Buy Now, Pay Later (BNPL)...On Your Credit Card

31 Pages Posted: 16 Mar 2022

See all articles by Benedict Guttman-Kenney

Benedict Guttman-Kenney

University of Chicago - Booth School of Business

Chris Firth

University of Warwick - Warwick Business School

John Gathergood

University of Nottingham - School of Economics

Date Written: March 10, 2022

Abstract

We provide the first economic research on `buy now, pay later' (BNPL): an unregulated FinTech credit product enabling consumers to defer payments interest-free into instalments. In 2021 transactions by BNPL firms are charged to 19.5% of active credit cards in our UK data. Charging a 0% interest, amortizing BNPL debt to credit cards, where typical interest rates are 20% and amortization schedules decades-long, raises doubts on consumers' ability to pay for BNPL. Such charging of BNPL to credit cards is most prevalent among younger consumers and in the most deprived geographies.

Keywords: BNPL, buy now pay later, consumer credit, consumer financial protection, credit cards, FinTech, household finance, regulation.

JEL Classification: D04, D18, G28, G51, M38

Suggested Citation

Guttman-Kenney, Benedict and Firth, Chris and Gathergood, John, Buy Now, Pay Later (BNPL)...On Your Credit Card (March 10, 2022). Available at SSRN: https://ssrn.com/abstract=4001909 or http://dx.doi.org/10.2139/ssrn.4001909

Benedict Guttman-Kenney (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://www.benedictgk.com

Chris Firth

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

John Gathergood

University of Nottingham - School of Economics ( email )

Sir Clive Granger Building
University Park
Nottingham, NG7 2RD
United Kingdom

HOME PAGE: http://https://sites.google.com/site/gathergoodjohn/

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