Online payment platform, Paypal last year introduces a new payment strategy where customers are allowed to buy goods online without necessarily paying the bill immediately, but rather in installments.
The new payment method enables merchants and partners to get paid upfront while enabling customers to pay for purchases between $30 and $600 over a six-week period with no accrued interests.
The fintech company stands to benefit from this method as it will win in the rapidly growing online market.
Many consumers find this appealing amid economic uncertainties, prompting more retailers to offer this payment option.
According to Adobe, online purchases in the U.S. made using a buy now, pay later service increased 215% over a year.
The technique also offers an opportunity to increase payment volumes. Since the option is available for purchases of between $30 and $600 customers choose to make more purchases as it makes expensive items seem more affordable for consumers.
The fact that this payment option gives a consumer a chance to pay in interest free installments, most online shoppers will go for highly priced items without fear being unable to settle the bill instantly.
This is an advantage to retailers as consumers will not be turned away by the high prices.
