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Problem

Buy now, pay later (BNPL) lets shoppers split a purchase into several smaller, interest-free payments over a short period. Over 45 million customers in the United States and 15 million in the United Kingdom have adopted it. Retailers including ASOS, Adidas, Walmart and Sephora now offer it. Yet nobody knew whether it changed how much people spent, or whether those changes lasted. Less than half of retailers expected BNPL to increase how often customers came back to buy again.

Science

We studied a large US clothing retailer that introduced BNPL for the first time in October 2020. We tracked weekly spending for 25,000 customers who adopted BNPL and matched them against 25,000 similar customers who did not, using 22 weeks of data before the launch and 30 weeks after. Using a method called difference-in-differences analysis, we compared how two similar groups change over time, to isolate the effect of BNPL from other factors. We then ran three separate controlled experiments, each pre-registered before the results were collected, to test why the effect happened.

Outcome

Customers who adopted BNPL were 9 percentage points more likely to make a purchase in any given week and spent approximately 10% more per transaction. Both effects held across the entire 30-week period after adoption. The spending increase was largest among customers who typically bought smaller amounts and those who relied more heavily on credit cards, two groups the research identifies as more likely to feel financially stretched. The experiments showed why: splitting a payment into instalments makes the cost feel smaller and gives customers a greater sense of control over their budget. Both effects reduce the feeling of being financially constrained, which in turn drives higher spending.

Change

Retailers now have evidence that BNPL is not a short-term novelty. The effects persist, and they are strongest among customers who are already financially stretched. That creates both an opportunity and a responsibility. Retailers can target BNPL communications at customers who typically spend less, where the uplift is greatest. But regulators are right to pay attention. The Dutch Authority for Financial Markets has already raised concerns about BNPL use among younger customers, and research suggests BNPL increases the likelihood of overdraft fees. The research calls on retailers and regulators to ensure that the credit BNPL provides is affordable, and that customers are not being nudged into spending they cannot sustain.

Stijn Maesen, ³Ô¹ÏºÚÁÏ Business School; Dionysius Ang, Leeds University Business School, University of Leeds. Published in the Journal of Marketing, 2025.