Credit card in front of laptop. This image implies customers can use layaway programs to shop

Should I Use a Layaway Program for E-commerce? Buy Now Pay Later

Layaway is not a new concept, but for the e-commerce world, it was not until recently that it started to take a storm. Ecommerce provider BigCommerce released a global survey that found that 48% of digital consumers said the availability of financing options would influence their purchase decision. Even more notably, the study found that over one-third of those who used a financing provider for an online purchase said it allowed them to buy a more expensive product than they initially had in mind. Furthermore, 31% of the people surveyed said they wouldn’t have purchased at all if they didn’t have the option to pay in installments. 

In today’s fast-moving e-commerce world, it is essential to keep up with the competition. Offering buy-now-pay-later plans to your customers can drive sales to your website and help build brand loyalty. These programs can help decrease abandoned cards and increase sales.

Let’s take a look at Afterpay, Sezzle, and Klarna. 

Afterpay

  • Founded in Australia
  • Over 18,000 websites use Afterpay (as of November 2019)
  • Merchants pay 30 cents plus a commission ranging from 4 to 6 percent
  • Customers pay a 25% upfront payment if you have signed up for the service in the last six weeks or if you are shopping in-store. 
  • Returning customers are required to make a payment two weeks after purchase with the remainder paid back every two weeks

Sezzle

  • Founded in Minneapolis, MN
  • Over 2,000 websites use Sezzle (as of November 2019)
  • Links to credit and debit accounts to allow customers to make purchases and pay them off in four installments
  • Merchants pay standard payment processing fee is 6% + 30c per transaction
  • Customers pay 25 percent of the purchase price and fees of $10 are charged if a scheduled payment fails, or $5 fees are charged is users want to reschedule automated payments 
  • Sezzle pays the merchant the full amount upfront, minus fees

Klarna

  • Founded in Sweden
  • Over 33,000 websites use Klarna
  • Offers three payment options to customers
    • Installments
      • Gives your customers an interest-free alternative to credit with 4 installments
      • Merchants pay 0.30 USD + 5.99% per transaction
    • Pay in 30 days
      • Gives your customers an extra 30 days to pay, online or in our app
      • Merchants pay 0.30 USD + 5.99% per transaction
    • Financing
      • Gives your customers the option to pay over 6 to 36 months
      • Merchants pay 0.30 USD + 3.29% per transaction
  • Customers are not charged interest or hidden fees
  • Customers pay $35 if they miss a payment