A Study on the future of Buy now pay later and its Challenges

Author

Dr. Narendra , Ms. Sruthi Kusuma


Abstract

 Buy Now, Pay Later (BNPL) services have spread rapidly among young consumers in India, driven by digital payment platforms, e-commerce growth and the appeal of interest-free instalments. BNPL offers convenience and easier access to credit. However, it also lowers the immediate pain of payment, which can encourage impulsive purchases and spending beyond one’s means. Many young users, particularly students with limited or irregular income, may not fully understand repayment obligations, late fees or the cumulative effect of several BNPL commitments. Over time, this can lead to overspending, debt build-up and financial stress.

Despite BNPL’s growing popularity, little empirical evidence explains how it shapes the spending behaviour of young Indian consumers. In particular, it is unclear whether BNPL usage directly increases spending or does so mainly by triggering impulse buying. It is also unclear whether factors such as age, income and financial literacy protect consumers from these effects. Without this understanding, consumers, BNPL providers and regulators lack a sound basis for promoting responsible use. This study therefore examines the effect of BNPL usage on consumer spending behaviour, the mediating role of impulse buying, and the moderating roles of age, income and financial literacy among young consumers in India.


Keywords

Buy Now Pay Later (BNPL), Alternative credit financing, Digital credit, AI-driven credit scoring, Open banking integration, B2B Buy Now Pay Later



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References


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