Impact of Buy Now, Pay Later (BNPL) Options on The Purchase Decision on E-Commerce Platforms in Western Province of Sri Lanka

Abstract

This study explores how Buy Now, Pay Later (BNPL) choices affect consumer purchasing intentions in the e-commerce sector, with a focus on Sri Lanka's Western Province. The study is prompted by the increasing use of BNPL services in emerging economies, where traditional credit is typically scarce. Despite BNPL's increasing global popularity, a considerable gap exists in understanding its implications for consumer behaviour, particularly in developing countries. This study fills a vacuum by studying the relationship between BNPL services and consumer purchasing decisions, focusing on four major factors: customer perceived value, promotional techniques, consumer financial literacy, and ease of use. By investigating these variables, the study seeks to provide insights into how BNPL options influence purchasing behaviours and contribute to the broader e-commerce landscape in Sri Lanka. The study uses a quantitative research design to comprehensively investigate the effects of BNPL alternatives. To guarantee inclusion, data were collected from 346 participants using standardised questionnaires available in both Sinhala and English languages. These questionnaires included demographic questions and measures that used Likert-scale responses to assess perceptions of BNPL services. The study used statistical tools such as descriptive analysis, correlation analysis, and regression modelling to determine relationships between the independent variables: customer perceived value, promotional strategies, financial literacy, ease of use and the dependent variable purchase intention. The study's findings provide several important insights. First, customer perceived value appeared to be a major factor in purchase intention, emphasising the significance of consumers' perceptions of BNPL as a useful financial tool. Second, promotional methods were determined as the most influential of the four variables. Targeted advertising, such as discounts or installment benefits linked to BNPL possibilities, have been demonstrated to dramatically increase consumer desire to use BNPL and make purchases. Third, consumer financial knowledge was important, as people with higher financial literacy levels were better able to navigate BNPL terms, resulting in more confident purchasing decisions. Finally, ease of use, while important, had a less extensive link with purchase intentions than the other characteristics. This implies that while user-friendly interfaces and smooth integration of BNPL alternatives are significant, they may not have the same impact on consumer behaviour as promotional methods or financial knowledge. These findings align with previous research highlighting the importance of flexible payment alternatives and financial awareness in changing customer behaviour. The findings support all four assumptions, demonstrating that BNPL services can greatly influence consumer purchase intentions by providing ease and affordability. Furthermore, the study emphasises the importance of promotional methods as a main driver of customer engagement, implying that e-commerce platforms might use targeted marketing campaigns to increase acceptance of BNPL services. By addressing financial literacy, the study underlines the importance of consumer education activities to reduce problems related to BNPL use, including over-indebtedness and impulsive purchasing. The study's consequences are theoretical and practical. From a theoretical standpoint, the study adds to the expanding body of information about consumer behaviour and digital payment systems by combining ideas from the Technology Acceptance Model (TAM) and the Theory of Planned Behaviour. These concepts provide a solid foundation for studying the psychological and behavioural dynamics that drive BNPL uptake. The findings provide actionable advice to stakeholders such as e-commerce platforms, BNPL providers, and legislators. To increase consumer trust, e-commerce platforms should improve the transparency of their BNPL offers, such as repayment schedules and interest rates. Targeted advertising activities can boost the desirability of BNPL choices, especially during peak shopping periods or holiday seasons. BNPL providers are urged to work with educational institutions and financial organisations to promote financial literacy, ensuring that consumers understand the possible risks and benefits of deferred payment plans. Policymakers can use the study’s findings to develop regulatory frameworks that safeguard consumer interests while fostering innovation in digital payment systems. For instance, regulations could mandate clearer disclosure of BNPL terms and implement safeguards against predatory lending practices. The study admits a few shortcomings despite its contributions. The study's conclusions may not be as applicable to other areas or nations with distinct cultural and economic contexts due to its geographic confinement to Sri Lanka's Western Province. Future research might also look at the impact of BNPL on certain demographic groups, such as low-income people, the elderly, or specific professional categories, to gain a more comprehensive understanding of its influence.