Study: Where do Canadian consumers stand on buy now, pay later versus credit cards?

The results of a recent GetApp Canada research study of over 1,000 consumers demonstrate whether online shoppers have taken to “buy now, pay later” (BNPL) services, and whether it has affected their buying habits.

Nearly a quarter (22 per cent) of those surveyed stated they have previously used BNPL services.

The study indicates that Canadian consumers are generally comfortable with credit and open to the notion of using BNPL services. However, the actual uptake is limited compared to the amount of people surveyed using credit cards, which 95 per cent had used in some capacity.

Key findings:

• 41 per cent of consumers used BNPL services to purchase home goods and furniture, high-priced items that have traditionally been offered with financing options.
• The two primary motivating factors for consumer use of BNPL were for budgeting purposes (19 per cent) and the ability to afford expensive purchases (16 per cent).
• The zero- or otherwise low-interest rate (11 per cent) and the ability to defer the initial payment of the purchase (11 per cent) were also driving factors for BNPL use.

How do consumers in Canada feel about credit?

When asked about their use of other credit services, 54 per cent of participants indicated they were at ease with the idea of ​​credit, and thought it was a smart financial strategy when used correctly.

However, the majority of respondents had never used BNPL services. The concerns about its use were:

• 28 per cent cited that they prefer using payment options they were more familiar with, like credit cards, debit cards, and PayPal
• 22 per cent expressed fear of going into debt
• 11 per cent feared spending more money than they have

Do consumers think regulations should be imposed on BNPL service providers?

Many respondents believe BNPL providers should be subject to regulations.

• 44 per cent thought spending limits should be set.
• 42 per cent would like more security measures.
• 39 per cent would want to see credit rating checks
• 38 per cent believe age limitations should be implemented.

“Despite the fact that BNPL services function similarly to credit cards, and often have lower or even no interest rates, many consumers seem more weary towards this trend,” explained Tessa Anaya, analyst for this study. “The unfamiliarity of BNPL paired with the lack of established regulations on such services are two likely reasons why the uptake seems low in comparison to traditional payment methods.”