Young Canadians driving adoption of buy now, pay later (BNPL) services

New research shows that Canadians aged 18-34 embrace buy now, pay later (BNPL) in a way that older generations do not. BNPL is a form of short-term loan in which consumers take immediate possession of their purchases and pay for them through a series of installment payments. The latest survey, Payments Behaviour Tracker - Payments Innovation (Consumer), examines Canadians’ adoption of BNPL services and how their sentiments toward them differ across generations.

Canadians aged 18-34 are more open to exploring new and different types of payment options for their purchases
Younger Canadians (18-34) are significantly more likely to be using BNPL now and in the next 12 months for purchasing in store or online than older Canadians (aged 55+).

Primary drivers of BNPL use among younger Canadians are:

• Feeling it makes it easier to budget spending
• Perceive as a more convenient/easy way to pay
• Not wanting to pay for a purchase upfront

“Younger Canadians are significantly more likely than older Canadians to use buy now, pay later from a variety of providers and for different purchase categories like vacation travel, paying recurring bills, out-of-home entertainment, groceries and gas,” said Jon Purther, Director of Market Insights at Payments Canada. “Canadians' preference for how they pay is changing. We are starting to see increasing use and interest in more diverse payment preferences like ‘buy now, pay later.”

Canadians aged 35-54 seem willing to learn more about BNPL but are more hesitant to use these services than younger generations
Though 91 per cent of Canadians aged 35-54 have never used BNPL services, they are somewhat more likely to begin to use BNPL services than older Canadians (aged 55+). This age group is also significantly more likely to use BNPL services from various providers than Canadians aged 55+, indicating a willingness to try out different BNPL providers. Canadians aged 35 and older are also considerably more likely than younger Canadians to avoid BNPL services because they favour other payment types to make their purchases, likely due to having more experience with making payments or having higher income or savings.

For Canadians aged 55 and older, financial responsibility remains paramount when it comes to spending 
Ninety-five per cent of older Canadians have not used BNPL services, and the majority of this age group (80 per cent) said they had no plans to use BNPL in the next 12 months. Of those who haven’t used BNPL, the most common reasons were that they didn’t feel they needed these services and did not want to go into debt (43 per cent). Of the older Canadians who have used BNPL services, the most common reason for choosing to do so was to avoid incurring interest payments on their purchases.

Overall, increased knowledge and familiarity with BNPL could encourage Canadians to make use of the services
Canadians could benefit from more knowledge of BNPL services, as 38 per cent of these respondents had not heard of BNPL prior to being surveyed. Over half of Canadians surveyed (55 per cent) that have never used a BNPL service have avoided the service because they felt they did not have a need for it.

Canadians are more comfortable using BNPL services provided by their bank or a credit union than any other provider (e.g., retailers, international card schemes, tech companies). They are also more likely to use BNPL services for vacation travel than any other types of purchases, indicating they see value in BNPL for making large, infrequent purchases. In general, the most common reason Canadians are using BNPL services is that it has made it easier for them to budget their spending.

About the study
The Payments Behaviour Tracker - Payments Innovation (Consumer) study was compiled to examine consumer sentiment and user habits around buy now, pay later (BNPL) services, and how these differ across different demographics. In total, 1511 Canadian consumers were surveyed between June 27 and July 8, 2022.