When consumption benefits precede costs: towards an understanding of ‘buy now, pay later’ transactions

An experiment investigates a real‐money ‘buy now, pay later’ transaction, whereby subjects experienced a varied time‐delay between transaction benefits and costs. Individuals were more satisfied when transaction benefits and costs occurred temporally together. When a time‐delay was imposed, respondents preferred a short delay to a long delay. Transaction satisfaction was found to mediate the effect of time‐delay on behavioral intentions to complete the transaction again and perceived transaction fairness. Results suggest that a previously‐incurred transaction benefit becomes disassociated with its' transaction cost over time, causing the later transaction cost to be perceived as a greater loss at time of payment. The findings provide preliminary indication of the length of delay necessary for benefits to begin psychologically decaying. Implications for ‘buy now, pay later’ transactions and consumer satisfaction are discussed.