The Long Shadow of "Pay Later": A Three-Wave Longitudinal Investigation of Buy Now, Pay Later Spillovers on Luxury Brand Equity Across Developing and Developed E-Commerce Markets

This three-wave longitudinal study (N = 1,951 luxury consumers across eight developed and developing e-commerce markets) investigates whether Buy Now, Pay Later (BNPL) financing erodes luxury brand equity over time. Extending Keller's customer-based brand equity model with mental accounting, signaling, self-congruity, and cognitive dissonance theories, the authors propose temporally decaying luxury brand equity (TD-LBE)—a dynamic, path-dependent reconceptualization of brand value that unfolds across the installment payment cycle. Latent growth-curve modeling on 5,223 wave-level observations reveals a robust BNPL × time interaction: the BNPL-standard payment brand equity gap widens monotonically from d = −0.16 at purchase to d = −0.46 at post-completion (three months), representing a 32× faster decay rate for BNPL users. Critically, random-intercept cross-lagged panel modeling rejects the hypothesized chained mediation through debt burden and cognitive dissonance, supporting instead a direct signaling penalty mechanism. Contrary to expectations, market development and luxury type exhibit negligible moderation, indicating TD-LBE generalizes across insti-tutional contexts. These findings necessitate reconceptualizing brand equity as time-sensitive in embedded finance environments, with implications for luxury retail strategy, BNPL disclosure regulation, and consumer welfare policy.