Expect Increased Regulatory Focus On "buy Now, Pay Later" Financing

"Seismic shift in financial services"¹, "fastest-growing payment option"², and "explosive growth"³ are terms that have been used to describe the buy now, pay later (BNPL) financing market. Technological innovations and the emergence of new fintech companies coupled with an increase in online shopping as a result of the COVID-19 pandemic⁴ have supported the proliferation of BNPL financing⁵. Although such growth may be welcomed by CEOs and shareholders of BNPL firms, it has also prompted Canadian and international regulators to examine more closely the impact of this popular financing product.

Point-of-sale lending is not a new concept; it has traditionally been offered though installment loans (generally for larger-scale purchases such as home appliances), or through white label credit cards bearing a retailer's name, often with lower credit limits and looser credit policies. Although traditional point-of-sale lending has generally subjected consumers to lengthier