Buy Now, Pay Later Cost Disclosure and Consumer Payment Choice: Evidence from a Randomized Field Experiment in Retail Stores - Phase 2: Loyalty Bonus Disclosure for Immediate Payment

The intervention consists of a standardized verbal disclosure at the point of sale. On treatment days, sales staff are trained to inform each customer, before the payment method is finalized, that immediate full payment — by cash or by card without an installment plan — entitles the customer to a 15% loyalty bonus, whereas installment/BNPL payment does not. The listed price does not depend on the payment method; only the loyalty bonus is conditional on it. Staff are instructed to state the bonus terms neutrally and not to recommend either payment option.

Design Overview

This study is Phase 2 of a randomized field experiment conducted in the same three comparable retail stores as Phase 1 (AEARCTR-0018591), over a four-week period from July 27, 2026 to August 23, 2026. All three stores follow a within-store randomization design in which entire business days are assigned to the treatment or control condition. Relative to Phase 1, two elements change: the content of the intervention, from disclosure of the full installment cost to disclosure of a 15% loyalty bonus for immediate payment, and the randomization scheme, from a combination of between-store assignment and half-day blocks to day-level randomization applied uniformly across all stores.

Store Selection

The stores are those used in Phase 1, originally selected for their similarity in traffic volume and patterns, store format and size, average transaction value, product mix, historical sales trends, and historical share of installment/BNPL purchases.

Randomization Scheme

Within each store, business days are randomly assigned to the treatment or control condition according to a schedule generated before the start of the intervention. The randomization is stratified by day of the week: for each store, each weekday (Monday through Sunday) is assigned to the treatment condition on exactly two of the four study weeks and to the control condition on the remaining two. This stratification guarantees an exact 50/50 split of treatment and control days within each store and balanced coverage of weekday- and weekend-specific traffic patterns. The full schedule comprises 84 store-days (3 stores × 28 days), of which 42 are treatment store-days and 42 are control store-days. The schedule was generated with a fixed random seed (7212026) and is committed prior to the intervention; it is not altered during the study period.

Treatment Condition

On treatment days, sales staff follow a standardized verbal script informing each customer, before the payment decision, that immediate full payment qualifies for a 15% loyalty bonus and that installment/BNPL payment does not. The script is purely informational: staff state the bonus terms without persuasive or evaluative language and do not recommend one payment option over another.

Control Condition

On control days, all stores continue their standard pricing communication and sales process. No loyalty bonus tied to the payment method is offered or disclosed.

Data Collection

Each transaction is tagged with store ID, date, treatment/control status of the day, payment method, transaction value, product category, and, where available, seller ID and an indicator of whether the loyalty bonus was applied.

Outcomes

The primary outcome is the share of purchases paid in full immediately rather than through installment/BNPL plans. Secondary outcomes include average transaction value, total sales volume, product category composition, and returns where available.

Analytical Approach

The primary analysis compares transactions on treatment and control days within stores, using regressions with store and day-of-week fixed effects and standard errors clustered at the store-day level, the unit of randomization. Additional specifications control for calendar week, product category, and other available transaction characteristics. Pre-intervention data, including Phase 1 data collected under AEARCTR-0018591, may be used to assess baseline comparability and improve precision.

2026-07-27

2026-08-23

Share of purchases paid in full immediately rather than via installment/BNPL payment.

The primary outcome is the proportion of completed transactions in which the customer pays the full purchase amount immediately rather than choosing an installment/BNPL plan. Immediate payment covers cash, card, and any other non-installment payment method; installment/BNPL payment covers BNPL products and equivalent installment-based options offered at the point of sale.

Construction

The outcome is constructed from transaction-level sales data. The following variables are recorded for each completed transaction:

Transaction ID: unique identifier of the purchase
Payment method: immediate payment vs. installment/BNPL payment
Store ID
Date: linking each transaction to its assigned experimental condition
Treatment/control status: assigned at the store-day level
Loyalty bonus indicator: whether the bonus was applied, where available
Product category and transaction value, where available

At the transaction level, the outcome is defined as Immediate = 1 if the transaction is paid in full immediately, and Immediate = 0 if it is paid via an installment/BNPL plan. The immediate-payment share is the number of immediate-payment transactions divided by the total number of completed transactions, and can be computed by day, store, or experimental condition.

Interpretation

A statistically significant increase in the immediate-payment share on treatment days relative to control days would be interpreted as evidence that a loyalty bonus for immediate payment shifts consumers' payment choices away from installment/BNPL plans.

Secondary outcomes include:

Average transaction value
Total sales volume
Number of completed transactions
Product category composition and product shifts
Conversion rate, if customer traffic or store-visit data are available
Returns, if available
Loyalty bonus accrual and redemption, where available

Overview
This study is a randomized controlled field experiment evaluating whether a loyalty bonus for immediate payment, disclosed at the point of sale, affects customer payment choice and purchasing behavior in a retail setting. It is the second phase of the experiment registered under AEARCTR-0018591 and is conducted over four weeks in the same three retail stores.

Control Condition
In the control store and control time blocks, standard pricing communication remains in place, and no payment-method-contingent loyalty bonus is offered or disclosed.

Baseline Period
Data collected before the start of Phase 2, prior to July 20, 2026 - including data from Phase 1 (AEARCTR-0018591) - are used to assess baseline comparability across stores and to support the difference-in-differences analysis.

Unit of Analysis
The unit of analysis is the individual transaction.

External Validity
The study is conducted in a small number of comparable retail stores within one geographic area. Given the limited sample of stores and the specific retail context, external validity will be interpreted cautiously. The main objective of this phase is to obtain internally valid evidence on whether a loyalty bonus for immediate payment affects payment choice and purchasing behavior in the participating stores.
The study will be conducted in the same three retail stores as Phase 1.
The primary unit of observation is the individual transaction, and the realized number of transaction-level observations will be reported after data collection for the July 20 - August 20, 2026 study period.

Within-Store Day-Level Randomization

All three stores follow the same within-store design. In each store, every business day of the four-week study period is randomly assigned to either the treatment condition, in which the loyalty bonus is offered and disclosed, or the control condition, in which standard operations continue unchanged. Assignment is made at the level of the full business day, so each store alternates between treatment and control days according to its randomized schedule and serves as its own control.

Stratification and Balance

The randomization is stratified by day of the week within each store: every weekday appears in the treatment condition in exactly two of the four study weeks and in the control condition in the other two. As a result, each store contributes 14 treatment days and 14 control days, and treatment and control conditions are equally represented across all days of the week, including weekends. The complete schedule consists of 84 store-days, split evenly between the two conditions. It was generated with a fixed random seed before the start of the intervention and remains unchanged throughout the study.

Control Condition

On control days, standard pricing communication remains in place, and no payment-method-contingent loyalty bonus is offered or disclosed.

Baseline Period

Data collected before July 27, 2026 — including data from Phase 1 (AEARCTR-0018591) — are used to assess baseline comparability across stores and to support supplementary analyses.

Unit of Randomization

Store-day (full business day within a store).

Unit of Analysis

The unit of analysis is the individual transaction, with standard errors clustered at the store-day level.

External Validity

The study is conducted in a small number of comparable retail stores within one geographic area. Given the limited sample of stores and the specific retail context, external validity will be interpreted cautiously. The main objective of this phase is to obtain internally valid evidence on whether a loyalty bonus for immediate payment affects payment choice and purchasing behavior in the participating stores.

The study will be conducted in the same three retail stores as Phase 1. The primary unit of observation is the individual transaction, and the realized number of transaction-level observations will be reported after data collection for the four-week study period.

Sample size: planned number of clusters

84 store-day clusters (3 stores × 28 business days), randomly assigned within stores with stratification by day of the week: 42 treatment days and 42 control days, 14 of each per store.

Sample size: planned number of observations

Approximately 1,200 completed transaction-level observations over the four-week study period, based on realized volumes in Phase 1; the final number will depend on realized sales.

Sample size (or number of clusters) by treatment arms

42 treatment store-days and 42 control store-days across 3 retail stores; approximately 600 transactions per arm, subject to realized sales.

Lottery

Retail stores

Yes

3 stores total. All three stores follow a within-store design: in each store, 28 full business days over the four-week period from July 27, 2026 to August 23, 2026 are randomly assigned to treatment or control, stratified by day of the week and split 50/50 between the two conditions. This yields 84 store-day clusters in total.

3 retail stores

3 retail stores; 84 store-day clusters in total, of which 42 are treatment days and 42 are control days (14 of each per store); approximately 1,200 completed transaction-level observations over the four-week period, with roughly 600 transactions per arm, subject to realized sales.