Buy now pay later services (BNPL) are coming to your local farmer’s market.
That’s right—soon you’ll have the option to pay for your artisanal soap haul in four payments as Block rolls out BNPL options for vendors on its point-of-sale platform, Square.
Why it matters: BNPL is booming in Canada. Amazon has also announced it will now offer BNPL options through Affirm and RBC plans to roll out its own tool, PayPlan.
- As consumers grow more comfortable breaking up large purchases into smaller payment instalments, even Apple is creating its version of BNPL for Apple Pay.
Catch up: Square, known mainly for its square white card reader, has become a fixture in the small business ecosystem, offering services like bank cards and business loans.
- “We took more risk [than the banks would] to allow small businesses to access the financial system,” Luke Voiles, General Manager at Square Banking told The Peak.
- But after BNPL exploded in popularity (as people spent lockdowns shopping for things they didn’t need or couldn’t really afford), Block went all in on the opportunity.
Yes, but: BNPL has been subject to scrutiny from regulators concerned that it entices young shoppers to spend more than they can afford.
- Most BNPL plans don’t charge interest, but whack customers with sizeable late fees if they fail to make a payment.
- One-third of BNPL users have made a late payment and incurred fees, but so far Canadian regulators have taken a hands-off approach.
Bottom line: With prices high and interest rates rising (making credit cards less appealing), today’s economy is about as ideal as it could get for BNPL.