Buy Now, Pay Later

Buy Now, Pay Later

Reviewed by Faisal Zaidi

A point-of-sale option that splits a purchase into instalments.

What it is

A 2025 study in the Journal of Retailing found it raised spending more than credit cards did, with the display of small instalments driving the effect, more instalments or a smaller first instalment raising spending further, and lower perceived expensiveness accounting for the rise. A working paper on transaction-level data found that access raised total and retail spending for consumers with and without inferred liquidity constraints.

In effect

In the article on why buy now, pay later raises spending, the same total shown as a few small parts is judged against smaller expenses.

What it does not say

The research describes average effects on spending. It does not say that paying in instalments harms any one person, and it is not advice on whether to use it.

Sources

  1. Ashby, R., Sharifi, S., Yao, J., & Ang, L. (2025). The influence of the buy-now-pay-later payment mode on consumer spending decisions. Journal of Retailing, 101(1), 103-119.
  2. Di Maggio, M., Williams, E. C., & Katz, J. (2022). Buy now, pay later credit: User characteristics and effects on spending patterns. NBER Working Paper 30508.