Does ‘Buy Now Pay Later’ encourage over-consumption?
Although BNPL services have been around for over a decade, their recent popularity has been boosted by the pandemic and our changing consumer behaviour. BNPL services allow shoppers to buy items at the checkout and pay later through interest free weekly or monthly instalments. The sector is currently exempt from laws protecting borrowers because what they offer is technically not credit.
We know that lending money can carry serious consequences for missed or late payments, however, BNPL can seem like a quick and easy way to buy without credit checks and real-life implications. BNPL services have faced criticism for leading shoppers into unsustainable debt and fuelling over-consumption.
When surveyed, 12% of people used BNPL, 24% said they used them sometimes and 64% said they never used BNPL (out of 137 people and consider the demographic following my page). This opened some interesting conversations, I found that in the minority of people who used BNPL, some still used the services even if they could afford to buy the product outright (for financial management and to build a good credit score). Those who used BNPL sometimes felt they were responsible with their purchases.
With our obsession with newness, it’s easy to see how BNPL services can be exploitative (especially because they require little to no credit checks). Those who already have outstanding debt are also able to freely use other services without limits to borrowing. As we normalise our heavily curated online lives, slipping into unmanageable debt to create an image filled with newness may seem insignificant. My conclusion is that BNPL services do in fact encourage over-consumption, but I am aware the services offer a lifeline for those who have no other payment option.