ABSTRACT:The digital economy has witnessed an unprecedented transformation in retail credit mechanisms through the rapid growth of Buy Now, Pay Later (BNPL) platforms (e.g., Klarna, Afterpay, Affirm, Paytm Postpaid, LazyPay). Positioned as frictionless, interest-free alternatives to traditional credit cards, BNPL services have achieved massive market penetration among Generation Z consumers (born 1997–2012). This research paper investigates the structural financialization of Gen Z by analyzing how the adoption of BNPL platforms systematically alters purchasing behavior, lowers cognitive pain-of-paying thresholds, and accelerates microdebt accumulation. Utilizing a mixed-methods empirical framework—combining a cross-sectional primary survey of N=350 Gen Z respondents with behavioral economics models (Mental Accounting Theory and Intertemporal Choice Theory)—this study measures the correlation between BNPL usage frequency, impulse buying tendencies, and debt distress. The empirical findings reveal that 78.6% of surveyed Gen Z consumers actively engage with BNPL platforms, with 46.2% managing multiple concurrent point-of-sale installment loans. Regression analysis indicates a statistically significant positive relationship between BNPL usage frequency and unplanned discretionary spending (β = 0.482, p < 0.001), accompanied by an inverse relationship with monthly personal savings rates. Crucially, the abstraction of payments into smaller, deferred tranches induces cognitive decoupling, creating a phenomenon termed 'phantom debt'—obligations that escape conventional debt salience until default or penalty imposition occurs. The study concludes with targeted policy recommendations for regulatory bodies and financial literacy interventions designed to safeguard young consumers from systemic over-indebtedness.

KEYWORDS: Buy Now Pay Later (BNPL), Generation Z, Financialization, Behavioral Economics, Mental Accounting, Debt Accumulation, Impulse Buying, Phantom Debt, Point-of-Sale Credit.

THE FINANCIALIZATION OF GEN Z: ANALYZING THE IMPACT OF BUY NOW, PAY LATER (BNPL) PLATFORMS ON CONSUMER SPENDING AND DEBT ACCUMULATION

MR. SATYAM SAINI, MS. AARYA MEWADA, MR. RAJ YADAV, MR. TANAY MHATRE, DR. SUNITA VIJESH YADAV