Most boomers will remember the temptation of ads promising “no money down, twelve months to pay.” Today’s younger consumers are adopting this same buy now, pay later mindset (conveniently abbreviated to BNPL) to make impulse e-commerce purchases that don’t require full payment up front. Independent retailers also selling online – i.e., bricks and clicks stores- should consider taking advantage of this trend.

The BNPL option is offered through programs such as Sezzle, an app which allows customers to break an online purchase into 4 payments over 6 weeks, with 0% interest. The five-year-old company, headquartered in Minneapolis, assumes the credit risk. This is a definite plus for retailers, since the full sales price is paid to the merchant when the shopper pays the first 25%. A transaction fee equal to 6% plus a $0.30 per transaction is deducted, which is one way that Sezzle makes money.  According to Product Mint, Sezzle also benefits from late payment (or penalty) fees from consumers

Shoppers using Sezzle must be prequalified, providing a non-prepaid payment method such as a bank account, a debit card, or a credit card and passing a “soft inquiry” credit check. They can then shop via the Sezzle app, or buy directly from the 29,000 online retailers that The Balance reports now partners with the program. Retailers can set their own minimum for purchases paid for through Sezzle, although I’ve seen it as an option for purchases under $5 for stores that must make it available on everything.  (An example is llb Designs Studio’s cute Shop Small stickers, which come to just 81¢ per payment.)

There are other platforms offering similar services you should consider, including AfterPay and Affirm. According to AfterPay, this type of payment plan allows their retailers to attract a younger demographic.  The thousands of users of these platforms show that splitting the payment into four parts is a successful way to encourage customers to make larger purchases, or to buy something they might not otherwise have thought they could afford.  If you sell online, it’s worth checking out!

Happy retailing, 

Carol “Orange” Schroeder

PS There will not be a Specialty Shop Retailing blog on October 4