Published February 10, 2026 | Version v1
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Behavioural and Psychological Determinants of Buy Now, Pay Later Adoption

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The global financial ecosystem is undergoing a structural shift as Buy Now, Pay Later (BNPL) transitions from a fintech novelty to a foundational pillar of modern consumer credit. This research paper investigates the behavioural and psychological determinants driving BNPL adoption, synthesizing secondary data and empirical findings from 2018 to 2026. Utilizing theoretical frameworks such as the Technology Acceptance Model (TAM) and the Unified Theory of Acceptance and Use of Technology (UTAUT2), the study identifies performance expectancy, effort expectancy, and materialism as critical drivers of adoption. Psychologically, the "illusion of income" generated by Credit Limit Misconception (CLM) and the reduction of the "pain of payment" through instalment framing are found to lower cognitive resistance to spending. Experimental evidence reveals a significant spending uplift (4.39% higher than debit transactions) and an inflated perception of available funds (22.2% higher likelihood of discretionary purchase). The paper further analyses the socio-demographic stratification of users, highlighting the prevalence of BNPL among Generation Z and lower-income cohorts. Finally, it explores the regulatory response, specifically India’s Reserve Bank of India (RBI) 2025 Directions, which aim to stabilize the sector through mandatory disclosures and localized credit rails like UPI. The findings suggest that while BNPL democratizes access to short-term credit, its reliance on behavioural nudges necessitates robust consumer protection to mitigate risks of over-indebtedness and post-purchase regret.

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Dates

Submitted
2026-02-10
The global payments landscape is witnessing a paradigm shift as consumers increasingly move away from traditional revolving credit card debt toward structured, digital-first instalment products. Buy Now, Pay Later (BNPL) services—short-term, point-of-sale credit facilities that allow consumers to defer payment through interest-free instalments—have emerged as the fastest-growing financial technology of the decade. By the end of 2031, the global BNPL sector is projected to reach a valuation of approximately US$1 trillion, growing at a compound annual growth rate (CAGR) of 14.7% from 2026.

References

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