Have businesses changed consumer behaviour by making debt feel normal?

This one could divide opinion a little bit, but it is something we both feel quite strongly about.

We were in Sports Direct recently and noticed the advertising for Frasers Plus around the shop. It led to a really interesting discussion about how normal buy now, pay later has become, especially for younger consumers and our own Business students.

When did it become normal to get into debt for things we used to save up for?

A growing number of businesses now encourage consumers to “spread the cost” of things such as trainers, technology, holidays and even takeaways.

Frasers Plus are not on their own either. There is huge competition in this market from businesses such as Klarna, Clearpay and PayPal Pay in 3.

Of course, there are positives. Buy now, pay later can help consumers manage cash flow and make products feel more accessible. We completely understand that many people do not have huge amounts of spare cash available at the moment.

But it does raise an important question. Are consumers now being encouraged to buy more expensive products than they would have previously considered because purchases feel smaller once they are split into monthly payments?

A £180 pair of trainers no longer feels like £180. It feels like “3 payments of £60”.

The cynic in me would also argue that, in some cases, this may allow businesses to charge more for products, increase profit margins and then encourage customers to simply spread the cost.

The psychology behind buy now, pay later

This is where the topic becomes really interesting from a Business Studies perspective.

Businesses have become incredibly good at reducing the “pain of paying”. Instead of focusing on the total cost, consumers are encouraged to focus on smaller monthly payments.

Psychologically, that feels much more manageable, even though the overall price remains exactly the same.

It also taps into instant gratification. Consumers can get the product immediately, enjoy it straight away and deal with the payments later. Businesses know that if they can remove the delay between wanting something and owning it, consumers may be more likely to buy.

This links closely to consumer behaviour and persuasive marketing. Businesses understand that the way prices are presented can influence purchasing decisions.

Is this creating bad financial habits?

This is probably the most important personal finance point.

Many consumers start by asking: “Can I afford the monthly payment?”

But the better question is: “Can I actually afford this product?”

That difference matters.

A £180 pair of trainers split into three payments of £60 might feel manageable. But if someone is also paying for clothes, a phone, a takeaway, a holiday deposit and other purchases in the same way, those “small” payments can quickly add up.

That is where the concern starts. It is not really a problem until unfortunately it becomes one. For some consumers, this can lead to years of financial stress and difficulty, especially if these habits are developed from a young age.

It is something I have spoken about with my students before because I genuinely think personal finance should have a much bigger focus in education.

A balanced view

Of course, it is important to acknowledge that buy now, pay later is not automatically bad.

For some consumers, it can help manage cash flow, provide flexibility and offer interest free borrowing when used responsibly.

The issue is not necessarily the existence of buy now, pay later itself. The bigger question is whether businesses and society are slowly normalising debt for everyday spending.

Questions for business students to consider

1. Explain how buy now, pay later services may influence consumer behaviour.

2. Why might businesses benefit from offering services such as Frasers Plus, Klarna or Clearpay?

Extension task: Discuss the statement below with a partner and decide whether you agree or disagree. Make sure you can justify your viewpoint with clear reasons.

“Buy now, pay later services are making debt feel normal for younger consumers.”