The ability to use ‘buy now, pay later’ schemes increases the amount customers spend by around 10 per cent, according to research by Imperial College Business School.

The availability of ‘buy now, pay later’ schemes also increases customers’ willingness to buy a product – with shoppers’ likelihood of buying an item increasing by nine percentage 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.

Customers who were more likely to be at risk of financial difficulties were also more likely to increase their spending using BNPL schemes.

These findings come from research by Dr Stijn Maesen, Assistant Professor of Marketing at Imperial College Business School, and Dionysius Ang, Associate Professor of Marketing at Leeds University Business School, who wanted to understand the impact of BNPL schemes on customer spending.

‘Buy now, pay later’ schemes have dramatically 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.

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. 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.

The researchers studied weekly data from a large US retailer that introduced a BNPL scheme, where customers could spread their cost across four separate payments. This data allowed the researchers to make a direct comparison of sales made both before and after the BNPL scheme was introduced.

This impact was not just a short-term boost either, with customers purchasing more on average for the remainder of the study.

This research is published in the Journal of Marketing, an American Marketing Association journal.