Hidden cost of buy now, pay later on Saudi youth savings

The concept of buy now, pay later has been a revolution in fintech. Or at least, that is how it has been marketed.

But is it truly a beneficial way to sustain consumption without damaging savings?

BNPL, as it is known, is rapidly becoming embedded within the Saudi Arabian youth and the broader financial market, with one major app, Tamara, reporting that 80 percent of its user base is Gen Z and millennials.

Saudi Arabia’s BNPL market is currently valued at about $5.29 billion and is projected to steadily grow at a 6.6 percent compound annual growth rate within the coming five years.

BNPL is not a niche habit anymore; it is becoming the normal payment method for many in my generation in Saudi Arabia.

However, BNPL has faced heavy scrutiny, with recent stigma centering around the idea that the ease and simplicity of the payment method triggers excessive, impulse buying, particularly among the younger, consumerist generation.

Nevertheless, a study of 218 Saudi Arabian students at Majmaah University found something more nuanced; BNPL had minimal effect on impulse buying, but still appeared to significantly hurt students’ personal savings and investments, while most still wanted to use the method.

This result suggests that the cost of buying products essentially disappears for students, rather than registering as spending for them in their financial state.

Now, why have such results emerged in opposition to the conventional critique of impulse buying?

The answer lies in the notion of each purchase being small and frictionless, and thus never feeling like a financial transaction worth weighing.

A separate, 2025 study has found a negative correlation between financial literacy and the perceived benefit of BNPL, and so most people drawn toward using such a method understand its cost the least; many users do not, or cannot, calculate the cost of a purchase and fit it within their broader financial situation.

This is backed by findings showing that a significant part of the popularity of BNPL methods stems from cognitive ease, or the reduced barrier to buying that arises when costs are split into distinct, manageable payments instead.

Thus, a main, quiet cost of BNPL methods lies within its simplicity; splitting and delaying the costs creates the illusion that you are not spending much, which may go on to impact future savings for consumers, particularly in the Saudi Gen-Z.

This blind spot, however, does not weigh equally across markets; it bears disproportionately on Saudi youth, who have had minimal previous exposure to deferred payment in any form.

Only 25.42 percent of Saudis even hold a credit card, which is far lower than in mature markets such as the US.

On the other hand, about 77 percent of Saudi consumers use BNPL (for essential purchases).

This reframes the integration of fintech into such a market as a whole, as traditional credit or deferred-payment methods never became broadly embedded in Saudi youth to begin with, which allows BNPL to effectively act as the first one many young Saudis use.

Thus, someone whose only experience is BNPL has never built the habit of checking a running total, because nothing in their financial life ever required it.

The absence of a consolidated total here carries a consequence beyond simply unsustainable spending; it determines how much of one’s income ultimately reaches savings as a whole.

Every riyal taken in an installment is a riyal denied the opportunity to accrue value through saving or investment, and timing only makes this loss greater than what it appears to be, as that loss compounds further the longer it goes unnoticed.

The true cost of BNPL is not the upfront cost of a single purchase, but rather the quiet, ongoing toll it takes on savings themselves.

BNPL holds a quiet cost that never announces itself, despite shaping a generation’s financial future regardless.

The solution, then, is not to abandon BNPL, but to treat every installment as money already spent rather than money merely deferred.

Immediately logging each purchase against one’s own running total would recreate the financial checkpoint that BNPL’s design often removes.

Platforms should also make total outstanding payments visible before each new purchase, so users directly confront the accumulated cost rather than only the next payment.

Ultimately, the cost of Buy Now, Pay Later must, rather than staying quiet, be recognized to ensure our current generation saves its future instead of slowly spending it away.

• Abdulrahman Al-Okby is a 12th-grade IB student in Saudi Arabia with interests in economics, finance and public policy. His work focuses on youth financial behavior, emerging markets and the wider social impact of financial technology.