Buy Now Pay Later: Untangling the Nonlinear Effect of Installment Payment on Consumer Purchases

Although installment payment has been regarded as a popular payment option on the e-commerce platform, there is an ongoing debate regarding whether it can facilitate product sales. Therefore, to disentangle this mixed understanding, the current study combines econometrics and experiments to test the optimal number of installment periods. The findings of the study show that the number of installment periods has a curvilinear impact on product sales; with the initial increment of installment periods, it can stimulate consumer purchase; however, it has a detrimental effect later on. These results can provide actionable suggestions for retailers to refine their setting of installment payments.