Decoding the Buy Now, pay Later Revolution: Exploring Consumer Trust and Financial Perception in Emerging Markets

Abstract

The​‍​‌‍​‍‌​‍​‌‍​‍‌ rapid spread of Buy Now, Pay Later (BNPL) services has been a major change in consumer finance, a case very well and mainly in emerging markets where credit infrastructures are less mature. This paper looks at how consumer trust and financial perceptions drive the use of BNPL in such areas. We based our study on a quantitative-empirical approach and used data from a global sample of a few emerging economies to model the relationships between perceived financial risk, institutional trust, BNPL usage intention and repayment behaviour. The results show that the positive effect of good financial perceptions (like perceived convenience and transparency) on BNPL adoption is significantly enhanced by higher institutional trust. In short, if the person trusts the institution they are more likely to use BNPL. On the other hand, increased perceived financial risk results in the weakening of this path and hence an increase in the likelihood of late or non-payments. Our study reveals that even though BNPL might be a means of financial inclusion and provide some breathing space to the user with regard to consumption, if trust mechanisms are not in place and consumer financial perceptions are not positive, then the BNPL model may result in users being covertly vulnerable. We take into consideration the strategies implications for the BNPL providers and regulatory bodies and suggest the need for transparent communication, consumer education, and risk-mitigation frameworks that are suitable for emerging-market contexts. By doing so, this research serves as a bridge between marketing literature and trust and financial-perception concepts, BNPL adoption model, and practical guidance that platforms can use to embed sustainable growth in environments with varying degrees of institutional ​‍​‌‍​‍‌​‍​‌‍​‍‌maturity.