Buy Now Pay Later (BNPL): Implications for Consumption Behavior and Household Financial Risk

Abstract

This academic article aims to present the effects of Buy Now Pay Later (BNPL) services on changes in consumption behavior and household financial risk in the context of the digital economy. It explains the characteristics of BNPL as a financial innovation that increases convenience and flexibility in payment, particularly for consumers with limited access to traditional credit. The article also applies the concepts of intertemporal consumption, the budget line, and indifference curves to explain that BNPL relaxes current liquidity constraints, enabling consumers to increase present consumption in exchange for future repayment obligations and a reduction in future consumption capacity. Although BNPL services can expand opportunities for access to liquidity and support economic activities, they may also create risks related to excessive spending, debt accumulation, liquidity risk arising from installment obligations that exceed cash flow or income in each period, and household financial vulnerability. In addition, this article highlights the problem of information asymmetry among consumers, service providers, and financial institutions, which may lead to adverse selection and moral hazard. Therefore, the development of BNPL services should proceed alongside appropriate regulation, transparent information disclosure, and the promotion of financial literacy, so that such services can generate benefits for both consumers and the economy.