Canadians increasingly using ‘buy now, pay later’ on groceries

Prime Minister Mark Carney visited a grocery story in Brampton, Ont., in the leadup to the July start of the federal grocery and essentials benefit. Photo by Peter J. Thompson /Financial Post

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Many Canadians are utilizing the “buy now, pay later” option as rising costs continue to strain household budgets. Koho Financial Inc.’s “pay later” adoption has more than doubled from last year, up 109 per cent as Canadians opt for it for essential items like groceries, the Toronto-based fintech said in a report.

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It said that among all KOHO products analyzed, “Pay Later” recorded the strongest adoption growth by a wide margin, rising from 0.82 per cent of users in May 2025 to 1.71 per cent in May 2026, with the largest increase during the holiday grocery season before remaining elevated throughout 2026.

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“Pay later” adoption outpaced all other Koho products during the study period, pointing to growing demand for financial flexibility as Canadians navigate higher everyday costs. By comparison, Koho’s credit building and savings interest feature adoption both declined over the same period. Koho’s financial tools are used by more than 2.5 million people from across Canada, it said.

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“One of the most interesting findings is that affordability pressures are changing behaviour, but not always in predictable ways,” said Koho’s head of consumer trust, Faye Lucas. “The findings make it clear that grocery costs are rising faster than Canadians can adapt. People are changing where they shop, how often they go, and how often they pay and yet the spending keeps climbing.”

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While Canadians are making deliberate adjustments to manage rising food costs, grocery spending continues to climb, it said. Koho’s report found that average grocery spending per user increased approximately five per cent year-over-year, rising from $261 to $275 per month.

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Koho said the increase in grocery spending was driven by both larger baskets and more frequent trips to the grocery store. The average grocery basket size grew 2.4 per cent, from $44.58 to $45.65 per transaction, while grocery trip frequency was up 2.9 per cent, from 5.86 trips per month to 6.03 trips per month.

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“Groceries are one of the most persistent financial pressures Canadians face,” Koho chief executive Daniel Eberhard said in a news release.

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Discount grocers appear to be winning as shoppers look for ways to stretch their budgets. The report found that Canadian shoppers are shifting toward discount grocery retailers, like No Frills or Giant Tiger, as trips to such stores have also increased.

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It said that Canadians are becoming more intentional about where they shop as they look for ways to manage rising food costs. Trips to discount grocery retailers increased 4.1 per cent year-over-year, while trips to premium grocery retailers remained essentially unchanged, increasing just 0.3 per cent. At the same time, discount basket sizes grew 1.6 per cent, compared to 0.9 per cent among premium retailers.

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Meanwhile, other types of household spending aside from groceries have also increased. For one, spending on food delivery has gone up nine per cent year-over-year, rising from $215 to $235 per month across major platforms including DoorDash, Uber Eats and SkipTheDishes. Spending on eating and drinking out increased four per cent, while retail spending is up six per cent.

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The report draws on grocery spending and financial behaviour data from more than 173,000 Koho members between May 2025 and May 2026. A separate 17,400-member longitudinal cohort was used to validate year-over-year spending trends.

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