Research from Imperial College Business School shows that customers spend around 10% more when using Buy Now, Pay Later. In other words, a shopper who might have planned to spend £100 often ends up spending £110 in the end, with this payment option.
The research also found that the likelihood of buying an item increases when BNPL is available. Shoppers are more likely to commit to purchases they would otherwise reconsider. Credit card users, in particular, tend to be the most influenced, as they are already familiar with delayed payments.
This trend is beneficial for businesses, because customers make decisions more quickly and spend more freely. For the customer, however, this increased spending has an impact on their spending habits.
How Has The Use Of Buy Now, Pay Later Schemes Grown?
The number of people using BNPL has gone up in recent years, reaching 380 million globally in 2024. The popularity of these schemes can be credited to how they make expensive purchases feel more manageable. For many, spreading payments over time is a better alternative to upfront costs.
A detailed analysis of a US retailer’s data showed that sales rose to a noticeable difference after the introduction of BNPL. These higher spending levels continued long after the option was introduced, which could indicate that BNPL changes how customers think about their purchases.
The more retailers adopt these schemes, the more they have become a routine part of shopping. Customers are using these schemes as a way to handle expenses that might otherwise be difficult to manage, especially during uncertain financial times.
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How Do Businesses Gain From Buy Now, Pay Later Schemes?
Retailers with BNPL options are seeing clear rewards. Customers who might hesitate to make a large purchase often go ahead when payments are spread out, and businesses benefit from this change in behaviour.
Data from a US retailer showed a rise in spending after BNPL was introduced. Customers spent more overall and continued to do so for months, showing that these schemes can lead to lasting changes in how people shop.
For businesses, BNPL is a is a way to bring in new shoppers and keeps current ones returning. Retailers see it as a way to stay competitive while giving customers what they’re looking for, and that is a sense of flexibility in how they pay.
What Makes BNPL A Risky Option?
As much as BNPL options may help customers in the short term, people often underestimate how quickly deferred payments can accumulate, and this can cause troubles when it comes to repaying multiple debts at once.
Missed payments come with extra charges and that makes it harder for people to be in control of their finances. For those already struggling to make ends meet, these schemes can create a cycle of financial strain that could be hard to get out of.
Experts think that there should be tougher regulations in place to limit the harm caused by BNPL, mainly for vulnerable groups. The pressure on household budgets is going up, and many believe these payment options need better requirements to protect those who are most at risk.
