Pandemic Purchases Part 2: Buy now, pay later? How delayed payment services may not be so helpful

Cowry Authors • 6 min read


How retailers are tapping into behavioural science to nudge customers to buy sooner and buy more. 



This is part 2 of our Pandemic Purchases Series. For part 1, please see the link here.


Buying things has never been so easy. As previously mentioned in Pandemic Purchases Part 1, shopping online has surged during the pandemic as more shoppers are making purchases online. Because of this, businesses offering Buy Now Pay Later (BNPL) services have flourished. This service allows customers to pay for all sorts of goods, from tech to t-shirts, with monthly instalments or in full at a delayed date interest free.

In 2020, a study by comparison website Finder showed that the BNPL sector is growing at 39% a year, with around 8.5 million customers were planning in using BNPL services in the future and 9.5 million customers who have avoided retailers who did not offer BNPL. Furthermore, Compare the Market found that during Lockdown, BNPL purchases increased by 33%.

So, why is BNPL so popular? These businesses tap into behavioural science, nudging customers to buy sooner and buy more. This article explains the science behind what makes BNPL attractive by understanding the concept of Present Bias and how these services can be used effectively to manage the complexity of human life.


Present Bias: Living for the Now

In the behavioural science literature, the concept of present bias is well documented. This principle explains how individuals crave instant gratification, preferring smaller and sooner rewards compared to larger later ones.

Present bias is a powerful driver of behaviour, and can explain why we do not save enough for retirement, procrastinate, and value convenience. Alongside emotions, cravings for instant gratification can lead us to make impulse purchases, ignoring associated risks and costs until the future.

For example, one famous study in psychology known as the Marshmallow Test presented children with a choice: one marshmallow now, or wait 15 minutes and receive two. Despite the clear benefits of waiting, we, and the children, have a preference for the instant reward of a tasty marshmallow. This need is what is being used by BNPL to make customers buy. Rather than waiting till payday, or saving up, customers can get what they want now thinking about the consequences in the future.

Children show a series of coping strategies to try and avoid eating the marshmallow.

Paying for it Later: How BNPL Services Can Be A Problem

While these services are an easy and convenient tool for purchases, they can have large unintended consequences. These services can motivate bad spending habits where customers start buying large numbers of items on credit. If not managed, this can lead to large (and sometimes unaffordable) outgoings in following months. If customers do not adjust future spending habits in line with these upcoming costs, they may not be able to afford them, resulting in late payments being added.

Customers falling into this credit trap may also see a decline in their credit score. As a tool for measuring how much someone can borrow through credit cards, loans, or mortgages, having a bad score can reduce the amount of money available to borrow, increase interest rates/premiums, or simply result in not being able to borrow all together.

It’s Not All Doom and Gloom… How to Use BNPL Services Effectively

Despite large potential risks being associated with BNPL, it remains a useful tool for three main reasons:

1. BNPL offers more flexibility, allowing customers to buy things they need if they do not have the money;

2. It allows customers to spread the cost of goods with access to interest free lines of credit; and

3. In the online clothing sector, it overcomes a key barrier where customers can try-on items delivered before being charged.

To avoid traps and pitfalls, there are a number of things customers can do to use BNPL services effectively. Firstly, The Money Advice Service (MAS) suggests drawing up a budget and keeping a record of spending, and when payments are due. Being able to effectively plan has been shown to positively affect outcomes of important tasks, such as paying off debts.

Secondly, customers should try to be mindful of their spending, and consider implementing a cooling off period before buying items. Research has shown that cooling off periods can provide suitable time for individuals to move from an impulsive ‘hot’ state of emotion to a more reflective ‘cold’ state or system 2 thinking. By implementing this technique, customers can filter out impulsive purchases which they may regret in the future, and only purchase goods they really want and really need.


In summary:

· BNPL is an easy and convenient service that provides customers with the flexibility of delayed or chunked payments.

· By understanding our own biases, such as present bias and instant gratification, customers can use BNPL to manage with their bills and spending.

· By keeping a record of purchases, drawing up a budget, and implementing a cooling off period, customers can begin to use system 2 thinking to consider whether they really want or can afford purchases.

Using some of these techniques are as important as ever. Many people have been furloughed or have been working from home during the pandemic and customers might be more susceptible to impulse purchases with more time on their hands. Customers need to carefully consider what they are buying, and how they are paying for it.


· G, Johnson. (2020). Buy Now Pay Later (BNPL) Statistics. Finder. Available at:,as%20they%20were%20before%20lockdown.

· O’Donoghue, T., & Rabin, M. (1999). Doing it now or later. American Economic Review, 89(1), 103–124.

· E, Lunn (2020). Missed Klarna Payments Show Up on Credit Reports. Mortgage Solutions. Available at:

· [1]The Money Advice Service. (2020). What Are Buy Now Pay Later Purchases? Available at:

· Rogers, T., Milkman, K.L., John, L.K. and Norton, M.I., 2015. Beyond good intentions: Prompting people to make plans improves follow-through on important tasks. Behavioral Science & Policy, 1(2), pp.33–41.














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