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Fintech and responsibility: Buy-now-pay-later arrangements

Author

Listed:
  • Paul Gerrans
  • Dirk G Baur
  • Shane Lavagna-Slater

Abstract

Buy-now-pay-later (BNPL) arrangements have rapidly emerged as a short-term debt option, and like other innovative and disruptive Fintech, challenge existing regulation. BNPL arrangements avoided prescribed ‘responsible lending’ legislative obligations, which applied to similar short-term credit products. Instead, BNPL relies on ‘responsible spending’ in providing a potentially cheaper option than alternatives such as credit cards. We describe the interplay of regulation and responsibility with BNPL. A survey investigates whether a key demographic (young adults) have an appetite or skill for responsible use. We analyse the preference for BNPL relative to credit cards and the role of financial literacy and traits including propensity to plan and save. The findings suggest that financial literacy reduces perceived BNPL benefits and that lower financial literacy is associated with more benefits and less risks. JEL Classification: G53, D14, G51, G41, G18

Suggested Citation

  • Paul Gerrans & Dirk G Baur & Shane Lavagna-Slater, 2022. "Fintech and responsibility: Buy-now-pay-later arrangements," Australian Journal of Management, Australian School of Business, vol. 47(3), pages 474-502, August.
    • Handle: RePEc:sae:ausman:v:47:y:2022:i:3:p:474-502
    DOI: 10.1177/03128962211032448
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    More about this item

    Keywords

    Debt; financial literacy; Fintech; responsible lending; responsible selling; responsible spending;
    All these keywords.

    JEL classification:

    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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