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The Rise of the Buy Now, Pay Later Service

by CIN7 Team
The rise of buy now, pay later services like AfterPay has given shoppers an alternative to credit cards and retailers an alternative to lay-by programs.

The buy now, pay later trend has taken off around the globe. Over the past few years, companies like Afterpay in Australia have let shoppers take home the products they can’t afford to pay all at once. These services are growing in popularity, especially among millennials, who tend not to own credit cards. Meanwhile, retailers benefit by offering another payment option at the POS that helps them move products quickly out of their inventory.

]Under traditional layby (or layaway) programs, of course, a customer makes a deposit on a product and completes payment over a fixed period. The retailer, meanwhile, sets aside that product in their store until payment is complete. This can be a mixed bag for retailers. Yes, laybys can get customers to return to the store over the payment period (and get customers to buy when their credit is tight). However, there’s always the chance that the customer won’t finish the payments. That leaves a product to sit in a retailer’s inventory unsold, perhaps even to become obsolete.

The growing alternative

With buy now, pay later, the customer also pays over a set period but takes the product home at the time of purchase. By giving customers what amounts to a loan, these services assume the risk to retailers of default payments. Moreover, they get products out of the retailer’s inventory at the time of purchase. The benefits to customers and retailers have fueled the growth of these services. Afterpay, for example, is now offered by 16,500 retailers in Australia just three years after launch. And by one estimate, 10% of Australian shoppers use it.

Afterpay earns most of its revenue by charging retailers a small percentage of a buy now, pay later sale. Afterpay makes a complete payment to the retailer at the time of purchase while letting the customer pay Afterpay in four installments.

CIN7 integrates with Afterpay, allowing retailers in Australia to give customers a happy alternative to credit cards and traditional lay by programs to make a purchase. Retailers, particularly in fashion and apparel, use CIN7 to keep stock in line with orders across multiple channels, all in a single, management platform. Click below to find out how CIN7 can benefit your multichannel retail business.