The economics of the phenomenon "buy-now-pay-later"

This thesis explores how Buy Now, Pay Later (BNPL) companies generate profit despite offering zero-interest installment services to consumers. It examines their business model, revenue streams, and economic incentives. The study finds that BNPL providers earn income mainly through merchant fees charged to retailers, late payment fees, and value-added financial services. By increasing customer conversion rates and average order values, BNPL services benefit merchants, who are willing to pay these fees. The thesis also analyzes the risks associated with this model, including consumer over-indebtedness and reliance on penalty-based revenue. It concludes that BNPL firms remain profitable by acting as intermediaries between consumers and merchants rather than charging interest directly.