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
- Installments
- Customers are not charged interest or hidden fees
- Customers pay $35 if they miss a payment