For good or ill, buy-now-pay-later (BNPL) options do encourage consumers to spend more at retail, new research shows.

The research by Imperial College Business School says the ability to use BNPL platforms like Klarna, Clearpay or many others, boosts the amount customers spend by around 10% and “also increases customers’ willingness to buy a product – with shoppers’ likelihood of buying an item increasing by nine percentage points”.

The study was based on weekly data from a large US retailer that introduced a BNPL scheme, spreading purchase prices across four payments. It was able to make a direct comparison of sales made both before and after BNPL was added. 

And the impact wasn’t just a short-term boost, with customers purchasing more on average for the remainder of the study.

The researchers also found that people who tended to buy items online using a credit card, rather than a debit card, were more likely to spend more with a BNPL scheme.

Customers who were more likely to be at risk of financial difficulties were also more likely to increase their spending using BNPL schemes.

BNPL has been criticised for encouraging unaffordable spending, although it has also been praised for making products more affordable with payments spread out across three or four chunks and no interest charged… as long as the customer keeps up the payments.

Dr Stijn Maesen, assistant professor of marketing at Imperial College Business School, and Dionysius Ang, associate professor of marketing at Leeds University Business School, conducted the study. They wanted to understand the impact of BNPL schemes on customer spending and the need to do this comes as such schemes have dramatically grown in the past few years, with the total number of users reaching 380 million in 2024. 

Dr Maesen said: “The risk is that these schemes allow financially vulnerable customers to take on unsustainable levels of debt — and in response to these issues, new rules and regulations are on the horizon in the UK. However, it’s clear that for businesses, these schemes are proving incredibly beneficial for their profits.” 

The researchers are urging regulators to ensure BNPL schemes don’t have a disproportionately negative impact on those already struggling financially.