Canada could attract 14 million Buy Now, Pay Later (BNPL) users by 2025. When you consider the total Canadian consumer market represents 23.45 million consumers between 18 and 64 years old, this potential can’t be ignored. 

If you think that estimate is optimistic, you’d be wrong. Of that total, 13.84 million have used BNPL or would consider using it in the future – that’s 59% of the total market. Canadian BNPL users also shop more, with 73% making daily or weekly online purchases. With the global BNPL market expected to hit $760 billion (it reached $292 billion in 2018) by 2025, we’re going to show you why Canadian consumers are primed to embrace BNPL. 

The February 2022 Nilson Report revealed that over 50% of all purchase volume was with debit and prepaid cards. That’s an impressive amount of cash shoppers. BNPL gives these consumers access to financing they never before, and they are taking full advantage of the extra buying power. 

• 1 in 4 BNPL users (24%) say they are now making larger purchases because of BNPL.
• 1 in 5 BNPL users (22%) say they are now spending more overall because of BNPL.
• If they didn’t have access to BNPL, 73% of users would have delayed or not made one or more purchases in the last six months.
• 29% of Canadian BNPL users make purchases weekly and 26% purchase at least 2-3 times a month.

Many retailers think BNPL is still fashion-driven, but that’s no longer the case. As BNPL becomes a more common form of consumer financing, so too are the items they’re purchasing. 

Top 4 categories Canadians will consider BNPL for in the future

• Electronics (62%)
• Home furniture/kitchen items (55%)
• Automotive parts or accessories (29%)
• Groceries (21%) 

And with vehicle sales exploding in the last year, along with inflation driving up the cost of groceries, there is huge growth potential for BNPL as Canadian budgets get stretched due to rising prices. Clothing, however, is still a major category and rounds out the top seven along with sports/fitness and health and beauty.

We found that 1 in 2 users in Canada (51%) have reduced or completely stopped using their credit cards due to BNPL. This trend is expected to grow as credit card use continues to decline – last year Canada saw the biggest drop in credit card balances since at least 1999 (from $90.6 to $74 billion). If you don’t accept BNPL, these users have no choice but to shop at retailers that do. 

• 1 in 2 (53%) report they avoid buying from retailers that don’t accept their preferred BNPL brand. 

We also found that 58% said they never make late payments on their credit cards, while 26% said they continue to use BNPL because they don’t want to spend all their money at once. So BNPL complements this financial discipline and budgeting. Spreading payments on a credit card accrues interest as high as 29% and Canadians are realizing they can do the same with BNPL interest free. 

Only 5% of respondents were able to name any modern BNPL brands unprompted. That might sound like a negative, but it’s an opportunity. BNPL growth is accelerating globally as evidenced by PayPal and Square’s billion-dollar BNPL acquisitions, along with Amazon, Walmart and Target adding it to their checkouts in late 2021. And we’re already seeing that Canadians are embracing the benefits of BNPL and want retailers to offer it. 

• 53% of BNPL users here avoid buying from retailers that don’t offer their preferred BNPL brands (and why you need to multi-app). 
• 49% said they would only “maybe” still purchase from a store or website that did not have BNPL as a payment option.
• 71% of consumers said it’s very important that they have multiple BNPL brands to choose from 
• Over 50% of consumers want to hear about BNPL offers and benefits from stores.

Our surveys, research and data are all about giving retailers the power of information. The retail landscape has evolved drastically in the last two years and the future shows no signs of slowing down. We are witnessing a major change in consumer financing and payment options. BNPL is shaking up a space that has seen little change in the last 40 years. Credit and debit cards have long been the only options, while recent additions like Apple or Samsung Pay simply piggyback the existing establishment. BNPL is an innovative way to pay with easy-to-understand terms and interest-free payments. And it’s what today’s financially savvy Canadian consumers want. Learn more in our latest report.