Buy Now, Pay Later, Perceived Affordability, and Compulsive Buying: The Role of Fear of Missing Out

Abstract

Buy Now Pay Later (BNPL) is an increasing payment trend in the digital commerce landscape that is under-researched when it comes to its implications for vulnerabilities of consumers. Previous research has dealt with the issues of purchase incidence, transaction value, merchant profits, or the risk of repayment, but has paid little attention to the possibility that installment framing could result in compulsive purchases because of the low value of the product being sold, which can make the purchase of an expensive product more affordable. This study seeks to fill this gap by conducting a survey-based experiment that compares the BNPL and lump-sum payment options while using the same smartphone purchase. The perceived affordability, fear of missing out (FOMO), and compulsive buying measures were measured with a five-point Likert scale. After cleaning, the number of valid responses was 69, of which 44 were in the lump-sum condition, and 25 were in the BNPL condition. Age, gender, occupation, and income were controlled for regression-based mediation and moderation-mediation analyses. The findings indicate that BNPL boosted the perceived affordability and compulsive buying compared to a single lump-sum payment. Perceived affordability and FOMO were also positively correlated with compulsive buying. The indirect pathway via perceived affordability and the moderating pathway of FOMO did not achieve statistical significance, and thus, the pathway through perceived affordability and the moderating pathway of FOMO should be interpreted with caution in this sample. The results suggest BNPL is a psychologically significant payment structure, although there was no evidence to support the complete conditional process model. The study suggests that there is a need for more transparent total-cost-of-transaction disclosure, reminders to repay, and the absence of red flag affordability cues when offering BNPL schemes, such as overstating the affordability of installments, and a responsible checkout design that doesn't correlate high-pressure scarcity cues with BNPL offers.