Page 538 - ISC PROCEEDINGS 21.4

explored the psychological mechanisms behind BNPL’s effect on consumer behavior,
particularly the role of mental accounting and payment pain.
Moreover, the moderating role of financial literacy in the BNPL-spending
relationship remains underexamined, especially in emerging markets like Vietnam, where
financial literacy is low, increasing overspending risks (Pamungkas & Putri, 2024).
Satisfaction, often seen as an outcome, has not been studied as a mediator through which
BNPL influences shopping intentions.
This study aims to fill these gaps by exploring BNPL's impact on online shopping
behavior, focusing on mental accounting, payment pain, and satisfaction as mediators. It
also examines financial literacy as a moderator, assessing how consumers' financial
knowledge affects BNPL's influence on shopping intentions. Based on the findings, the
study offers managerial insights for e-commerce and fintech firms on optimizing BNPL,
along with recommendations for consumers on using BNPL sustainably.
2. Theoretical framework
2.1. Theoretical foundations
2.1.1. The Stimulus - Organism - Response (SOR) model
The Stimulus–Organism–Response (S-O-R) model, developed by Mehrabian and
Russell (1974) based on Watson’s (1913) Stimulus–Response theory, explains how
external environmental stimuli (S) affect individuals’ internal psychological states (O),
which subsequently shape their behavioral responses (R). In this study, the stimulus (S) is
the use of Buy Now, Pay Later (BNPL). The organism stage (O) focuses on consumers’
psychological processes when using BNPL, particularly mental accounting and the pain of
paying. The resulting response (R) is reflected in the online shopping behavioral intention
of Generation Y and Generation Z consumers in Vietnam.
2.1.2. Mental accounting theory
Mental accounting is a core concept in behavioral economics, with its early
foundations reflected in Kahneman and Tversky’s Prospect Theory (1981). Thaler
(1985;1999) later established mental accounting as a foundational theory for explaining
human behavior, describing how individuals cognitively categorize and manage money by
assigning it to separate “mental accounts” (e.g., savings, daily expenses, leisure) rather
than treating money as fully fungible. Thaler identified three core components of mental
accounting: Perception and Evaluation, Budgeting, and Choice Bracketing. Through these
mechanisms, mental accounting shapes how individuals make decisions related to
spending, saving, investing, and borrowing (Thaler, 1985; 1999).
2.1.3. Hyperbolic discounting
Hyperbolic discounting, first discussed in Richard J. Herrnstein’s work and later
formalized by George Ainslie (1975), refers to a behavioral bias where individuals favor
smaller, immediate rewards rather than larger rewards available in the future. This theory
posits that discount rates are time-inconsistent and decline over time, implying that
human decision-making changes over time and follows a hyperbolic curve (Ainslie, 1975).
In the context of BNPL, installment payments shift consumers’ attention from the total
price to smaller periodic payments, reducing perceived payment pain and increasing
willingness to purchase. From this perspective, deferred payments amplify present bias,
causing consumers to overvalue immediate benefits while undervaluing future costs
(Cheng & Huo, 2025).

537