The ability to use “buy now, pay later” offerings, such as online payments platform Klarna, increases the amount customers spend by around 10%, according to research by Imperial College Business School.
BNPL also increases customers’ willingness to buy a product – with shoppers’ likelihood of buying an item increasing by 9% points. The researchers found that people who tended to buy items online using a credit card, rather than a debit card, were more likely to spend more with a BNPL scheme.
The schemes have grown in the past few years, with the total number of users reaching 380 million in 2024. Whilst for many they can be a helpful, interest-free way to alleviate the burden of large payments, there can also be negative effects for the purchaser, according to the researchers.
Customers who were more likely to be at risk of financial difficulties were also more likely to increase their spending using BNPL schemes.
Dr Stijn Maesen, assistant professor of marketing at Imperial College Business School, said: “The risk is that these schemes allow financially vulnerable customers to take on unsustainable levels of debt – and in response to these issues, new rules and regulations are on the horizon in the UK. However, it’s clear that for businesses, these schemes are proving incredibly beneficial for their profits.”
The research recommends that policymakers urge regulators to ensure that BNPL schemes do not have a disproportionately negative impact on those already struggling financially. This is particularly relevant, given the pressures of a cost-of-living crisis and a poor medium-term outlook for the global economy.
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