Original title: Buy Now, Pay Later: Academic Insights and Open Policy Questions
Benedict Guttman-Kenney, Walter W. Zhang · September 2026
Buy Now, Pay Later, or BNPL, lets shoppers delay and split up payments for purchases. Before 2020, BNPL was just a niche checkout option for online fashion. That changed quickly. A jump in online shopping during the COVID-19 pandemic fueled huge market growth. By 2026, people can use BNPL to pay for almost anything, from a pizza to monthly rent. Because this financing is now everywhere, researchers reviewed studies across economics, finance, and marketing to see what we have learned. The authors explain BNPL products and lender business models. They outline the psychology and economics driving why consumers choose these loans, while also detailing who the typical customer base is. Additionally, they look at how BNPL affects consumers and why these debts usually do not appear on credit reports. Finally, they highlight unresolved questions that directly matter for future policy choices.
Imagine you are at a grocery store and you see a sign that says 'Pay later, no interest if paid in 30 days.' You decide to buy a few extra items because it seems easy. But later you realize you have several such promises to pay, and you lose track of how much you owe. In this paper, the payment option works like that sign: it makes purchases feel cheaper now, and the research reviews how this affects consumers and whether these debts should be tracked like regular loans.
Millions of people now use BNPL for everyday purchases, but the rules around it are still unclear. This review shows what we know about who uses it and how it affects them, and highlights policy questions like whether these loans should appear on credit reports. Understanding these issues matters for anyone who uses or regulates BNPL.
This paper is a review of existing research, so it does not provide new data or experiments. It identifies open questions but does not resolve them. The policy implications are discussed but not tested. The review may not cover all recent studies given the fast growth of the field.
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Buy Now, Pay Later: Academic Insights and Open Policy Questions — Benedict Guttman-Kenney, Walter W. Zhang
Abstract licence: CC0
Explanation generated by Synthesis from the abstract — it is not the original paper. This is a preprint, so it hasn't necessarily been peer reviewed.