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Abstract
Buy Now, Pay Later (BNPL) services have rapidly transformed consumer credit markets, offering interest-free installment payments that alter spending patterns and financial behaviors. This mixed-methods study synthesizes empirical evidence from 2020–2024 across industry reports, regulatory filings, and academic literature to examine BNPL's effects on transaction volumes, impulsive purchasing, demographic adoption patterns, debt accumulation, and financial stress. Findings indicate that BNPL adoption increases purchase probability by approximately 9 percentage points and enlarges basket sizes by 10%, with effects persisting for at least 26 weeks. Adoption is highest among Generation Z and Millennials, with notable increases in discretionary spending. While aggregate default rates remain low (1.83%), late payment rates have risen to 41%, and 24% of users report stress regarding upcoming installments. Regulatory developments in the United Kingdom, European Union, and United States signal a shift toward treating BNPL as regulated consumer credit. The study discusses implications for consumer financial literacy, retailer strategies, fintech product design, and regulatory policy, emphasizing the need for balanced approaches that preserve innovation while protecting consumer welfare.