Financial Literacy and Buy Now Pay Later (BNPL): The Effect of Financial  Awareness on Spending Habits

Devarsh Utkarsh Kshatri

doi:10.47814/ijssrr.v8i11.2990

Devarsh Utkarsh Kshatri Adani International School, Gujarat, India

DOI: https://doi.org/10.47814/ijssrr.v8i11.2990

Keywords: Buy Now Pay Later, Financial Literacy, Financial Behaviour, Financial Attitude, Financial Knowledge

Abstract

Buy Now Pay Later (BNPL) services are a common source of payment for many individuals nowadays. The popularity and the usage of BNPL services in India is growing at a rapid pace. For safe usage of BNPL services, knowledge and implications about BNPL is crucial. This study assesses the relationship between BNPL usage and financial literacy of users in India. Primary data was collected from 42 participants from Gujarat, India using questions from the Financial Literacy and Inclusion in India survey 2023 about financial literacy which was conducted by the National Institute of Securities Market. This measured financial literacy across three parameters: financial knowledge, financial attitude and financial behaviour. Statistical techniques such as t-tests, correlation and regression analysis were used to analyze and draw inferences from the data. The analysis showed similar levels of financial literacy among both women and men. A strong positive correlation between financial literacy and BNPL knowledge was found indicating the importance of financial literacy in the responsible usage of BNPL services. Regression analysis further supported the role of financial literacy in high BNPL knowledge. The findings highlight the need for initiatives in schools and other institutions for educating people on financial literacy which will help in making rational decisions about services such as BNPL. Specific financial literacy initiatives for different demographics will help to provide an effective solution to prevent overspending or reckless spending due to BNPL usage. Boosting the overall financial literacy of people will lead to better financial decisions, leading to better financial conditions and boosted welfare for citizens.

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