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Buy now, pay later (BNPL) ...on your credit card

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  • Guttman-Kenney, Benedict
  • Firth, Chris
  • Gathergood, John

Abstract

We provide the first economic research on ‘buy now, pay later’ (BNPL): an unregulated FinTech credit product enabling consumers to defer payments into interest-free instalments. We study BNPL using UK credit card transaction data. We document consumers charging BNPL transactions to their credit card. Charging of BNPL to credit cards is most prevalent among younger consumers and those living in the most deprived geographies. Charging a 0% interest, amortizing BNPL debt to credit cards – where typical interest rates are 20% and amortization schedules decades-long – raises doubts on these consumers’ ability to pay for BNPL. This prompts a regulatory question as to whether consumers should be allowed to refinance their unsecured debt.

Suggested Citation

  • Guttman-Kenney, Benedict & Firth, Chris & Gathergood, John, 2023. "Buy now, pay later (BNPL) ...on your credit card," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    • Handle: RePEc:eee:beexfi:v:37:y:2023:i:c:s2214635023000023
    DOI: 10.1016/j.jbef.2023.100788
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    2. William A. Barnett & Kun He & Jingtong He, 2022. "Consumption Loan Augmented Divisia Monetary Index and China Monetary Aggregation," JRFM, MDPI, vol. 15(10), pages 1-17, October.

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    More about this item

    Keywords

    BNPL; Buy now pay later; Consumer credit; Consumer financial protection; Credit cards; FinTech; Household finance; Regulation;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

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