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

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