Buy now, pay later technology continues to boom in 2022

Buy now, pay later (BNPL) technology is continuing to increase in popularity, with the payment option expected to grow by 63.5 per cent on an annual basis to reach US$5955.5 million dollars this year.

Buy now, pay later typically refers to point-of-sale installment loans that allow consumers to make purchases and pay for them at a future date. Its popularity is being driven by younger generations like Millennials and Gen Z consumers and business owners.

“​​A lot of the younger generation not only are expecting this, but it’s just a normal practice for them. Unlike previously, when you know, business to business (B2B) payments were being made through cheques or being mailed, the millennial buyer who’s now becoming more influential in the business to business space is expecting this kind of payment option,” Elias Beaino, executive vice president at Tabit, Canada’s first B2B buy now, pay later solution offered at point-of-sale, said.

A recent survey, conducted by Tabit in conjunction with research firm Angus Reid, revealed that business owners aged 18 to 34 are twice as likely as those aged over 35 to say they would “definitely” consider using this type of financing solution.

In addition, 44 percent of younger respondents say that BNPL financing solutions would make them more likely to make larger purchases for their business.

Beaino said the idea behind Tabit came after the explosive growth in the BNPL space on the consumer side. So Tabit thought the finance option would translate well into the business side.

Tabit isn’t the only company focusing on popularizing BNPL payments in Canada.

Klarna, a global retail bank, payments and shopping service, launched its services in Canada last month and recently opened a new North American product development hub in Toronto – its first product tech hub outside Europe. With its Canadian launch, Canadians can now shop using Klarna’s interest and fee-free “Pay in 4” service, as well as its “Pay Now” option.

Canadian retailers onboard include Harry Rosen, Mejuri, and Frank And Oak. The Pay in 4 service allows consumers who use Klarna at a retail partner’s checkout to split their purchases into four interest-free payments every two weeks from the time of purchase.

According to Kristina Elkhazin, Head of Canada, Klarna, BNPL payments are getting more popular because, “consumers today are looking for alternatives to high-interest rates and revolving credit that offer more choice, control and flexibility.”

She said despite the fact that most Canadians own a credit card, they are debt-averse, with debt repayment being the number one goal for Canadians in 2022, according to a CIBC study.

BNPL allows consumers to spread out their purchases so they can pay them off in sections, enabling them to earn more money in between payments. According to a study by the Financial Consumer Agency of Canada, 74 per cent of respondents used the option for purchases over C$200.

When it comes to B2B BNPL solutions such as what Tabit offers, the dollar threshold is a bit different. In the business space, the minimum will usually be about C$500 or C$1,000. According to Beaino, Tabit is able to finance anything up to C$500,000. He said he sees a strong future in BNPL, with it continuing to popularize.

“I think we’ve seen this trend already taking place in the U.S., in Europe and in Australia. There are examples of companies who have entered the B2B buy now pay later industry and they have been growing extremely fast…I think that it’s only going to grow as we’re able to educate our users more and more over the next couple of years.”

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Samira Balsara
Samira Balsara
Samira is a writer for IT World Canada. She is currently pursuing a journalism degree at Toronto Metropolitan University (formally known as Ryerson) and hopes to become a news anchor or write journalistic profiles. You can email her at sbalsara@itwc.ca

Related Tech News

CDN in your inbox

CDN delivers a critical analysis of the competitive landscape detailing both the challenges and opportunities facing solution providers. CDN's email newsletter details the most important news and commentary from the channel.