Authors: Felix Aidala, Gizem Kosar, Daniel Mangrum, and Wilbert van der Klaauw
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Staff Reports
Understanding Consumer Demand for “Buy Now, Pay Later”
Number 1167
October 2025 Revised February 2026
October 2025 Revised February 2026
JEL classification: G51, G41, C93, R22
We estimate consumer preferences for “Buy Now, Pay Later” (BNPL) using a large-scale probabilistic stated choice survey experiment. Average willingness to pay (WTP) for the standard BNPL bundle is negative, but younger, lower-income, and less credit-worthy consumers exhibit higher demand. The share with positive estimated WTP closely matches actual BNPL take-up. Consumers strongly dislike interest charges and hard credit checks. Counterfactual simulations show that incorporating these features into the standard bundle lowers demand and worsens adverse selection toward riskier borrowers. These findings have implications for the sustainability of the BNPL market, consumer credit supply, and quality of securitized BNPL receivables.
Author Disclosure Statement(s)
Felix Aidala-Brody
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Gizem Koşar
The author declares that she has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Daniel Mangrum
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Wilbert van der Klaauw
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Gizem Koşar
The author declares that she has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Daniel Mangrum
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Wilbert van der Klaauw
The author declares that (s)he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
Suggested Citation:
Aidala, Felix, Gizem Koşar, Daniel Mangrum, and Wilbert van der Klaauw. 2025. “Understanding Consumer Demand for ‘Buy Now, Pay Later.’” Federal Reserve Bank of New York Staff Reports, no. 1167, revised February 2026. https://doi.org/10.59576/sr.1167
Aidala, Felix, Gizem Koşar, Daniel Mangrum, and Wilbert van der Klaauw. 2025. “Understanding Consumer Demand for ‘Buy Now, Pay Later.’” Federal Reserve Bank of New York Staff Reports, no. 1167, revised February 2026. https://doi.org/10.59576/sr.1167
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