Buy Now, Pay Later: Increasing Accessibility in QuebecBuy Now, Pay Later: Increasing Accessibility in Quebec The “Buy now, pay later” concept has gained popularity in Quebec, with online services like Afterpay, Sezzle, and Klarna offering customers the option to pay for purchases in installments. TIXR, a ticketing platform, has integrated this feature into its system. Convenience Raises Concerns While the convenience of payment plans appeals to consumers, experts like Alyssia Marchetta of Option consommateurs highlight a potential lack of awareness among clients. A study by the Financial Consumer Agency of Canada indicates that one in five Canadians spent more than planned due to installment payment plans. TIXR’s Integrated System TIXR offers the payment plan option directly on its website, making it easier to access. The platform reports that 24% of sales are made through installment plans, particularly for events with higher ticket prices. Klarna Expands to In-Stores Since launching in Canada in 2022, Klarna has gained a significant user base. It has expanded its services to include in-store options at retailers like MEC, Moose Knuckles, and Bouclair. However, usage remains limited at these locations. Risks and Considerations Marchetta cautions consumers about the potential risks of paying for essentials in installments, as it could lead to overspending and budget issues. Additionally, she emphasizes the need for consumers to fully understand the terms and conditions of installment services and their potential impact on credit scores. Lack of Data on Default Rates Marchetta also expresses concern about the lack of data on the relationship between users who spend more on installment plans and those who default on their credit card payments. Consumer Education Needed Option consommateurs has published a research report highlighting the need for consumer literacy on “Buy now, pay later” products. They urge consumers to thoroughly research services, understand the terms, and use them responsibly.
The “Buy now, pay later” formula is more accessible than ever in Quebec. More and more retailers are offering their customers the possibility to pay their bill in installments with online services such as Afterpay, Sezzle or Klarna. Some companies are going a step further by making the function available in-store. And a new competitor to the ticketing giants, TIXR, is integrating its spread payment system into its ticketing system.
Published at 01:22 am
Updated at 05:00 AM
A $40 tank top, a $95 concert ticket, a $300 grocery purchase: These days, you can pay for almost anything with a payment plan.
(Consumers) “look at the amount of payments and not at the total cost,” complains Alyssia Marchetta, budget advisor at Option consommateurs, who all too often notices a lack of knowledge on this subject when she meets clients.
According to a pilot study by the Financial Consumer Agency of Canada, as early as 2021, one in five Canadians reported spending more than planned because of the installment payment plan.
A ticketing platform that arrived in Canada about a year ago even integrates the option directly into its website. In other words, to buy tickets on TIXR, it is not necessary to create an account with a third party to take advantage of installment payments, which makes it easier to access.
An integrated option
“Currently, about 24% of sales are made through the payment plan option, particularly for events where the ticket price is higher,” explains Stéphane McGarry, Vice President of Partnerships – Canada at TIXR.
California-based platform TIXR, described by McGarry as the “Netflix” of entertainment, sells tickets for popular Quebec event companies such as Beachclub, New City Gas and the Riverside Festival in Gatineau.
Unlike a platform like Ticketmaster, which works with Klarna, TIXR itself offers the possibility to pay in installments at the virtual box office. You do not need to create an account with a third party: just click on the option, for a credit fee of around $9.
“About 50% (of events) are using it and we are seeing interest growing,” the TIXR head explains.
This is the case of Unity Electro Fest, an electronic music festival that takes place in Quebec City at the end of August. So far, about 3% of the tickets sold have been purchased with the option to pay in installments.
The Pointe-Calumet Beach Club, for its part, only offered the option for the first event of the summer, with a slightly higher ticket price than the following ones. “We’re probably talking about barely 10% of the tickets that were sold with the option,” says Olivier Primeau, owner of the venue.
While this trend does not yet appear to be translating into Quebec, installment payment plans in Canada are expected to experience 51.6% annual growth through 2023, according to the two organizations, Research and Markets said.
“In Quebec (…) we don’t have numbers yet, but I’m not surprised that there is an increase in the country,” notes Alyssia Marchetta.
A trend that shows no signs of disappearing. In February, the American firm Research and Markets predicted that the value of goods purchased in Canada using installments will rise from US$5.8 billion in 2023 to US$10.6 billion in 2029.
What does this say about the state of the consumer budget? Is it convenience, curiosity or need? It is worrying.
Alyssia Marchetta, Budget Advisor at Option Consommateurs
TIXR notes that the option is particularly popular among students and young adults between the ages of 18 and 25.
Klarna in store
In 2022, Klarna, a “virtual shopping mall” that lets you split your bill for multiple well-known brands into four equal installments, arrived in the country. A year and a half later, the new Fintech already had 640,000 users and processed more than 2 million orders in Canada.
Lululemon, Canada Goose, Dynamite and Frank & Oak are just a few examples of retailers where you can use Klarna at the virtual checkout. Last October, Walmart joined them, making it possible to spread the payment of your online groceries over a few weeks.
When it comes to essentials, that’s where I would put a little warning sign. The more accessible it is, the more risk people have of spending more and going over budget.
Alyssia Marchetta, Budget Advisor at Option Consommateurs
And Klarna isn’t just available online. For about six months now, some of the platform’s partner retailers have even started offering the option… directly in-store.
So far, only two stores in Quebec have tested the customer frenzy: Mountain Equipment Co-op (MEC), which specializes in outdoor gear, and Moose Knuckles, known for its winter clothing. In a few weeks, furniture retailer Bouclair will be added to the list, we hear. The pressAccording to Tony Trew, vice president of marketing at Bouclair, the feature has proven very successful in Ontario since being implemented in stores, prompting the company to expand the feature to another province.
For now, Klarna is involved in only 1 in 100, or even 150, transactions at MEC, says Jules Fauteux, head of the Montreal branch. At Moose Knuckles in Mirabel, only a few in-the-know people use the option.
According to Jules Fauteux, customers are often put off using it because they have to create a Klarna account before they can benefit from it. This is exacerbated by the pressure of the queue at the checkout.
On the other hand, a customer might rush to install the app because they feel rushed by people waiting, according to Alyssia Marchetta, without really analyzing how the service works and costs. “When you’re looking at (magazines) online, you’re better off taking the time to check the terms, learn about it, try to understand it,” the budget advisor notes.
The danger of paying in installments? “It is not clear to the consumer what impact it can have on the credit file if you do not pay,” the advisor summarizes.
His biggest concern is the lack of data on the relationship between people who spend more and people who default on their credit cards.
Last October, Option consumer companies published a research report on “Buy Now, Pay Later” products. The main conclusion: there is a great lack of knowledge and a great need for literacy among Quebec consumers about the concept.
Consult the Option Consumer Report
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