Discussion Paper

How Does Buy Now, Pay Later Affect Customers’ Credit?

Abstract: In this paper, we explore the relationship between consumers’ use of buy now, pay later (BNPL) and their credit reports. BNPL is a deferred payment tool that allows consumers to split transactions into four payments over six weeks. Unlike many other financial products, it is offered primarily by fintech companies and advertised to consumers as free from fees and credit checks. These providers typically do not report a consumer’s use of BNPL and subsequent repayment behavior to credit bureaus, which makes studies of BNPL users’ credit more challenging. In this analysis, however, we leverage a unique data set combining anonymized survey data and appended credit bureau data collected by the market research firm Competiscan, on behalf of the Consumer Finance Institute (CFI) of the Federal Reserve Bank of Philadelphia.

Keywords: buy now; pay later; BNPL; point-of-sale payments; consumer survey; credit reporting;

JEL Classification: D10; D18;


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Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Community Affairs Discussion Paper

Publication Date: 2023-09-28

Number: 23-01