The Canadian Buy Now Pay Later (BNPL) Opportunity
In this article, we examine the Canadian consumer perspective on BNPL: why they use it, when they use it, and what they want next.
Buy now, pay later (“BNPL”) has grown significantly in popularity amongst online shoppers over the past 12 months. Research conducted by The Behavioural Architects (on behalf of Quadpay Canada) has shown that Canadians are actively searching for flexibility and convenience during the checkout process, which they cite as key drivers for using a BNPL provider.
As an online or brick and mortar retailer, should BNPL be part of your offering? How big is the opportunity?
In short, it’s massive: there are ~24,000,000 total Canadian consumers aged 18-64 years. And Covid-19 has really shaped how Canadians are now shopping – with 95%+ having shopped online. Of these, 41% have not yet used BNPL.
According to the Digital Marketing Institute, online cart abandonment rates hover around 85%. This combined with Covid-19 induced brick and mortar lockdowns and in-store capacity restrictions, means driving online conversions is more important than ever.
Why are cart abandonment rates so high? Top reasons include high prices, lack of payment options, “just browsing”, and extra fees (like shipping – especially in Canada).
BNPL is a great tool to optimize your funnel. It works at the bottom of the funnel by increasing conversion rates and by driving higher order values – converting price-sensitive shoppers and converting browsers into buyers. In short – helping you sell more, and shoppers afford more.
Offering BNPL online and in-store opens up a large conversion and incremental revenue opportunity for fast-moving retailers. According to our study, 14,000,000+ Canadians have already, or would in the future, transact using a buy now, pay later product.
So why are Canadian consumers using it?
Our research shows that there are common themes driving customers to use BNPL. They are:
- Avoiding credit card fees: Many credit cards still charge interest in excess of 20%. Add this to annual fees and other penalties and it’s clear why many Canadians are searching for low- or no-interest/fee purchase options.
- Ease of use: People want fast and easy checkouts. People can save their details in a BNPL product, speeding up and simplifying the checkout process.
- Spreading the cost: Most BNPL products spread a purchase over six to eight weeks. This means customers can fit their spend into a two-month budget instead of one.
How does this translate into a benefit for me as a retailer?
- Conversion: Our research shows that 73% of existing BNPL users would have delayed or not made at least one purchase in the past six months had they not had access to BNPL.
- Average order value (AOV): By offering a more flexible payment option, our retail partners have seen 20%+ increase in average order value.
- Purchase frequency: Our data shows that a typical consumer transacts [2-3x] more frequently when using BNPL.
In summary, BNPL is a great tool for both retailers and their customers. A sure way to sell more, and help your customers afford more.
Want to know more?
Hilary Krutt oversees all content strategy and creative copywriting efforts at Quadpay. An avid reader, she kicked off her career in the publishing industry and has since led editorial efforts for a variety of clients across healthcare, higher education, and retail as well as in the insurtech space.
