Hyperbolic Discounting and Consumer Debt Behaviour in Buy Now Pay Later Financial Products
Sneka Bhargavi S V
MBA Student, Faculty of Management Studies
CMS Business School, JAIN (Deemed-to-be University), Bengaluru, Karnataka
sneka_bhargavi24@cms.ac.in
Dr. V Y John
Associate Professor, Faculty of Management Studies
CMS Business School, JAIN (Deemed-to-be University), Bengaluru, Karnataka
dr.vy_john@cms.ac.in
Abstract
The rapid proliferation of Buy Now Pay Later (BNPL) financial products has fundamentally reshaped consumer credit behaviour by enabling immediate consumption with deferred payment obligations. Despite the widespread adoption of BNPL services, the underlying psychological mechanisms — particularly hyperbolic discounting — that drive consumer debt behaviour within these platforms remain insufficiently explored, especially in emerging market contexts. This study examines the extent to which hyperbolic discounting, present bias, impulsivity, and promotional incentives influence consumer borrowing decisions and repayment patterns among BNPL users. Primary data were collected from 250 respondents across Chennai, Bengaluru, and Hyderabad through structured questionnaires and analysed using regression analysis, paired sample t-test, chi-square test, and reliability analysis. The findings reveal that hyperbolic discounting explains 79.2% of the variance in debt accumulation (β = 0.995, p < 0.001), present bias accounts for 80.2% of repayment difficulty (β = 0.896, p < 0.001), and promotional influence explains 55.9% of financial stress (β = 0.756, p < 0.001). Age-based behavioural differences in repayment are statistically significant (χ² = 261.863, p < 0.001). The study contributes empirical evidence to behavioural finance theory while offering practical implications for BNPL platform designers, financial regulators, and consumer educators seeking to balance innovation with consumer protection in India's rapidly evolving digital lending ecosystem.
Keywords: Hyperbolic Discounting, Buy Now Pay Later (BNPL), Consumer Debt Behaviour, Behavioural Finance, Present Bias, Financial Literacy, Digital Lending, Fintech
