Toronto – When any service is offered for free, it is good to know why.
The purchase bouncy now pays financing in the market later, which usually meet to spread payment in several weeks without any cost, as it is traders who pay for service in the hope that it will convince consumers to spend more.
This is definitely a promise providers such as advertising for Ephum and Clarna businesses, promoting 20-few percent to order total order, while Shopify says that its installment program can grow up to 50 percent in the average sequence price, as well as 28 percent less abandoned trains.
While the option can probably add convenience at any direct cost for consumers, financial experts have warned that it is far from risk -free.
“The temptation is very great to overseas,” said Insolvency Trustee Dug Hoyas.
Hoyas said that with the option pop up during online checkouts, or being introduced by the cashier, consumers also do not have to fully think through the decision, and they said Hoyas, the implications of what they agree.
“For most people, you are really taking a loan without realizing it. You are not taking a conscious decision that yes, I will borrow that money. And it’s dangerous, obviously.”
While most buyers pay loans-which run in hundreds of dollars instead of thousands-there is also an increasing push to share data with the credit-reporting agencies, which create new areas of risk.
Last week in the US, veteran Fico said it was launching its first credit score to incorporate BNPL data.
Spokesman Brian Levin said that in April, Affirm said it would start sharing data with the transonians in the US, as well as a target to do so in Canada, spokesperson Brian Lewin said.
“We believe that reporting to credit agencies supports the responsible loan and promotes positive credit results.”
In Canada, Equifax stated that its credit report has begun to include data from some BNPL lenders, which can be used in the calculation of credit scores.
The Transonian stated that it is still at the stage of finding out how to integrate BNPL data, including spokesperson Hyunju Kim, including creating a separate section on the credit report to reflect the unique nature of these products.
While the work progresses to add BNPL to credit reporting, some providers have expressed concern.
Clarna said in March last year that it was not sharing BNPL data with US Credit-Reporting agencies as it does not fit well with other types of loans.
The company, which confirmed that it does not share data with Canadian agencies, said that adding BNPL to the existing credit-reporting model could leave consumers worse.
“As the consumer has very little clarity on potential long -term effects, we believe that this approach is very risky,” said this.
Other providers, such as afterpays, also say that they do not provide any data to credit-reporting agencies. Sezzle said that sharing data with rating agencies is an option for those who choose their Sezzle up programs to make their credit.
Different approaches to credit reporting also remind of the diversity of other micro -policy differences among the providers that consumers should consider before signing up.
Some, such as affirm and afterpay, will prevent any further purchasing if a consumer falls back on payment, while others like Clarna, but can also charge a short late fee and send unpaid loans to collection agencies.
More until the old bills are paid, more on stopping any further purchases.
Most providers have also been offering loans for a long time, with rates anywhere in the 30 percent limit from zero interest. Some exercise equipment and flights are also partnership for large-ticut items, which are formed for potentially risky infections for high debt loads.
The head of banking everyday by Natasha Macmillan, Retahb.K said that just with the fact that many providers also risk to stack them, and keep an eye on many accounts of debt.
“Due to zero-interest appeal, it gives almost a false sense of strength to people,” he said.
“The real precaution that I give is that, if you have one, or several, you are all looking at the total cost of purchase, pay later programs that you are running, to make sure that you can actually cover the cost of each of them.”
Stress of those cheap loans is starting to show for some providers. Clarna’s most recent quarterly results saw a 17 percent increase in consumer credit deficit, and its overall disadvantages doubled, raising concerns could lead to widespread industry problems.
But the company’s credit loss rate was still only 0.54 percent, showing that most borrowers are still repaying their loans.
The big question is whether consumers are spending more than them, and if they had planned to keep money elsewhere, now they are going to return those shopping.
To avoid piles of unexpected bills, Hoyas said that the key is to think further while shopping.
“There is nothing wrong in using a credit card or buying now, later or a car loan or a mortgage or anything. This is when you do not have a plan, when it is a boying purchase when it stands at the store, when you may get into a bit of trouble.”
This report of Canadian Press was first published on 3 July 2025.
Ian Bikis, Canadian Press
