![]() “The total cost of many products has gone up recently and, in some cases has gone up dramatically, and (BNPL) makes it feel cheaper,” said Gail Henderson, an associate professor at Queen’s University Faculty of Law. The growth of BNPL is fuelled by the economic slowdown amid a rise in the cost of living - the consumer price index rose by 7.0 per cent in August, compared to a year earlier, Statistics Canada reported this month - and a spike in eCommerce during COVID-19, according to the Research and Markets survey. Since her initial purchases, Hopkins has used several BNPL services including Sezzle, Klarna and Afterpay to help build a new post-pandemic lockdown wardrobe. Without the BNPL option, Hopkins said she “either wouldn’t have made a purchase at all or would have purchased less without the pay-later option.” She checks her budget before finalizing a purchase. Users who charge BNPL purchases to credit cards are often unaware of the late-payment fees and may be piling on financial problems down the road, Mullholland said.įor Hopkins, who is cautious about overspending and racking up any debt, BNPL payments work well. “But it’s a slippery slope for people who are facing affordability challenges and are not as financially literate.” “It’s a great financial instrument in the hands of a small minority of people who are extraordinarily disciplined about their finances and keep close tabs on them,” said Elizabeth Mulholland, CEO of financial empowerment charity Prosper Canada. However, financial experts warn that the ease and attractiveness of the service can send customers into a debt spiral if they spend beyond their means.īNPL payment in Canada is expected to grow by 63.5 per cent annually and reach $5.95 billion (U.S.) in 2022, according to a Research and Markets survey.įorty-two per cent made their scheduled payments with a credit card, which could rack up interest if not paid off promptly 30 per cent made their payments through a linked bank account.įifteen per cent of users who made their payments on time and in full made “unfavourable financial trade-offs.” These included delaying payment of another bill, incurring overdraft fees on their bank account, borrowing money from family or friends, exceeding credit-card limits, cutting back on essentials and taking out a loan or cash advance. Customers fill out a simple application at the (typically online) checkout. These arrangements are quick and convenient and soaring in popularity. “Buy now, pay later” or BNPL is a type of short-term financing offered at the point of sale that allows consumers to make purchases and pay for them at a future date, often interest-free. For me it was just a stopgap and I was expecting cash,” Hopkins said. “The fact that it’s what I would have paid, but broken up into four payments every two weeks, made it perfect. Hopkins made her purchases - all within her budget - and split the $242.95 owed into four equal payments. While browsing online stores, she came across a “buy now, pay later” option which would let her pay for her gifts in instalments. The 40-year-old book editor was awaiting a late payment from a client during peak holiday-shopping season. Last Christmas Dana Hopkins had a cash-flow problem.
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