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Canada Lags Behind in the Race to Adopt Buy Now, Pay Later – And That Could Be Your Advantage

By Andrew Luu

The last few weeks have been explosive in the buy now, pay later (BNPL) space with Amazon and PayPal staking their claim in the race to offer this new player in consumer financing. 


On Sept. 8, 2021, PayPal announced it was acquiring Japanese BNPL firm Paidy for $2.7 billion. This follows PayPal’s recent entry into the Australian market where BNPL is already firmly established with companies like Zip.


The timing of PayPal’s bold expansion is seen as a strategic response to other recent moves. Amazon upped the stakes by partnering with Affirm in August to finally provide BNPL to its U.S. and Canadian customer. However, this isn’t Amazon’s first move in the BNPL race, as it already offers this option in Australia with Zip – a partnership inked way back in November of 2019. 


“We’re here to disrupt the credit card model,” says Zip Canada, Managing Director Steve Croth. “In many regions, credit card use is experiencing double digit declines.”  


For both Amazon and PayPal, the Aussie connection is no coincidence. Australia has one of the most mature BNPL markets where almost half have used BNPL online and over half of those have two or more accounts. So, when American financial technology giant Square decided it needed to establish a foothold in the space, it also went to Australia buying BNPL firm Afterpay in an all-stock deal worth a whopping $29 billion.


With these major U.S. brands needing to go abroad to boost their BNPL profiles, it’s no surprise Canada is lagging behind as this chapter in alternative financing unfolds. Despite estimates of Canadian BNPL payments growing by 41.1% and reaching $4.6 billion in 2021, many major retailers here like Best Buy, Canadian Tire, Home Depot and Walmart still don’t offer BNPL. 


But the writing is on the wall. As consumers become accustomed to splitting purchases into four equal, interest-free payments with Amazon and via PayPal, it’s inevitable they will demand BNPL everywhere they shop. With Zip entering the Canadian market in early 2021, retailers have the opportunity to front run this trend by offering BNPL before others, or risk losing market share to those that do.


“BNPL offers an incredible alternative with instant approvals, zero interest, a simple sign-up process and a better way to break up payments over time,” Croth explained. “It’s no wonder why Gen Z and Millennials are flocking to BNPL on mass and Canada is no different. So, if you’re not providing an alternative to credit cards, you may be skipped over by Millennials and Gen Z consumers.”

About the author
Andrew Luu

Andrew Luu is an international award-winning journalist who spent a decade writing about cars before turning to the world of advertising. His resume includes AutoWeek Magazine where he tested cars and hosted its TV show, along with clients such as Chrysler, Ford and TD Bank.