Understanding the psychological determinants of buy-now-pay-later (BNPL) in the UK: a user perspective

Abstract

PurposeThis study explores the psychological determinants of buy-now-pay-later (BNPL) use in the UK and reviews the efficacy of existing payment constructs.Design/methodology/approachA total of 533 BNPL users engaged in story stem completion. Template analysis was used, supported by the identification of four BNPL sentiment groups to enable comparison.FindingsWhilst positive attitudes towards BNPL dominate, other psychological determinants are apparent to a varied extent. Psychological distance and ownership of borrowed money are redolent, while transparency and transaction convenience are less appreciable. BNPL users understand temporality beyond its current conceptualizations. Some users construe BNPL as a “savings” product, and hence payment format conceptualizations may be erroneous. Those with a positive sentiment foreground BNPL’s consumption and budget management benefits. However, the potential for unintended consequences is manifest across all users.Research limitations/implicationsThe potentially unwanted consequences, or dark side, of BNPL use in the UK are highlighted. The specified constructs, whilst helpful, do not particularize the complex interconnected nature of the psychological determinants of BNPL use. Improved conceptualization offering richness and clarity is needed – temporality specifically requires consideration.Practical implicationsUsers’ sophistication and misunderstanding are both evident, necessitating fuller conversations among various stakeholders, including, providers, policymakers, consumers and advocacy groups.Originality/valueThis research advances the scarce literature exploring consumers’ BNPL use determinants and challenges current conceptualizations surrounding payment format perceptions.

Intensifying materialism through buy-now pay-later (BNPL): examining the dark sides

“…Prior studies have found that individuals with a high level of materialism have a significantly favorable opinion about credit instruments and their use (Pinto et al, 2000). BNPL services provide consumers with the convenience of instant gratification by allowing them to purchase items immediately and pay for them later in smaller installments (Relja et al, 2023). It is expected that this ease of access to credit and the instant gratification provided by BNPL services can further intensify materialistic tendencies, leading to increased spending and debt accumulation (Consumer Financial Protection Bureau, 2022).…”

“…A recent study found that using BNPL could encourage impulsive shopping and overconsumption, particularly when purchasing solely desired things rather than necessities (Lia and Natswa, 2021). Credit availability through BNPL services can decrease the pain of payment at the moment of purchase (Relja et al, 2023), releasing the brake that keeps customers' spending under control. This might put a foot on the accelerator, increasing BNPL users' impulsive drive to spend more on things they do not think are particularly important to them (Powell et al, 2023).…”

“…These individuals often use Buy Now Pay Later (BNPL) options to facilitate their conspicuous consumption and display of social status. Compared to cash payments, BNPLs are less emotionally charged and, therefore, less painful (Relja et al, 2023), making them an attractive payment option that enables purchases that may have been difficult (Schomburgk and Hoffmann, 2023). However, materialists with access to more significant amounts of money through BNPLs may become more susceptible to impulse buying, which is becoming increasingly prevalent in modern culture (Powell et al, 2023).…”

“…2. Literature review and hypothesis development 2.1 BNPL BNPL is a consumer credit that enables users to buy products and services and pay for them in installments over a specific time instead of paying the entire amount up front (Relja et al, 2023). BNPL services aim to provide customers with better flexibility and convenience than traditional credit choices, such as credit cards (Zainudin et al, 2019).…”

Guest editorial: The dark side of FinTech: unintended consequences and ethical consideration of FinTech adoption

“…In the first paper, Relja et al (2024) explore and examine the impact of psychological factors in the context of the adoption of buy-now-pay-later (BNPL) services in the UK. The data for this study were collected from 533 BNPL users using the story stem completion method.…”