As consumers' financial constraints become ever greater, deferred payment solutions are also becoming increasingly important for small purchases such as clothing or groceries.
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At Ardene or Aldo you can buy a blouse or a pair of shoes and pay in four installments every two weeks. Without interest. With Afterpay, an Australian fintech company.
At Altitude Sports or Empire you can do the same with Sezzle, an American company. Even at Walmart, Klarna lets you spread your toaster payments over four weeks.
“There was a wrestling show in Montreal last year, but it was $500, so I didn't want to put it on a credit card and pay for it for months or years. So Klarna gave me the option to cut the whole thing into four slices. Four times $125. I don’t pay any interest because the interest is deducted from my checking account,” says Bruno Lemieux from Outaouais.
David Descoteaux
He also uses the service when he buys tickets to see the Canadian with friends, he says. “If I buy multiple tickets, when they pay me, I put them on top. I use this as a method to easily distribute the payment,” he says.
This is the new BNPL (buy now, pay later) trend. These “fintech” companies allow people to pay for their property in four interest-free installments without using their credit card.
“I placed large orders, I bought dresses, pants and sweaters and the price fluctuated between $12 and $25 each, so a total of 2 or 300 piastres. It's better than putting it on my credit card. It hurts my heart less to pay $25 every two weeks than it does to pay 250 piastres. You feel less bad,” says Sophie, a young mother from Saint-Lambert.
Walmart is on board
Last October, Walmart launched Klarna to give customers pay later and interest-free when shopping online.
“We recently launched Klarna to give our customers more payment options and flexibility when shopping on Walmart.ca and the Walmart app. This service breaks down purchases into four interest-free payments over a six-week period,” says Steeve Azoulay, Director of Public Affairs at Walmart Canada.
“Currently this service is only offered online. We always listen to our customers’ feedback on new flexible payment options,” he adds.
Debt risk
According to a September 2023 report from Research and Markets, BNPL payments in Canada are expected to grow 51.6% annually, reaching $2.1 billion in 2023 and $8.3 billion in 2028.
However, some fear that these types of services contribute to debt, particularly among young people. “These products are presented as alternatives to credit cards, when in reality there are fees if you miss a payment, for example $7.50 on Sezzle, or if you don't have money in our account,” points out Clarisse N'kaa of Option consommateurs , who recently conducted a study on this topic.
“It is offered as an alternative to a loan, but with a credit card you don’t pay any interest if you repay it on time. So basically: How is this an alternative? she emphasizes.
Companies that offer split payments on e-commerce websites:
Afterpay, Sezzle, Affirm, ZIP, PayPal and Klarna
How it works?
The amounts are debited directly from your bank account or credit card, usually every two weeks over a period of six weeks.
Interest to be paid: $0
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