Summary

Buy Now, Pay Later, also known as BNPL, is a fast and easy or ‘frictionless’ or ‘slick’ credit instalment payment service which has been enabled by FinTech. BNPL is typically accessed through trusted e-commerce platforms at no obvious cost to the consumer. However, many consumers do not realise that BNPL is a form of credit and the implications of not repaying their ‘debt’.

This research explores the different digital vulnerabilities of BNPL products in terms of: the consumer vulnerabilities (understanding of product and use of credit, risk of fraud, the speed/ease of frictionless or ‘slick’ access to credit which is embedded in other familiar and/or trusted brands/services, risk of money laundering, data-related privacy, security and fairness) and organisational vulnerabilities (the brand and how BNPL products are marketed and advertised, risk to merchants in the event of non-payments, corporate irresponsibility and unethical behaviours, commercial business value and models).

Our interdisciplinary approach will develop new insights to inform current and emerging understandings of digital vulnerability to reduce vulnerability around BNPL products.

Impact

This research has developed new understandings of digital vulnerability. Through drawing on a contextual review of current understandings (or lack thereof) around digital vulnerability across BNPL applications. The review included scholarly articles and secondary data (BNPL websites and Apps, news articles, policy documents and grey literature) to develop a systematic understanding of digital vulnerabilities in the FinTech domain, and to analyse the where the vulnerabilities lie in the BNPL space.

Essentially, digital vulnerabilities exist throughout the BNPL product and process. The existing literature fails to adequately consider that digital vulnerabilities are a two-way process in that individuals, organisations or systems can be made vulnerable to digital harm as well as cause them.

For example, we found that existing notions of digital and financial vulnerability needs to shift away from purely low income or groups experiencing poverty to highlight the value of exploring financial vulnerability amongst all levels of income and wealth as it cannot always be linked to financial hardship.

Vulnerabilities were often related to digital literacy where many people passively receive information online at face value and did not realise they were using an unregulated credit product.

Digital vulnerabilities are often hidden within products and their digital design. For example, regarding surface appearance of the interface versus what goes on behind the interface to make people consume more or how algorithms make decisions. When BNPL is marketed or embedded within a known, trusted retail brand, this can be used to promote seamlessness of interaction as well as convey trust via an established brand/platform.

BNPL is increasingly susceptible to identity fraud. An example of this is where fraudsters can use someone’s name and other primary identifiers to create a BNPL account using a fake email address. As some information is genuine, these accounts are not flagged as fraudulent; an additional issue with BNPL is that an account is not debited for several weeks, and the defrauded person remains unaware.

Future work

We are developing our initial findings for a grant proposal to UKRI for submission late Spring 2022.