CONVENIENCE OR DEBT TRAP? A COMPARATIVE ANALYSIS OF BNPL PERCEPTION AND USAGE

Abstract

This research explores the growing use of Buy Now, Pay Later (BNPL) services in India, focusing on their adoption, perception, and behavioral impact among college students in Delhi and the NCR region. As BNPL gains popularity for its convenience and flexibility, concerns arise around impulsive spending, debt risks, and regulatory gaps. The study aims to assess whether BNPL serves as a financial tool or a debt trap, based on a survey of 114 students aged 19–28. It analyzes awareness, usage patterns, and financial literacy using descriptive statistics, correlation tests, and logistic regression in SPSS. Key variables studied include: • BNPL usage frequency and platform preference • Perception of BNPL (as a convenience or a debt trap) • Influence of financial literacy and credit card usage • Association with financial stress, overspending tendencies, and peer influence Key Findings 1. Low Usage, Moderate Awareness: While only 26.3% of respondents reported using BNPL, awareness levels were relatively high (mean rating: 3.61/5). Among non-users, awareness significantly increased the likelihood of future consideration. 2. Perception Divide: o 70% of BNPL users perceive the service as a financial convenience. o 51.2% of non-users view it as a potential debt trap. o Higher awareness was correlated with more informed and neutral perceptions. 3. Financial Literacy as a Protective Factor: Students with higher financial literacy were significantly more likely to see BNPL as a convenient tool, while those with lower literacy and higher spending levels tended to view it as risky. v 4. Credit Card Users More Likely to Use BNPL: The odds of using BNPL were six times higher among credit card users, suggesting an overall openness to digital credit tools. 5. Strong Correlation with Financial Stress: A very strong positive correlation (r = 0.925) was found between BNPL usage and financial stress, emphasizing the need for responsible usage frameworks. 6. Satisfaction Among Current Users: BNPL users reported high intent to continue using and recommend BNPL, reflecting a positive experience despite associated risks. Implications for Stakeholders • For BNPL Providers: Transparent communication, usage safeguards, and consumer education are essential to maintain trust and reduce default risks. • For Regulators and Policymakers: The findings highlight the urgent need for specific BNPL regulations that ensure responsible lending, disclosures, and data protection. • For Educators: Introducing financial literacy programs into higher education curricula can empower students to make informed decisions about credit products like BNPL. The study finds that BNPL services are at once empowering and potentially harmful. Their appeal to young, tech-savvy users is undeniable—but so is the risk of financial overextension without adequate awareness or regulation. With financial literacy and awareness emerging as key determinants of safe usage, educational and regulatory initiatives are critical to ensure that BNPL remains a tool for inclusion rather than a gateway to indebtedness.