2024/09/29 by Ashish Kumar, Jari Salo, Ram Bezawada · 38 citations
Business, Management and Accounting · Decision Sciences · #Advertising #Business #Consumer Behavior and Marketing Influence #Consumer Retail Behavior Studies #Consumer behaviour #Marketing #Technology Adoption and User Behaviour
paper · doi:10.1016/j.jretai.2024.09.004
published in Journal of Retailing 100(4), 602-617 (Elsevier BV)
openalex publication_date 2024/09/29 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/27
• We study the impact of customers’ BNPL adoption on their online spending. • Customers adopting BNPL spend 6.42% more than those who do not. • Low-ticket items benefit more than high-ticket items when customers use BNPL. • Young and low-income customers who adopt BNPL have higher sending than older and high-income customers. • Customers with high category experience and high promotion sensitivity spend more following BNPL adoption. Recent innovations in financial technology (FinTech) have introduced short-term financing options for customer loans, allowing customers to make purchases and pay for them in future installments without incurring interest, a model commonly referred to as Buy Now, Pay Later (BNPL). Despite the increasing provision of BNPL by online retailers, there remains a limited understanding of its effects on customers’ online purchase behavior. To address this gap, we utilize a synthetic difference-in-differences research design to estimate the impact of customers’ BNPL adoption on their online purchase behavior, specifically measured by order size. Our empirical results indicate that customers who adopt BNPL provided by a focal retailer have a higher order size than those who use traditional payment services. Our empirical estimates indicate an increase of 6.42% in online spending by customers adopting BNPL. Additionally, we examine the moderating effects of various customer segments - including loyalty, category experience, and promotion sensitivity - as well as demographic factors such as age, income, household size, and product characteristics, particularly low-ticket items. The impact of BNPL adoption is found to be amplified among customers with high levels of category experience and promotion sensitivity. Conversely, the effect is attenuated among older and higher-income customers, indicating that younger and low-income customers are the primary drivers of this effect. Moreover, our analysis demonstrates that purchases of low-ticket items predominantly drive the observed effect. This study provides strategic insights for online retailers concerning the implementation and targeting of BNPL as an effective online payment option.