Buy-Now-Pay-Later SMS Late Payment Reduction
AFM (Dutch Authority for the Financial Markets) + Riverty · Netherlands · 2024
Summary
A Dutch financial regulator partnered with a buy-now-pay-later provider to test whether pre-due-date SMS reminders reduced late fees. They did—substantially. One in five customers who would have been charged a late fee avoided it because of the reminder. The experiment is notable because it was initiated by the regulator to protect consumers, not by the business to recover fees. It demonstrates that financial regulators can mandate or incentivize simple behavioral interventions that improve consumer outcomes.
Research question
"Can SMS reminders sent before payment due dates reduce the proportion of consumers charged late fees?"
Methodology
Intervention
SMS reminder sent to buy-now-pay-later customers before due date
Assignment
Randomized controlled trial (customer)
Sample size
~60,000 BNPL customers
Primary outcome
Proportion of customers charged late payment fees
Effect estimate
−20% of customers charged late fees (1 in 5 avoided a fee)
Decision
SMS reminders made standard practice by Riverty; AFM recommending broader industry adoption
Result
Positive
−20% of customers charged late fees (1 in 5 avoided a fee)
Evidence strength
Strong
Randomized controlled trial with large sample.
Replication status
Open for replication
Institution
AFM (Dutch Authority for the Financial Markets) + Riverty
Location
Netherlands
Year
2024
Policy area
Financial Services
Mechanism
Information