BUY NOW, PAY LATER (BNPL): A REVIEW OF BEHAVIORAL AND SOCIAL DRIVERS, ECONOMIC IMPLICATIONS, AND REGULATORY CHALLENGES

Abstract

This review paper provides a multidimensional review of the global expansion of Buy Now, Pay Later (BNPL) platforms and their specific impact on young consumers, especially Generation Z, integrating social drivers, behavioral economics,  macroeconomics, and regulation into a unified framework. The study reveals that BNPL’s frictionless digital design exploits cognitive biases like mental accounting and reduces the psychological "pain of paying," transforming a liquidity-smoothing tool into an aggressive driver of impulse spending. Amplified by social media environments, digital peer comparison, and the Fear of Missing Out (FOMO), these micro-level behavioral biases encourage young users to pile up uncoordinated debt across multiple apps, ultimately contributing to broader macroeconomic risks such as depressed national savings rates, elevated household debt-to-GDP ratios, and ecological resource waste. Furthermore, the review identifies a critical regulatory lag in which decentralized BNPL providers operate in data silos outside traditional banking frameworks, obscuring liabilities from centralized credit bureaus and creating systemic blind spots. By establishing a direct conceptual link showing how individual behavioral vulnerabilities roll up to generate national economic risks, this paper moves beyond simple technology-acceptance metrics to deliver timely, actionable insights for consumer advocates, financial educators, and macroprudential watchdogs striving to maintain financial stability without suffocating digital fintech innovation.