UAE: Do buy-now-pay-later apps encourage higher spending? Expert explains

Khaleej Times

13-03-2025

In recent years, the rise of buy-now-pay-later apps has transformed the way consumers approach shopping, enabling them to make purchases and pay in installments. However, this convenience has sparked a debate among experts about whether these services encourage higher spending and the potential implications for consumers' financial habits.
Many banks also provide the option to pay in interest-free installments, often referred to as "buy now, pay later" (BNPL) plans allowing customers to make purchases and spread the cost over a set period without incurring interest charges, provided they adhere to the repayment schedule.
Dr Ben Lebig, Value Chain Mid Term Strategist - Chevron, weighed in on this growing trend. "The 'buy now pay later' apps have become widely used in the UAE among various communities,' he said. "While the intent has been to make high value purchases become more affordable by spreading the payments across various months, the use of these apps has evolved into something else.'
Dr Ben also mentioned that these apps have promoted impulsive buying because the impact is not immediately felt. He has witnessed many who in the past would not buy something they think they could not afford, but because of the installment payment using these apps, are now more inclined to splurge.
However, he warned that continue relaying on these apps could result to accumulation of debt that builds up over time. 'These apps create a false impression that everything is affordable hence creating a habit of impulse buying and the danger of spending beyond their means." Dr Ben explained. "Consumers should always be conscious of their use of these apps through detailed tracking of spending while comparing it with their monthly income.'
Mixed experiences
Users across the UAE have shared mixed experiences with these services. Abdullah Karama Al Zubaidi from Abu Dhabi thinks that these apps are double-edged swords. 'They can facilitate essential purchases, but they can also lead to a bad habit of buying unnecessary luxuries," Al Zubaidi said.
Ahmed Salem, also from Abu Dhabi, noted the benefits of BNPL apps, saying, "The programme is excellent and helps a lot with purchases, especially if a person cannot afford to pay the full amount at once,' said Salem. However, he sought Islamic guidance on the use of these apps.
Heba, a resident of Dubai, expressed her concerns, stating, "I closed it because debts accumulated. One tends to purchase without awareness, and by the time the pay cheque arrives, most of it goes to its installments in the first week."
Afaf Haddad from Abu Dhabi echoed similar sentiments, saying, "These programmes facilitate the installment process for consumers, but I consider them a trick that makes people take the easy route of installment buying for more expensive items. In the end, most of the salary goes towards these."
As the popularity of buy-now-pay-later apps continues to grow, it remains essential for consumers to strike a balance between convenience and responsible financial management.
Ultimately, understanding the implications of these services can empower individuals to make informed purchasing decisions and avoid falling into the trap of excessive spending.