The Advantages of Payment Plan Options

Would you like to reduce your store’s cart abandonment rate?

How about increase conversions?

Or perhaps you would like to reach more young consumers?

These are perpetual challenges for online merchants. The solution may have nothing to do with your products or marketing, but the payment options you give to your customers. They want to give you their money - if only you’d let them!


A square image, divided into 4 equal parts, shows 4 different payment methods: credit card, check, cash, and mobile device


Offering your customers a variety of payment options and payment plans is a great way to increase your business overall. Accepting all major credit cards, as well as popular payment apps like PayPal and Venmo, is a great start. If you want to really supercharge your sales, though, look into payment plans, that let customers buy bigger ticket items (or maybe several small ticket items) right now. This allows your customers to buy right now, instead of having to save up - and potentially forget about the purchase altogether.


While consumers in every demographic are prone to look at items they may not buy now, Millennials experience this conundrum most frequently. This is because only a third of young adults have credit cards, according to


Millennials Want Options

Why are millennials shying away from using credit cards? Well for one, they came of age during the financial crisis and their worldview is shaped by that experience. Millennials’ definition of financial success includes an aspiration of being totally debt-free, according to a study by Facebook. With record levels of student debt, it’s no wonder why Millennials are more wary of debt than previous generations.


Even those millennials who do want to use a credit card may not be able to get one. One in five people between the ages of 23 and 27 have been declined for credit multiple times within a single year, according to a 2016 study by ID Analytics. The biggest factor limiting millennials ability to get credit is their credit scores. 67% of consumers under the age of 30 have a subprime or non-prime credit score. Around 33% of people in this age group do not have a score at all, due to a lack of credit history.


As a merchant, if you are hoping to reach millennial consumers and are only offering them traditional credit card payment options, you are likely leaving sales on the table!


" One in five people between the ages of 23 and 27 have been  declined for credit multiple times within a single year,  according to a 2016 study by ID Analytics."   Click to Tweet


The Layaway, Re-Imagined

Just because they’re dreaming of being debt free doesn’t mean they don’t want to occasionally jumpstart a purchase. Millennials are quite comfortable using short-term loans or installment payment plans to get what they want. Financing options are available for a variety of stores, from nutritional supplements to electronic accessories, and even Americana furniture items. Stores that don’t offer these short-term loans are, quite literally, leaving money on the table.


This behavior is nothing new. In fact, it could be said that it’s the mirror of a type of shopping that has been around for decades - the layaway. Merchants have long been finding ways to offer consumers the flexibility to reserve an item and pay for it over time. Now, new FinTech companies like Sezzle are creating online payment solutions that allow consumers to receive their purchase immediately and pay over time, with no interest or hidden fees.


How do these payment plan options work? Sezzle enables consumers to pay for their purchases in four equal, interest-free installments, spread over six weeks. Sezzle pays the merchant upfront, in full. Consumers pay 25% at the time of purchase, and then make three more 25% payments, every two weeks.


Consumers that would normally have been scared off by high purchase totals will now complete checkout with the knowledge that they can pay over time. Other consumers will simply buy more than they otherwise would have. And this can all be done without the worry of hidden fees, high interest rates, and remembering to pay bills on time — age-old issues with credit cards.


A calendar with the 31st circled sits next to a calculator, a pen, and a stack of change


Consumers Win, Merchants Win

It’s no wonder that consumers like receiving items that they’re still paying off, but what’s in it for the merchants? There are many benefits to merchants. First, they get another payment option to help reach young consumers. Second, they get paid up front. Third, they get an incremental sale that likely would have otherwise been an abandoned cart. Finally, they boost their average order value by giving consumers more purchasing power.


Adding alternative payment plan options to online stores creates a true win-win for both shoppers and merchants!


This is a guest post by Chris Dolan, VP of Strategic Partnerships at Sezzle.


Sezzle has built a payment platform that increases purchasing power for consumers by offering interest-free installment plans at online stores. This increase in purchasing power for consumers leads to increased sales and basket sizes for merchants.


Click here to learn more about Sezzle. Or here to add Sezzle to your store. Feel free to reach out to Chris with any comments or questions on LinkedIn. 

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