Factors impeding buy now, pay later (BNPL) adoption in India: A mixed-method approach

Abstract

Buy Now, Pay Later (BNPL) services are reshaping digital credit access in India, yet their adoption remains limited due to complex and interrelated consumer barriers. While previous research has explored general fintech or digital payment adoption, there is a significant gap in understanding BNPL-specific barriers, particularly how these barriers influence one another within India’s distinct socio-economic and regulatory landscape. India’s rapid fintech growth, large unbanked population, evolving regulatory environment, and uneven levels of digital and financial literacy make it a unique and urgent case for such inquiry. Thus, this study aims to identify and rank the key barriers to BNPL adoption in the Indian context and analyze their causal interrelationships, and adopts a sequential mixed-methods design for the same. In the qualitative phase, a netnographic analysis of BNPL app reviews—supported by existing literature (specifically Innovation Resistance Theory) and expert insights—was used to identify barriers. In the quantitative phase, the ‘Decision-Making Trial and Evaluation Laboratory’ (DEMATEL) method was employed to analyze seven identified barriers, categorize them into causal and effect groups, and assess their interdependencies. The findings reveal digital illiteracy as the most influential causal barrier, affecting others such as inertia, privacy concerns, hidden fees and high penalty fees, and negative credit profiles. Impulse buying and regulatory concerns also emerged as key causal factors. The study offers practical recommendations, such as financial education, responsible lending, and regulatory reform, and contributes to BNPL literature by applying a novel methodological lens to an underexplored market. These insights can guide stakeholders seeking to responsibly scale BNPL adoption in India.