A Contextual Model of BNPL Adoption, Financial Inclusion, and Consumer Vulnerability in Nigerian E-Commerce

This financial exclusion translates into 36% of adults in Nigeria being unable to smooth their consumption, accumulate assets, and hence break the poverty cycle. Buy Now, Pay Later digital credit services have also grown exponentially in Nigeria, promising to plug this financial exclusion gap. However, the implications of BNPL services on household welfare and poverty are yet to be understood. In this paper, we aim to explore the implications of BNPL services on the UN's Sustainable Development Goal 1: No Poverty, Goal 8: Decent Work, and Goal 10: Reduced Inequalities by developing a contextual model of BNPL adoption in Nigeria's unique financial environment. By combining the Theory of Planned Behavior, Behavioral Finance, and Financial Inclusion theories, we propose that Perceived Financial Inclusion, Perceived Regulatory Risk, and Repayment Channel Convenience are crucial yet neglected factors in BNPL adoption by Nigerians. We use Structural Equation Modeling to test our hypotheses using data obtained from a stratified sample of 1,200 e-commerce consumers in Nigeria. Our results show that BNPL adoption is driven by the perceived accessibility of BNPL as a credit option, although this relationship is moderated by perceived regulatory risks. Financial literacy plays a significant role in moderating the association between BNPL usage and household financial fragility. This study contributes the first empirical results on the effect of digital credit on household financial fragility in the biggest economy in Africa, with important policy implications for poverty reduction strategy, as well as a new framework for FinTech adoption in emerging markets, together with critical policy implications for Nigerian policymakers