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Buy Now Pay Later: market overview and outlook

Author

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  • Lorenzo Gobbi

    (Banca d'Italia)

Abstract

The surge of digitization in the financial industry and in e-commerce has favoured the strong growth of Buy Now Pay Later (BNPL) operators, which traditionally grant short-term loans of a limited amount, allowing consumers to split the payment of a purchase into a variable number of interest-free instalments. After providing a general overview of the BNPL model and some statistics on market penetration, this paper describes the existing regulatory framework, in terms of both contracts and licences. It then considers the potential implications of rising inflation, and of the resulting increases in interest rates by various Central Banks, for the business models of BNPL operators, whose valuations have already decreased. Lastly, it discusses the need to protect consumers from inadvertently piling up excessive debt.

Suggested Citation

  • Lorenzo Gobbi, 2022. "Buy Now Pay Later: market overview and outlook," Questioni di Economia e Finanza (Occasional Papers) 730, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_730_22
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2022-0730/QEF_730_22.pdf
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    More about this item

    Keywords

    Buy Now Pay Later (BNPL); Fintech; Digital credit;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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