A growing number of Canadians are turning to instalment loans to manage rising grocery costs, according to new data from Toronto-based fintech Koho Financial Inc. The company reported a 109 percent increase in users employing its buy-now, pay-later (BNPL) option over the past year, rising from 0.8 percent of users in May 2025 to 1.71 percent in May 2026. Koho serves over 2.5 million customers across Canada.

The surge in BNPL use initially correlated with the holiday grocery shopping season and has persisted into 2026. The report highlights that Canadians are stretching budgets in various ways to cope with ongoing food price inflation. Monthly food spending per Koho user increased by about 5 percent year-over-year to $275 in May, with shoppers visiting grocery stores more frequently and spending more per trip, even as they sought out discount retailers. Food delivery expenditures also rose by 9 percent.

BNPL services allow consumers to split purchases into multiple payments over weeks, often interest-free unless a payment is late. Koho’s platform permits retroactive splitting of transactions, charging an upfront fee and imposing a $15 monthly late payment fee if applicable.

This uptick occurs amid a backdrop of sustained grocery inflation, which has outpaced general inflation in Canada for more than a year. Prices for vegetables saw notable increases, including a 45 percent jump in tomato prices year-over-year, attributed partly to the end of a trade agreement between the United States and Mexico affecting North American tomato supply chains. Data from Toronto-Dominion Bank indicates that overall grocery prices have climbed more than 30 percent since 2019. Food banks have also seen a rise in demand, with visits doubling since 2019.

Experts describe BNPL’s growing popularity as an indicator of financial stress for essential expenses. Licensed insolvency trustee Doug Hoyes referred to BNPL as the “canary in the coal mine,” suggesting that when individuals exhaust funds on other necessities such as rent, they may increasingly rely on BNPL for essentials like groceries.

Other major BNPL providers in Canada are also experiencing rapid growth. Klarna expanded its Canadian user base to 2.2 million last year, reflecting a 244 percent increase since 2023. Affirm reported a more than 300 percent rise in active Canadian consumers over the past five years.

Data from a March study by licensed insolvency trustee firm Spergel reveals that about 22 percent of Canadians using BNPL finance groceries and household essentials. Nearly half of those surveyed had multiple BNPL plans concurrently, and 22 percent reported missed or late payments, highlighting potential risks.

BNPL companies are diversifying their offerings in response to demand. Affirm Holdings announced plans to allow certain U.S. customers to split monthly rent payments into instalments and partnered with H&R Block Canada to offer instalment payment options for tax services.

While younger, lower-income Canadians largely lead BNPL adoption, middle-income and older users are increasing their use. According to Payments Canada, in 2025, 29 percent of BNPL users had annual household incomes below $40,000, while 27 percent earned more than $80,000, with higher-income users more likely to utilize BNPL monthly.

Hoyes cautioned that while BNPL can serve as interest-free credit if used responsibly, its easy accessibility and aggressive marketing could pose risks for vulnerable consumers facing unexpected expenses. Unlike credit cards, BNPL services often deliver repeated offers encouraging continual use, potentially trapping users in cycles of debt.