Understanding Consumer Demand for “Buy Now, Pay Later”

We estimate consumer preferences for “Buy Now, Pay Later” (BNPL) using a large-scale probabilistic stated choice survey experiment. Average willingness to pay (WTP) for the standard BNPL bundle is negative, but younger, lower-income, and less credit-worthy consumers exhibit higher demand. The share with positive estimated WTP closely matches actual BNPL take-up. Consumers strongly dislike interest charges and hard credit checks. Counterfactual simulations show that incorporating these features into the standard bundle lowers demand and worsens adverse selection toward riskier borrowers. These findings have implications for the sustainability of the BNPL market, consumer credit supply, and quality of securitized BNPL receivables.