eCommerce sees a lot of new incoming trends regularly and these trends play a major part in keeping the ecommerce industry progressing. One such trend that has been floating in the air in the space of ecommerce is the option of paying over-time in fixed monthly installments. This trend has shaken the traditional credit industry and accumulated $1.8 billion in the United States alone. It has slowly and steadily become a major outlet of payment for the customers.

For United States citizens, this is a new experience, however, this practice is a lot popular in several other countries for years now. In Australia, it plays a part in 8-10% of total online sales. According to a stat by Ebanx, 54% of the overall online sales in Brazil were performed through installments. This number is quite in the UK too as over two-thirds of millennials pay for their online products in installments. Credit cards are not the go-to options for millennials and the number is quite low.Shop Now, Pay Later in ecommerce business

Millennials prefer the option of mobile-first payment methods like pay over time financing. There are a lot of providers that make the task easy for customers by showing the entire cost of the purchase upfront without surprising with late fees. If you are looking for a familiar figure in the eyes of ecommerce customers then this pay-over-time is just the right opportunity for you to establish your name. Upcoming piece of information will solve all your doubts regarding the pay over time option.

Understanding Pay Over Time or Shop Now, Pay Later

Pay-over-time is not a completely new option. You have seen a similar mode of payment in the face of the layaway’ option that was prevalent in U.S. departmental stores for quite some years. Pay-over-time, kind of, works on a similar concept and can be said a modernized version of that concept.

Through this option of payment, you can buy an item through monthly installments over a particular period and after that period you become the owner of that item. This mode of financing helps budget-conscious customers a great deal as they can buy expensive items through its assistance.

How Does Buy Now, Pay Later Works?

The whole process of this mode of payment can be understood through an example, so let us assume an example. A person decides to buy an item of a particular amount and as it a little expensive for him to buy on the spot so he considers the option of paying in installments, so in the upcoming steps, we will describe how he can complete the purchasing through the mode of installments.

1. Customer is provided with the option of paying in installments

Customer while checking the price of the item on the display page, discovers that there is an option of buying that item in installments. Paying the huge sum upfront would be a little too much for the customer so he decides to buy the item through the pay-over-time option especially with a 0% APR offer. 0% APR offer will make sure that she won’t have to pay any interest charges if the pay-over-time gets the approval. The customer will receive a message containing a link to apply for financing with a pay-over-time provider.

2. Account Creation

In this step, the customer will open the link and will provide all the asked necessary details such as his name, date of birth, contact number, last four digits of the social security number. Now the approval process does not take up a lot of time and is completed within a few minutes. At the end approval process, the customer gets a notification regarding the approval of his pay-over-time request. The notification contains information regarding the amount she has been approved to spend. The best part about this whole process is that it does not affect your credit score at all.

3. The customer decides to purchase

Now, after she has decided to buy the item, he will have to select the pay-over-time option amongst the monthly option of 3-, 6- or 12-month repayment terms. After she has select one of the options, a window will come upon her display screen which the amount she will have to pay every month with interest if any. This monthly amount depends solely on the option of monthly payments he has selected.

4. The eCommerce Merchant is paid right away

The merchant is paid the full amount upfront by subtracting the fees that the company has to pay for the financing provider. Various stores have tie-ups with financing provides to free themselves from storing up customer installment payments.

5. The customer is responsible for paying up for the financing provider

After all the formalities are completed, the customer starts paying up the negotiated monthly payments to the financing provider. The financing provider does not charge any late fees or interests from the customer and collects the agreed monthly installments.

After the customer is done with all the installments, he becomes the owner of that item without having to buy something he does not like because of his limited budget. The whole buying experience is quite effortless and efficient which the customer would recommend to his friends after experiencing it by himself.

There is profit involved for the business store is that the item gets sold over its price tag because the customer decides to buy the item on monthly installments. Apart from this the easy and effortless mode of purchasing would have provided a lot of experience and comfort to the customer and based on this experience the customer surely will think about becoming a regular customer of that business store.

The buy now, pay later option creates a win-win situation for both customers and buyers. So, now let us have a close look at how this mode of payment benefits online retailers.

Benefits Associated With Buy Now, Pay Later For The Customers

There are numerous benefits of pay overtime for the customers but we have ironed out topmost that customers appreciate a lot.


There are a large number of budget-conscious people out there who want to purchase the items of their liking but decide to drop the idea after having a look at the price of the item. The pay-over-time option provides major assistance to such customers as they can buy the item without having to pay the full price of the product upfront but instead paying it up over a course of several months. This is budget-friendly for the customers and also helps the business store to sell the product at a higher price.

Online Buyers Prefer Brands That Offer Flexible Payment Options

Credit cards are past their best and in the U.S. the credit card debt at an all-time high. In these times, it is hard to blame the customers for looking for an alternative to credit cards. According to a study, around 60% of the buyers prefer brands that offer flexible buying options to their customers.

Reasons To Integrate Shop Now, Pay Later Option In Your Business Store

We discussed various benefits that that pay-over-time option brings along with it and in the section, we will further discuss the reasons for integrating the pay-over-time option with your business store.

Increases The Business’s Average Order Value

According to reports after some of the businesses integrated pay over time option their Average Order Value rose by a staggering 85% among their merchant partners. Online buyers should be provided with the completed information of the process which would make the task easy for them. Once the customers get to know that it is a transparent process in which they will have to pay only the agreed monthly payment with no late fees and no surprises, they will start trusting the option even more and use it in the future too.

Expansion of Territory in Terms of Customers

There a large number of customers who have designated pay-over-time as a simple and easy way of financing large purchases. Talking about the net spend made by new-age customers through this payment mode has reached over $2.5 trillion. Now, this figure suggests that this opportunity is only going to grow large in the upcoming future.

Reduction in Return Rates

When provided with the option of pay over time, customers tend to buy more stuff online deliberately which leads to fewer returns. According to some experiences of fashion retailers, return rates have reduced to over 15% through the pay later option.

Reduction in Abandoned Cart Rates

Since paying over-time reduces the effect of the price as a hurdle, budget-conscious customers tend to abandon the cart by 11%. This number is noteworthy as a large number of customers drop the idea of purchasing a product after seeing its price.

Accepting On An International Level

We have already shown you the figures which clearly shows how pay-over-time ode of payment has already become prevalent in several countries. Reports suggest that this mode of payment is very much on its way to double its market share by the end of 2023.

Making Customers At Ease

After reading all this information, you must have understood that it is very necessary to make the customers understand the benefits of this mode of payment. So, as a business owner, you must partner with a provider who respects the importance of customers and provide them with all the transparency associated with pay-over-time financing.

Customers should be made to understand the monthly payments that they will have to pay at the end of each month. This transparency is valued by customers and builds their trust in the business they are dealing with. Apart from this, the finance provider that you are hiring should not look to charge any type of late fees from their customers otherwise it will leave a bad taste in the customer’s mouth.

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Look To Offer A Pay Over Time Option On Your eCommerce Website

There a various options in terms of financing providers that you can look to partner with for your e-commerce business. Yes, pay-over-time is a great option to have for your customers but you also have to consider what is beneficial for you as well. So, in this section, we will provide you with some questions that you need to ask yourself before making the pay-over-time mode of payment a part of your business.

1. Is EMI or Pay Later compatible with my eCommerce platform?

A large number of companies that have an integration with pay-over-time solutions work on advanced technology that can easily deal with ecommerce platforms.

2. Is financing beneficial for the growth of my business?

To get the answer to this question, you need to have a look at your Average Order Value (AOV) and inventory categories. If the value of your AOV is on the low end of the spectrum, then including pay-over-time solutions to your business would not turn out to be of great help. On the eligibility grounds, if you deal in selling alcohol and groceries then you might not be eligible to get a taste of financing.

3. Would my customers like to try out payments over time solutions?

More and more businesses are dealing in pay-over-time solutions, so customers associated with your business would also look to do business with you through the pay-over-time option. However, you need to consider to have a close look at the mix of credit profiles in your customer base. Another process that you want to have a look at the underwriting process of the potential financial provider to ensure that it will approve most of your customers of doing the purchasing through monthly installments.

Wrapping Up

When you start a business, you need to place your customers as your topmost priority and take steps accordingly to benefit them in whichever way possible. Integrating your business with pay-over-time solutions is one such step that will help out your customers in a lot of ways. Customers getting conscious before buying high-priced products can get to own these products through monthly installments. This turns out to be beneficial for both customers and businesses. So, when every ecommerce business is looking to make pay over time mode of payment a part of their business, do not miss out on making the most of the presented opportunity.

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CTO at Emizentech and a member of the Forbes technology council, Amit Samsukha, is acknowledged by the Indian tech world as an innovator and community builder. He has a well-established vocation with 12+ years of progressive experience in the technology industry. He directs all product initiatives, worldwide sales and marketing, and business enablement. He has spearheaded the journey in the e-commerce landscape for various businesses in India and the U.S.