电子钱包和即时购买后支付方式的兴起：支付竞争、信贷扩张和消费者行为

TheRiseofE-WalletsandBuy-Now-Pay-Later:

PaymentCompetition,CreditExpansion,andConsumerBehavior

WenlongBian,LinWilliamCong,andYangJi1

FirstDraft:Dec2022;CurrentDraft:Nov2023.

Abstract

Thepastdecadehaswitnessedaphenomenalriseofdigitalwallets,whichisfurtheracceleratedbytheCOVID-19pandemic.Suche-walletsprovidenotonlyaconduittoexternalbankaccountsbutalsointernalpaymentaccounts,includingthepopularBuy-Now-Pay-Later(BNPL).Weexamine,forthefirsttime,e-wallettransactionsmatchedwithmerchantandconsumerinformationfromaworld-leadinge-walletprovider,witharoundonebillionusersgloballyandabusinessmodelthatotherprovidersquicklyconvergeto.Wedocumentthatinternalpaymentoptions,especiallyBNPL,dominatebothonlineandon-sitetransactions.BNPLservesas“digitalcash”inmediatingsmall-valuedtransactionsandthepurchasesofnon-durablegoods,whilegreatlyexpandingconsumercreditaccessattheextensivemarginthankstoitsadoptionintwo-sidedpaymentmarkets.WhileBNPLcrowdsoutothere-walletpaymentoptions,itexpandsFinTechcredittounderservedconsumers.Exploitingarandomizedexperiment,wealsofindthate-walletcreditthroughBNPLsubstantiallyboostsconsumerspendingwithoutincurringinterestchargesordelinquentbehavior,thankstotheinherentrewardsanddisciplineswithinthesuper-appecosystem.Theinsightsinformeconomiestransitioningfromcash-heavytocashlessorfeaturingapp-drivenplatformswheredigitalpaymentsandFinTechcreditseethelargestgrowthandpotential.

Keywords:Cashless,ConsumerCredit,FinTech,FinancialInclusion,MobileWallet.

JELCodes:E42;G20;G23;G51

1

Bian(brian123@),Cong(will.cong@),andJi(jiyang3@)areat

SungkyunkwanUniversityandNSD/CCER,CornellUniversityandNBER,andSunYat-SenUniversity,respectively.WethankYipingHuangandXueWangfortheirfeedbackandgeneroushelpwithdataaccess,Ripple’sUniversityBlockchainResearchInitiative(UBRI)andtheFinTechatCornellInitiativeforfinancialsupport,andMurilloCampello,PulakGhosh,IftekharHassan,YiHuang,andHuanTangfordetailedcomments.WealsothankHuangChen,ShaohuaChen,ChidiChidambaran,ZhiguoHe,JiayinHu,KimHuynh,GingerJin,HaoLiu,XiaomengLu,JunhoOh,CongPeng,WenlanQian,JasonSchloetzer,VickiTang,SijieWang,BernardYeung,YaoZeng,HaoZhang,LiZhou,YinggangZhou,aswellasconferenceandseminarparticipantsatthe2023ABFER,HKUST,andSUSTechResearchConferenceonCapitalMarketResearchintheEraofAI,ChinaBusinessResearchNetwork,CornellUniversity,FudanUniversityFanhaiInternationalSchoolofFinance,FordhamUniversityGabelliSchoolofBusiness,GeorgetownUniversity,9thGlobalConferenceonBusinessManagementandSocialScience(GCBMS-2023),PaymentsandSecuritiesSettlement:DataandInformationworkshop,19thAnnualConferenceoftheAsia-PacificAssociationofDerivatives(APAD-2023),2023JournalofFinanceandDataScienceConference,PekingUniversity,andXiamenUniversityforhelpfulfeedbackandsuggestions.RishiKumarandYiranNingprovidedexcellentassistanceindataprocessingandproofreading.DuetothetightenedregulationonBigTechfirmsinChina,thedataprovideronlypermittedustocirculatetheresultsinternally(underthemanuscript“DemystifyingE-WalletsandBNPL”)fromlate2020throughlate2022.

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1.Introduction

E-wallets,a.k.a,digitalwallets,containsoftwarethatenablesuserstomakepaymentsontheircomputersormobiledevicesusinglinkedbankcards,balanceandsavingsaccountsfromwalletproviders,ornewliquidityandcreditproducts.Thepastdecadesawaphenomenalworld-wideriseofPayPal,ApplePay,therelaunchedGooglePay,andsuper-appssuchasWeChatPayandAlipay.2ThecombinationofdigitalizationandthecontactlesspaymentsengenderedbytheCOVID-19pandemichasfurtheracceleratedconsumers’adoptionofe-wallets.Aconservativeestimateprojectsthetotalnumberofe-walletuserstobeover5.2billiongloballyin2026,upfrom3.4billionin2022.3Meanwhile,Buy-Now-Pay-Later(BNPL),ashort-termFinTechcreditallowingconsumerstodeferpaymentsinterestfreeintooneorafewinstallmentsatthepointofsale,hasbecomeincreasinglypopularamonge-walletusers.Nowacommonofferingfromleadinge-walletprovidersaroundtheglobe,

BNPLisprojectedtoaccountfor$680billioninglobaltransactionsby2025.4

Whileeconomistsagreethattheshiftfromcashandbankcardstowarde-walletsexertsaprofoundinfluenceontherealeconomy(Agarwaletal.,2020b,2022),littleisknownabouthowvariouspaymentoptionsinteractandcompetewithine-walletsandhowBNPLaffectsconsumercreditprovisionandtheirspendingandborrowingbehavior.Ononehand,asaconduittolinkedbankcards,e-walletscouldreducephysical-card-carryingcostsandalleviatetransactionfrictionsandcosts.Theiradoptionthuspotentiallybenefitstraditionalfinancialintermediaries(e.g.,banks)andconsumers.Ontheotherhand,e-walletsalsooffertheirownpaymentoptions.Forexample,PayPalprovidesseveralinternalpaymentoptionsinadditiontoexternal

bank-linkedaccountsorcards:PayPalBalance,PayPalSavings,PayPalCredit,and

2

/gx/en/industries/financial

-services/publications/financial-services-in-2025/payments-in-2025.html#macro3,retrievedonNov21,2022.Asuper-appoffersawiderangeofservicesallinoneintegratedapp.

3JuniperResearch.See

/press/digital

-wallet-users-exceed-5bn-globally-2026.

4“BuyNowPayLaterDigitalSpend,LedbyKlarna,PayPal,andAfterpay,toDoubleby2025:Reaching$680Billion,”KaleidoIntelligence,September2020.Alipay’sHuabei,PayPalCredit,andPayPalPayLaterareexamplesofthisfast-growingnewformofcreditwhichistypicallyembeddedine-wallets;ApplerecentlyintroducedApplePayLaterinMarch2023.

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PayPalPayLater.Theseinternalpaymentoptionsmaycircumventbanks,cuttingbanksofffromvaluableinformationrelatedtoFinTechlendingandcashlesspayments(Ghoshetal.,2022).Besidestheambiguouseffectonsocialwelfare(Parlouretal.,2022),itisunclearwhetherBNPLasaformofFinTechcreditcomplementsorsubstitutesbankcredit—acoreissueintheliterature(Tang,2019;JagtianiandLemieux,2019;DiMaggioandYao,2021),whatroleitplaysforeconomiestransitioningfrombeingcash-heavytocashless,andwhetheritleadstoexcessive

spendingandindebtedness(Ponce,Seira,andZamarripa,2017;Agarwaletal.,2020b).

Webridgetheknowledgegapbyopeningtheblackboxofe-walletsthatcontainmultiplepaymentoptions,andempiricallyinvestigatingtheseissuesusingthemostcomprehensiveandrepresentativedatatodatefromaworld-leadinge-walletprovider.Wealsoobtaindirectlymatched,transaction-leveldataonBNPLandcreditcards,insteadofinferringBNPLactivitiesfrombanktransactionsasispreviouslydone.Thesamplecovers550,000onlineand550,000on-sitetransactionsrandomlydrawnfromalltransactionsinJune2020.Wecomplementthee-walletdatabyrandomlysamplingfromatwo-monthrandomizedexperimentconductedbythesamee-walletproviderinJune2017tostudytheimpactofintroducingBNPLcredittoconsumers.WeextendtherandomizedsampletoDecember2021tofurtherunderstandhowthesuper-app

ecosystemdisciplinesBNPLusers’behavior.

Specifically,we(i)describethevariouspaymentchoicesine-wallettransactionsandtheirusagepopularity,especiallyhowBNPLdominates,(ii)demonstratehowBNPLcrowdsoutotherpaymentoptionsyetcomplementsbankcreditcards,servingasanewdigitalcashforsmall-valuetransactionsincludingnon-durablepurchases,(iii)analyzetheexpansionofe-walletcreditthroughBNPLforconsumersandregionsunderservedbybanks,emphasizingtheadoptionintwo-sidedpaymentnetworks,and(iv)documentthat,differentfromthefindingsintheexistingliterature,BNPLincreasesconsumerspending,butdoesnotleadtogreaterdefaultorindebtedness

owningtothediscipliningroleofthee-walletecosystem.

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Inadditiontoprovidingthefirsttransaction-levelanalysisofe-wallets,wealsojoincontemporaneousstudies(e.g.,deHaanetal.,2022;DiMaggio,Williams,andKatz,2022;Guttman-Kenney,Firth,andGathergood,2023)toaddtothefirstcanonofknowledgeaboutBNPLandtheeconomicimplicationsofitsmeteoricemergence.Ourstudydistinguishesitselfbydrawingevidencefromaneconomytransitioningfrombeingcash-heavytocashlessandtyingtogetherthepaymentandcreditfunctionsine-wallets.WedemonstratethatBNPLservesasa“newcash”insteadofcompetingwithcreditcardsheads-on,asdocumentedinearlierstudiesconcerningseveralothercountries.Furthermore,wedirectlyobserveBNPLtransactionswithrichconsumerandmerchantinformation,circumventinganynoisyinferencefrombanktransactionsalone.Giventheglobalconvergenceofe-walletstowardstheecosystemmodelandofBNPLtowardscash-likeusage,ourfindingsnotonlyinformabouttheChinese

marketbutalsoprovidevaluableinsightsglobally.

Westartwithsummarizingstylizedfactsregardingthedistributionofe-walletpaymentoptions.Internalpaymentoptions—particularlyBNPL—havebecomeconsumers’predominantwaytopay,accountingformorethanhalfofalltransactions,whereasthemostpopularexternaloption—linkeddebitcards—accountsforlessthanone-third.Asinternaloptionsdominateine-wallettransactions,theriseofe-walletscoulddisrupttraditionalbanks’accesstopaymentdata(Ghoshetal.,2022).Giventheimportanceofpaymentinformationanddigitalfootprintsinlending(Agarwaletal.,2020a;Berg,Fuster,andPuri,2022),thisrationalizeswhycentralbanksaroundtheworldlookintodevelopingtheirownelectronicpaymentsystems(EPSs)ordigital

currenciestocompeteforpaymentflowswithFinTechgiants(BoarandWehrli,2021).

Wenextestimateapaymentchoicemodeltoinvestigatetheinfluenceofe-walletcreditexpansiononotherpaymentchoicesafteraccountingforasetoftypicalfactorssuchasconsumerdemographics,paymentpreferences,merchants’acceptance,andtransactionvalue.Wefindthatconsumeraccesstoe-walletcreditcrowdsouttheusageofotherpaymentoptionsinbothon-siteandonlinetransactions.Inlinewith

thecrowding-outeffect,wealsofindthatsmall-valuetransactions,whichforma

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substantialshareofe-walletpayments,areoverwhelminglysettledwithe-walletcreditthroughBNPL.Whilepriorstudies(e.g.,Klee,2008)concludethatphysicalcashisthemainpaymentchoiceforsettlinghigh-frequencyandsmall-valuetransactionsinmodernsocieties,wepositthatBNPLisnowthemostpopularpaymentchoiceine-wallettransactionsandhenceservesasthenewdigitalcashin

transitiontocashlesssocieties.

Somewhatcounterintuitively,BNPLdoesnotcompeteheads-onwithbankcredit.UnlikepriorstudiesthatexaminetherelationbetweenFinTechlendingandtraditionallending(e.g.,JagtianiandLemieux,2019;DiMaggioandYao,2021),ourstudyfeaturesdataincludingborrowerswhohaveaccesstobothe-walletcreditandcreditcards(dual-accessusers).Wecanthereforeruleoutthepotentialimpactofborrowers’unobservablecharacteristics.Wefindthatdual-accessusersusee-walletcreditandcreditcardsindifferentpaymentscenarios,withe-walletcreditfordaily,small-valuetransactionsandcreditcardsforbig-ticketpurchases.E-walletcreditservesprimarilyasapotentialcomplementofcreditcards,notasubstitute,becauseitsadoptionbyuserswhoalreadyhavecreditcardsleadstoincreasedspendingthroughcreditcards

aswell.

BecauseourdatasetovercomestheempiricalchallengeintheexistingliteratureconcerningwhetherFinTechcreditusershaveaccesstobankcredit,wecaninvestigateife-walletcredit(i.e.,BNPL)expandscreditprovisiontothosewithnopriorcreditaccess.Wedocumentasubstantialexpansionattheextensivemargin.Specifically,84.14%and78.38%ofon-siteandonlineconsumerswithoutcreditcards,respectively,cannowaccesse-walletcredit.Moreover,43.54%ofon-sitemerchantswhopreviouslydidnotacceptcreditcardsnowaccepte-walletcredit.Additionally,44.37%ofon-siteand90.21%ofonlinetransactionsthatcouldnotbecompletedusingcreditcardscannowbecompletedusinge-walletcredit.ThecombinationofconsumerandmerchantdemandforBNPL,andthesupplybythee-walletprovider,hasledtotheexponentialgrowthofBNPLusage.TheimpactofBNPLaccesson

consumercreditusagealsoappearstobemorepronouncedinless-developedareas,

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suchasruralareasandnorthernregions,aswellasamongwomen.Overall,thee-

walletcreditseemstobenefitthosedisadvantagedorunderservedbybanks.

WiththewideuseofBNPL,apotentialconcernisthattheeaseandconvenienceofthisFinTech-basedconsumercreditmayinduceconsumers,especiallythoselackingfinancialliteracy,tooverborrowandoverspend(Berg,Fuster,andPuri,2022;Buetal.,2022).Weexploitatwo-monthrandomizedexperimentconductedbythee-walletproviderinJune2017toexaminetheimpactoftheintroductionofBNPLonconsumerspending.Foruserswhowereextendedcreditinthisexperiment,wefirstdocumentasignificantconsumption-boostingeffectconsistentwiththatobservedindevelopedeconomiessuchastheUnitedStates:anincreaseequivalentto4.78%oftheaveragemonthlyconsumptionasreportedbytheNationalBureauofStatisticsofChina.Moreover,weexploretheheterogeneityoftheconsumption-boostingeffectbyageandthenumberofbankcards.AlthoughtheconsumptionresponseofBNPLishigherforyoungercustomersandthosewithonlyonebankcard,consumptionalsoincreasesforoldercustomersandthosewithmultiplebankcards.Takentogether,thesefindingsareinfavorofthebuffer-stockexplanation(Carroll,1997;Aydin,2022),whereadditionalcreditreducesconsumers’motiveforprecautionarysavings

andthusenablesthemtoincreaseconsumptiontoanewlevel.

Next,wereturntoourtransactiondataandanalyzehowconsumerschangetheirusageofBNPLwhentheyhaveunpaiddebtandincurinterestexpenses.Wedistinguishbetweentwotypesofusersaccordingtotheircreditaccess:single-accessusers(e-walletcredituserswithnolinkedcreditcard),anddual-accessusers(asmentionedearlier).Whilesingle-accessusersappeartousee-walletcreditmorefrequently,theyusethecreditcautiously,astheproportionofrevolvers(thosewhoincurinterestchargesonunpaiddebt)andtheunpaid-debtratioforrevolversarelower.TheyalsoreduceBNPLusageintransactionsoncetheyincurinterestexpensesfromlatepayments(whicharehigherthantherateschargedbycreditcards).Utilizingtheextendedrandomizedsample,wefurtherexplorethemechanismsunderlyingthe

cautioususageofBNPL.Thee-walletsuper-appconstitutesanall-encompassing

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ecosystemwhereuserscanpurchasewealthmanagementproducts,hailtaxis,bookmovietickets,reservehotels,payutilitybills,orderfooddelivery,amongothers.WefindthattheoverallbenefitsusersreceiveincentivizefrequentyetresponsibleusageofBNPL,alleviatingtheconcernsofoveruseorirresponsibleusagethathavebeen

documentedinotherstudies.

Ourfindingshavebroadimplications.First,giventhatpaymentnetworkshaveconstitutedthecoreproductsofBigTechgiantsandFinTechstartups,ourinvestigationonthedistributionofpaymentchoicesine-wallettransactionsprovidesaninitialbenchmarkforunderstandingtheirroleinlargedigitalecosystems.Second,becausee-walletprovidershavehigh-frequencyandexclusivedataonmerchantsandconsumersunderservedbybanks,discussionson“open-FinTech”—inadditiontothe“openbanking”proposal—canbetimely.Third,althoughBNPLraisesconcernsaboutconsumerindebtednessworldwide,ourstudysuggeststhatBNPLusers,especiallythosewithnocreditaccessfrombanks,carefullymoderatecreditusageinaneconomytransitioningfromcash-heavytocashless.CreditexpansionthroughBNPLdoesnotnecessarilycomeattheexpenseofgreaterconsumerindebtednessordefaultunderinclusive,ex-antescreeningandex-postmonitoringandincentiveprovisionof

thee-walletprovider.

OurdataandtheChinesesettinghaveseveralappealingfeatureswell-suitedfortheeconomicquestionswestudy.First,Chinaisthelargeste-walletmarketintheworldandcurrentlyhasthelargestnumberofBNPLusers(Section2.1containsmoredetails),withmaturemobilepaymentnetworks.5Second,thee-walletfunctionalityandBNPLdesigninourstudyarereasonablyrepresentative,notonlyinChinawithitsaroundonebillionusersbutalsoontheworldstage.Forexample,theBNPLembeddedinthee-walletwestudyoffersarevolvingcreditlineandallows

installmentpayments,thuscombiningthefeaturesofPayPalCreditandPayPalPay

5ThemobilepaymentinChinaboomedearlyin2011andtheadoptionamongChineseadultsreached82%in2017.Thecoverageandusagehadsincestabilized.See

/docs/20210421101507614920.pdf

and

/goutongjiaoliu/113456/113469/3602384/index.html

;accessedonAugust6,2022.

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Later,andissimilartoothermajorBNPLproviderssuchasAffirmintermsof“Pay-in-4”(installments)productsandcreditlines.Boththerepresentativenessintermsoffunctionalityandthefactthatmanye-walletprovidersaroundtheglobeareconvergingtotheChinesemodelwithsmall-valuetransactions,especiallyinnondurables,andwithsuper-appecosystems(CFPB,2022andSection2.1)giveourfindingsexternalvalidityandimplications,evenfore-walletsandBNPLprovidersthatinitiallystartedaspure-playpaymentorcreditproducts.Finally,ourdatasetislikelytheonlyoneintheliteraturethatallowsdirectobservationsoftransactionsine-walletsandinvolvingBNPL,coveringbothonlineandon-sitetransactionsandencompassingbothmerchantandconsumerinformation,thankstothatthee-wallet

providerhasitsowne-commerceplatformsandQRcoderegistrationsystem.

Ourworkrelatestoseveralstrandsoftheliterature.FinTechfirmstypicallystartwithpaymentsandthenexpandintolending,insurance,investmentproducts,etc.(Frostetal.,2019).However,theexistingliteratureappearstofocuspredominatelyonlending,largelyduetodatalimitationsonpaymenttransactions.AshighlightedbyBerg,Fuster,andPuri(2022),paymentdataarefundamentalforcreditratingsinthelendingbusiness.OurstudyfocusesonFinTechpaymentsandprovidesthefirstempiricaldescriptiononatimelyandimportantissue:paymentchoiceswithine-wallets.6Althoughtherehavebeendigitalpaymentsurveysinadvancedeconomiesandnumerousstudieson(electronic)paymentchoices(e.g.,Arangoetal.,2015;Koulayevetal.,2016;Wangetal.,2016;Crouzet,Gupta,andMezzanotti,2019;Agarwaletal.,2020b,Cong,Easley,andPrasad2023),thesesurveyshavealwayscategorizede-wallets,ifatall,asanaggregatecategory.Lookingintotheblackboxofe-walletpaymentoptionsisimportantforunderstandingcurrentchangesinpaymentsystemsandevaluatinge-wallets’economicimpacts.OuranalysisofbothconsumeraccesstoandmerchantadoptionofBNPLasapaymentoptionalsoaddstostudies

suchasHiggins(2019)thatanalyzethecoordinatedtechnologyadoptionintwo-sided

6Hong,Lu,andPan(2020)documentthatrepeatedusageofdigitalpaymentsthroughsuper-appscanhelpusersbuildfamiliarityandtrust,therebyincreasingtheirparticipationandrisk-takinginmutualfundinvestmentsofferedbysuper-apps.

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markets.

WecontributetotheliteratureonFinTechcredit,especiallytheemergentdiscussionsonBNPL.Earlierstudiesfocusoncreditforonlinemerchants,smallfirms,andentrepreneurs(e.g.,Huangetal.,2018;Hauetal.,2019;Hauetal.,2021,GopalandSchnabl,2022),whereaswestudycreditforconsumersandhouseholds.Withinthisdomain,marketplacelendinghasbeenshrinkingwhileBNPLhasbeengrowing.Berg,Fuster,andPuri(2022)estimatethatnewlendingintheU.S.marketplacelendingmarketwas$6billionin2020;theU.S.BNPLmarket,bycontrast,wasabout$25billion.Comparedtothenumerousstudiesonmarketplacelending(e.g.,Lin,Prabhala,andViswanathan,2013;FreedmanandJin,2017;JagtianiandLemieux,

2019;Tang,2019;Cong,Tang,Xie,andMiao,2019),theresearchonBNPLisscarce.

SeveralcontemporaneousarticlesstudyBNPLindevelopedeconomieswherecreditcardshavealreadylargelyreplacedcash.Guttman-Kenney,Firth,andGathergood(2023)describeBNPLusageintheUK,where19.5%ofactivecreditcardusershadatransactionwithaBNPLfirmontheircreditcardsin2021,andyoungusersandthoselivingindeprivedregionswithlimitedrepaymentcapabilityhadanevenhigherratio.deHaanetal.(2022)findthatBNPLintheUnitedStatesplausiblyhasanegativeeffectonusers’spendinghabitsandfinancialhealth.Similarly,DiMaggio,Williams,andKatz(2022)findthatBNPLaccessincreasesconsumers’totalspendingandtheproportionofretailspendingintheUnitedStates,whichisbetterexplainedbythe“liquidityflypapereffect.”Thesestudiesprovidevaluableinformation,especiallytimetrends,onBNPL,buthavetorelyonbankandcreditcardtransactionstoinferBNPLactivities,thuscaptureonlytransactionslinkedtobanks,withlimitedmatchedmerchantorconsumerinformationandprimarilycoverasmallsetofpure-playproviders.7AmorerecentstudybyBergetal.(2023)studiesanotherBNPLmodelofferedbyafurnituremerchantinGermanytoshow,

througharandomizedcontrolledtrial,thatBNPLinducesgreaterconsumerspending

7Forexample,PayPalisexcludedbecauseitcontainslargenon-BNPLbusiness,despitealsobeingamajorBNPLplayer.ThetransactionsfromomittedBNPLprovidersarelabeledasnon-BNPL,leadingtoclassificationerrors.

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andbenefitsthemerchantmorethanPayPaldoes.Theauthorsfocusonthecost-benefitanalysisofaparticulartypeof“paylater’’thatmustoccurwithin14daysandistypicallycoveringlargertransactionamounts,whicharedifferentfromthetypical

BNPLmodelexaminedinotherstudies.

WeinvestigatetheusageofBNPLanditsimpactonconsumerspendingandindebtednessdirectlyusingacomprehensive,matched,transaction-leveldataset,inacountrywithdrasticallydifferentfinancialdevelopmentandbusinessecosystems,whilefeaturinganequallyimportantBNPLmarketandbusinessmodelthatmanymarketsaroundtheglobeareconvergingto.WehighlightthepaymentnatureofBNPLandexamineitsinteractionwithotherpaymentoptions.Furthermore,ourdataarerepresentativeofthepopulationofBNPLusersfrombothsidesofthetwo-sidedpaymentmarketsbecausetheyarenotlimitedtoonemerchantinaparticularproduct

categoryormerchantsworkingwithbanks.

Finally,wecomplementearlierresearchonmobilepayment,consumercredit,andoverspending(Aydın,2022;GrossandSouleles,2002;Ponce,Seira,andZamarripa,2017;Agarwaletal.,2020b).Previousstudiesdocumentaspending-boostingeffectofpaymentinnovations(e.g.,mobilepaymentande-wallets),whichcausesconcernsaboutoverspending,consumeraddiction,anddebttrapsthathaveplaguedmanydevelopedeconomies(e.g.,Manning,2001;Williams,2004).Recently,Wang(2023)theoreticallyandempiricallyanalyzescompetitionamongbank-card-basednetworksandfindsthatitleadstooveruseofcreditandreducedsocialwelfare.WefindBNPL,asanewconsumercredit,boostsconsumption.ButitdoesnotincreasehouseholdindebtednessinChina,aphenomenonalsodocumentedintheIsraelimarket(GelmanandRoussanov,2022),suggestingthatthepaymentcompetitioninducedbye-walletsandBNPLinChinaisrathernuanced:Heterogeneityinpaymentoptionsleadstodifferentmerchantfees,retailprices,andconsumersegments,withBNPLservingmanyconsumerswithoutcreditcardaccess.Consequently,dependingonthepaymentdesignandmarketenvironment,merchantfeesdonotnecessarilygetpassedonto

retailprices,andconsumersdonotnecessarilyoverusethenewlyavailablecredit.We

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shouldhighlightherethatthemaincontributionofourstudydoesnotlieintheexaminationoftheimpactofBNPLonconsumption.Rather,ourstudydelvesintothepaymentfunctionofBNPLandtheinteractionofBNPLwithotherpaymentoptionswithine-wallets,thecreditexpansionandfinancialinclusionofBNPL,andthepower

ofthee-walletecosystemindiscipliningBNPLusers.

Therestofthispaperisorganizedasfollows.Section2providestheinstitutionalbackgroundandintroducesthedata.Section3describesthelandscapeandstylizedpatternsofe-walletpayments,includingBNPL’sgrowingdominance.Section4presentsthefindingsconcerninge-walletcreditexpansionthroughBNPL.Section5investigateshowtheriseofBNPLaffectsconsumerspendingandindebtednessand

howthesuper-appecosystemdisciplinesBNPLusers’behaviors.Section6concludes.

2.InstitutionalDetailsandDataDescription

2.1InstitutionalBackground