Explainability of AI Credit Decisions and BNPL Continuance: The Moderating Role of Financial Literacy

Abstract

Artificial Intelligence (AI) is increasingly used in Buy Now, Pay Later (BNPL) services to support automated credit decisions. This study examines the association between perceived explainability of AI credit decisions and consumers’ continuance intention to use BNPL services and assesses the moderating role of financial literacy in Sri Lanka. A quantitative cross-sectional survey of 404 BNPL users was analysed using IBM SPSS Statistics and Hayes’ PROCESS Macro. Perceived explainability was positively and significantly associated with continuance intention. Financial literacy showed a positive direct association with continuance intention, but its interaction with perceived explainability was not statistically significant. Thus, financial literacy did not moderate the focal relationship. The findings extend explainable-AI research to post-adoption BNPL use and highlight the relevance of understandable AI-supported credit decisions.