The BNPL trap — how 'buy now, pay later' is quietly destroying European budgets

6 instalments, zero feeling of debt — a situation you recognise

A situation you recognise

Picture a junior UX designer at a tech company in Amsterdam, aged 27. She earns €2,900 net per month. She rents a room in a shared flat in De Pijp — her share comes to €850 including utilities. That leaves €2,050 for food, transport, clothes, and life. On paper, more than enough. In practice, she finishes every month with €40–80 in her account and genuinely can't explain why.

She doesn't buy luxury goods. She doesn't eat out at expensive restaurants or fly to Mykonos for the weekend. But she has six active instalment plans — and none of them feel like a problem. Running trainers for €139 in 3 payments of €46 via Klarna. Wireless earbuds for €199 in 4 payments of €49 through PayPal Pay Later. A winter coat for €249 in 3 payments of €83 on Clearpay. Skincare set for €89 in 3 payments of €29 via Klarna. A standing desk for €349 in 6 payments of €58 through Riverty. Gym equipment for €179 in 4 payments of €44 on Klarna.

Six items. No single payment exceeds €83 per month. Each one individually passes the “can I afford this?” test without hesitation. The problem is that she never added them up. When she finally did — on a quiet Sunday evening with a cup of tea and her banking app — the total surprised her: €309 per month. Fifteen per cent of her net salary. Over a third of her free budget after rent. Going to things she'd already stopped thinking about.

“I never felt like I was in debt,” she told a flatmate. “Each payment felt small and temporary. It's not like I took out a loan. It's just... instalments.”

Adam, założyciel Martia

Installments look different in the data

Zero-percent installments look like free money. In bank data they look like a series of claims on future months — one after another. When I first summed up my active installments in Martia, even I was surprised by the number. I knew about each one separately. I didn't know about all of them together. That view — all installments in one place — is something no bank will voluntarily show you.

Why it's hard — and no, it's not a lack of discipline

If you're reading this and thinking “she should have just not bought those things” — pause. This person isn't reckless. She's normal. And BNPL systems (Buy Now, Pay Later) were designed with full awareness of how the human brain works. It's not an accident that someone doesn't feel indebted despite six active payment plans. It's by design.

What is the cost partitioning effect?

The cost partitioning effect is the brain's tendency to evaluate each expense in isolation, without summing them into a total. When we see a price broken into small instalments — €29, €46, €58 — each amount passes through our mental “can I afford this?” filter easily. Our brains don't automatically aggregate. This phenomenon was described by Morwitz, Greenleaf, and Johnson (1998) in their research on how partitioned prices affect cost perception, published in the Journal of Marketing Research.

She didn't fail. Her brain did exactly what millions of years of evolution programmed it to do: it evaluated each threat separately. €46? Not a threat. €58? Not a threat. €29? Not a threat. No single instalment crossed the pain threshold — the amount at which the brain triggers a financial alarm. But €309 per month? That's a threat. The problem is that her brain never saw that number, because no one showed it to her.

What is the pain of paying?

The pain of paying is the negative emotion that accompanies spending money. The term was introduced by Prelec and Loewenstein (1998) in their landmark paper “The Red and the Black” in Marketing Science. They found that the intensity of pain depends on the payment method: cash hurts the most, cards less, and deferred payments — barely at all. BNPL systems effectively eliminate the pain of paying by separating the moment of pleasure (the purchase) from the moment of cost (the instalment 30 days later).

This is precisely what makes BNPL so dangerous: it removes the only natural brake we have when shopping — the discomfort of spending money. When you pay cash, you literally feel the money leaving your hand. When you pay by card, you see the reduced balance. When you choose “3 payments of €46” — you feel nothing. You buy now, the pleasure is instant, and the pain is spread across weeks, so diluted it ceases to exist.

BNPL in Europe — the scale of the problem

60%

of European consumers aged 18–34 have used BNPL in the past 12 months (Juniper Research / Worldpay Global Payments Report, 2024)

€680

average outstanding BNPL balance per active user in Europe (Kaleido Intelligence, 2024)

30%

of UK BNPL users say they bought something they couldn't otherwise afford (FCA Woolard Review, 2021)

1 in 4

BNPL users in the UK cannot accurately state their total outstanding BNPL debt (FCA, 2021)

Sources: FCA Woolard Review, 2021, Juniper Research — BNPL: Market Forecasts 2024

How BNPL hacks your brain — the mechanism step by step

BNPL systems aren't malicious. They're brilliant — from a product design perspective. They exploit at least four psychological mechanisms simultaneously, creating an environment where even a sensible person spends more than intended. Understanding these mechanisms is the first step to regaining control.

Mechanism 1: The affordability illusion — “I can afford it because the instalment is small”

When someone in this situation sees trainers for €139, the first thought is: “€139, that's a lot for trainers.” But a second later, beneath the price, appears: “or 3 payments of €46.33 — interest-free.” Suddenly, the same trainers become “affordable.” Not because the buyer has more money. Because €46 passes through the affordability filter that €139 would have failed.

Research by Hundtofte, Olafsson, and Pagel (2019) at Columbia University found that the availability of BNPL options increases consumer spending by an average of 20–30% compared with transactions requiring immediate payment. Not because people buy more expensive things — but because they buy more things that “individually” seem affordable.

Mechanism 2: Separating pleasure from pain

When you buy something with cash, pleasure and pain are synchronised — you receive the product and lose money at the same moment. Your brain automatically weighs one against the other: “Is this pleasure worth this pain?” BNPL breaks that synchronisation. The pleasure (unboxing the trainers) is immediate. The pain (€46 instalment) arrives in 30 days. And in 30 days, you no longer remember the excitement of unboxing — you're paying for a memory that has already faded.

Neuroscientists at MIT (Knutson, Rick, Wimmer, Prelec, and Loewenstein, 2007) studied this mechanism using fMRI and discovered that a product's price activates the same brain region as physical pain — the insula. But only when payment is immediate. With deferred payment, the insula stays silent. The brain literally does not register the expenditure as a cost.

Mechanism 3: Invisible total debt

In this scenario, the instalments were spread across three different services: Klarna, PayPal Pay Later, and Clearpay. None of these services shows the total amount owed across all platforms. Each shows “its” obligation — and each looks small. It's like weighing a backpack pocket by pocket: pocket 1 weighs 200 grams, pocket 2 weighs 300 grams — each is light. But the whole backpack weighs 8 kilograms and your back aches.

The Financial Conduct Authority (FCA) in the UK found in its 2021 Woolard Review that one in four BNPL users cannot accurately state their total outstanding BNPL debt. Not out of laziness or ignorance — the system is designed so that the total doesn't exist in any single place. You have to build it yourself — and most people don't.

Mechanism 4: Social normalisation — “everyone does it”

BNPL has become so ubiquitous in European e-commerce that it's now the default. Klarna is integrated into virtually every major online retailer across Germany, the Netherlands, Sweden, and the UK. PayPal Pay Later appears at checkout on thousands of sites. When everyone around you pays in instalments, you don't feel like you're doing something risky. On the contrary — you feel normal. And social norms are one of the most powerful regulators of behaviour, as Robert Cialdini demonstrated in his foundational research on social influence (Influence: The Psychology of Persuasion, 1984).

Let's return to this situation. Six instalments, three platforms, zero feeling of debt. Her brain didn't fail — it simply operated in an environment designed to ensure the pain never arrived. She didn't need more discipline. She needed one screen that showed her all €309 at once.

Don't know how much you're paying in instalments? Most people don't

Martia automatically pulls transactions from your bank account and categorises them. You see exactly how much you're paying in instalments — all on one screen. No spreadsheets, no logging into three platforms separately.

Try Martia for free →

The myth of free instalments — why '0% interest' doesn't mean '0% cost'

There's one sentence I hear from almost every BNPL user: “But it's 0% interest, so it doesn't cost me anything.” It sounds logical. And it's wrong — but not in the way you think.

Myth vs. reality

Myth: “0% interest instalments cost nothing — it's basically a free loan from the retailer. Why wouldn't I use it?”

Reality: BNPL instalments at 0% interest genuinely carry no financial cost per transaction — but they carry a behavioural cost. Research by the Federal Reserve Bank of Philadelphia (Di Maggio and Yao, 2021) found that access to BNPL increases total consumer spending by an average of 20–35% compared with the period before first use. The instalment itself is “free,” but it causes you to buy more and more often. The cost of a 0% instalment isn't interest — it's the additional purchases you would never have made otherwise.

Where does the “free instalments” myth come from? Simple arithmetic: if trainers cost €139 and three instalments of €46.33 equal €139, there's no additional cost. But this calculation misses the crucial question: the question isn't “how much does the instalment cost?” — it's “would I have bought this without the instalment option?”

In this scenario, of six instalment purchases, at least three would not have been bought if payment had been required upfront. The wireless earbuds? “My old ones still worked, but €49 a month seemed like nothing...” The standing desk? “I work from home once a week — it's a nice-to-have, not a need. But €58 a month sounded manageable.” The gym equipment? “A birthday present to myself.” Every purchase had a rationalisation. And every rationalisation worked because her brain was evaluating the instalment — not the full price.

Add to this the phenomenon behavioural economist Richard Thaler called mental accounting (Journal of Behavioral Decision Making, 1999). BNPL instalments don't land in any “mental account” in our heads. They're not a loan — because you didn't visit a bank. They're not debt — because you didn't sign a credit agreement. They're not even an expense — because the money hasn't left your account yet. They exist in a mental grey zone that the brain conveniently ignores.

How to regain control — concrete steps that work

You understand the mechanism now. You know that BNPL isn't a bad decision — it's a designed environment that makes bad decisions look good. Now the question is: what do you do about it? Here's a system we call the Martia Full Screen Method.

The Martia Full Screen Method

The Full Screen Method rests on one assumption: you cannot control what you cannot see. Before making any instalment decision, you need to see ALL your obligations on one screen — the total amount, the percentage of your salary they consume, and how many months remain. Fragmentation is the enemy of control. The full screen is the antidote.

Step 1: List every instalment on one page — this takes 10 minutes

Open Klarna, PayPal, Clearpay, Riverty — every service where you have active payments. Write down: item name, monthly payment, how many payments remain, total amount still owed. Don't judge, don't regret — just list. Then add up the “monthly payment” column. That single number will change everything, because you'll be seeing it for the first time. In our example, it was €309. What will yours be?

Step 2: Calculate the percentage of your salary going to instalments

Divide the total instalment amount by your “free budget” (net salary minus rent and fixed bills). If the result exceeds 15%, you have a problem you probably don't feel. In our example, 15% of net salary was going to instalments — but because no single instalment exceeded 3% of take-home pay, nothing felt off. Only the combined percentage revealed the real picture.

Step 3: Introduce a 24-hour rule before any new BNPL purchase

Before clicking “pay in instalments,” close the page and don't return for at least 24 hours. During that time, do one thing: open your instalment list and add the new item. Look at the new total. Do you still want it? Research by Dhar and Nowlis (1999) at Columbia Business School found that simply delaying a purchase decision by 24 hours eliminates 40–60% of impulse buys. Not because the product changes — but because the emotion passes.

Step 4: Pay off the shortest instalment first

This is a variation of Dave Ramsey's “snowball” strategy — instead of starting with the most expensive instalment, begin with the one that has the fewest payments remaining. Why? Because each cleared instalment is one fewer line on your list. And each removed line gives you a sense of progress that motivates you to continue. In this case, the skincare set (2 remaining payments of €29) and the trainers (1 remaining payment of €46) were cleared within the first month by cutting back on takeaway coffees and one meal out.

The outcome

She listed all her instalments on a Sunday evening. The next day, she connected her N26 account to Martia and saw every recurring instalment payment tagged automatically. Within two months, she'd cleared 4 of 6 instalments. Her monthly obligations dropped from €309 to €102. After four months, she had only the standing desk remaining (2 payments left). For the first time in over a year, she finished the month with more than €500 in her account. “I don't feel poorer,” she wrote in her journal. “I feel like I have room to breathe.”

Tools that show you the full picture

The biggest problem with BNPL isn't financial — it's informational. Instalments scattered across three platforms don't add themselves up. No one sends you a notification saying “Your total BNPL commitments are €309 per month — that's 15% of your salary.” But Martia does. By connecting your bank account through secure PSD2 Open Banking APIs (N26, Revolut, ING, BNP Paribas, and hundreds of other European banks), Martia sees all outgoing transactions — including recurring instalment payments. You don't need to enter anything manually. Just look.

This isn't an advert — it's a mechanism. Information fragmentation is BNPL's greatest weapon. Information consolidation is your response. When you see €309 on one screen, your brain can't ignore it — and that's the whole point.

Dealing with bigger debt?

If BNPL instalments are part of a larger debt problem, read our step-by-step guide: How to save money every month — a practical guide

Understanding why you avoid checking your finances?

BNPL thrives when you avoid looking at your accounts. Learn about the psychology behind that avoidance: How inflation ate European savings — and what to do about it

Do you know how much you're really paying in instalments each month?

Connect your bank account in 2 minutes and see exactly how much you're spending on instalments, subscriptions, and recurring payments. Because the most expensive instalments are the ones you've forgotten about.

Martia is bootstrapped — built without investors or a board of directors. Your financial data is yours. We have no one telling us to sell it to advertisers.