The Dark Side of ‘Buy Now, Pay Later’ Surfaces as Feature Rises in Popularity Across Canada

The rapid rise in popularity of “Buy Now, Pay Later” offerings may have a dark side to it.

An array of fintech firms across North America such as Affirm and Afterpay now offer “BPNL” services as the feature allows consumers to stretch dollars without sweating the hassles of traditional credit.

Payments via BPNL are expected to grow by more than 10% annually in Canada, according to data from ResearchAndMarkets.com’s “Buy Now Pay Later Business and Investment Opportunities Databook,” reaching nearly US$8 billion by the end of this year.

BPNL is in theory a perfectly safe way to handle money as a consumer but that onus of safety lies on the buyer—and Canadians, with a record high consumer debt of $2.5T as of 2024 according to a recent TransUnion report, have not proven fiscally responsible.

This is especially notable because most BPNL “debt” is not actually counted by traditional debt trackers, reports Vass Bednar for The Walrus, so the problem in Canada could be bigger than anticipated.

Part of the problem is that, currently, “BNPL lives in a regulatory grey zone,” he writes. “It is neither a credit card nor a traditional loan.”

That instant gratification and convenience, however, “can mask real financial fragility,” Bednar warns.

“What began as a tool for managing occasional indulgences has crept into the fabric of daily life, covering everything from groceries to takeout,” he penned, lamenting BPNL services as a “coping mechanism for growing financial insecurity.”

Bednar says that, so far, governments like Canada have treated BPNL “as a harmless innovation.” But, moving forward, the fintech feature should be subject to “legislation which will offer better protections for consumers who bite off more than they can chew.”

Overall, BNPL has “exposed both the demand for alternative repayment structures and the shortcomings of legacy public finance tools,” according to Bednar’s account.

The silver lining? It’s not too late. He believes that we can still “take the parts that work—design, flexibility, immediacy—without importing the predatory risk model.”