The impact of buy-now-pay-later on word-of-mouth

Marketers and researchers continue to seek new ways to encourage Word-of-Mouth (WOM) to leverage the estimated $6 trillion in consumer spending per annum driven by WOM. This research examines the effect of a previously unexplored influence on WOM generation, the payment mode. A series of experiments demonstrate that buy-now-pay-later, an emerging interest-free and fee-free payment mode facilitating repayment by instalments over 6 to 8 weeks after purchase, increases consumers’ intent to generate WOM after purchase. The effect of buy-now-pay-later to increase WOM is explained by transaction utility theory, where perceived value is obtained from buy-now-pay-later improving the terms of the purchase, and impression management, which motivates consumers to share value to appear smart and helpful. Results support that transaction utility mediates the effect of the payment mode on WOM. This research has important implications for marketing managers who can increase WOM to drive sales by encouraging consumers’ use of buy-now-pay-later.