As Canadians feel the pinch of holiday spending, PayPal is expanding its buy now, pay later service into Canada.

This new offering allows customers to split purchases from $30 to $1,500 into four installments with eligible merchants who are PayPal partners. This move aims to provide an additional payment option in times of economic uncertainty when many have turned to installment loans for financial assistance.

Competing in a Crowded Market

In entering Canada, PayPal faces competition from established players like Affirm, Klarna, and Afterpay, which already dominate the buy now, pay later space. Despite this, PayPal has managed to achieve around 20% quarter-over-quarter volume growth in the U.S., where similar services are available.

Enhancing Offerings for Holiday Shopping

To attract more users during the holiday season, PayPal is expanding its buy now, pay later service to include in-store purchases. Additionally, customers will receive 5% cash back on all BNPL purchases through the end of the year.

The company’s research highlights a growing interest among consumers in alternative payment methods. Around 60% of U.S. consumers are concerned about holiday spending this year, and over 80% of shoppers who have used or considered buy now, pay later options plan to use them for their holiday purchases.

BNPL as a Popular Option

Buy now, pay later services have become popular due to low or no fees and the lack of credit checks required. Despite concerns about potential misuse and regulatory oversight, these loans are projected to play a significant role this holiday season, with Adobe predicting BNPL purchases on Cyber Monday will reach $1 billion for the first time.

Merchants may benefit from the increased average order value that BNPL can bring, while Canadian customers can enhance their purchasing power for both domestic and U.S. based-merchants within PayPal’s ecosystem.