Shoppers were busy during the Black Friday holiday shopping period, and data now shows a growing number were financing their purchases using “buy now, pay later” payment programs.
This comes as Canadian consumers are being cautious with their spending amid the high cost of living from inflation and tariffs, as well as a weaker job market that’s making it challenging for some households to make ends meet.
During what Salesforce calls “cyber week,” from Nov. 25 to Nov 30, the company reports average sales in Canada grew by over seven per cent.
In the same period, the use of “buy now pay later” payments nearly doubled from a year ago to about five per cent of all payment types used during the “cyber week” period.
“Oftentimes the consumer is getting a better deal on interest rates and other types of factors. Especially if they don’t have a credit card, it’s a really attractive way for the consumer to afford the holidays,” says Caila Schwartz, director of consumer insights and strategy at Salesforce.
“We also see it’s a form of payment that younger consumers lean into, which says that our younger Canadian consumers came out in big numbers this holiday.“
Global data from payments provider Square has been tracking transactions globally from Black Friday to Cyber Monday in real time, and the company reports use of “buy now pay later” has seen about five per cent growth worldwide as of 4 p.m. eastern time.
Data specific to Canada was not immediately available.
“Buy now pay later” programs offer customers a longer period of time, often over the course of several weeks or months, to finance their purchases.
For example, if an item costs $100, the customer may be able to pay it off with four payments of $25 each in about a month, rather than paying it all at once.
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Financing purchases can help customers with making purchases they cannot or do not want to pay up front, but can come with risks of late payments resulting in additional interest and other fees.
Experts warn the purchases can add up quickly, though.
“We’re seeing more buy now pay later than we have in the past, and that speaks to some cash flow concerns that consumers may have. They’re being very selective right now, and they’re trying to get through the holidays,” says retail analyst Bruce Winder.
“The ‘K shaped’ spending model, where there’s some really good growth and retail activity for folks who are well off who are spending in luxury, but things are a little tougher for sort of the the balance of society who might be channeling down to more of the value segment.”
Winder says the data from Salesforce “really speaks to just how strained cash flow is, especially for younger people.”
“They (younger Canadians) feel this hammering from social media and their peer groups and marketing and online to look a certain way, feel a certain way, and it’s just not reasonable anymore,” says Winder.
“It’s starting to finally catch up to people and the only way they can bridge it is to try to use these alternative payment methods, which are good if you follow them. But, if you have any bump in your life, any loss of income or extra expense, then suddenly you’ve got significant charges you have to deal with.”
A similar theme was echoed in a recent survey of younger Canadians by TD Bank, which showed 53 per cent of respondents felt compelled to maintain a successful image on social media, and 65 per cent believed they were falling behind their peers financially.
During the cyber week period, Salesforce says debit or credit card were used for an average 72 per cent of transactions, 17 per cent were mobile wallets and two per cent were gift cards and and loyalty programs.
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