Why retailers are embracing buy now, pay later financing services

 Why retailers are embracing buy now, pay later financing services

Supply chains are snarled and manufacturing is constrained. For weeks, headlines have been telegraphing a clear message to shoppers: This holiday season shop early.

In years past, early bird shoppers may have turned to layaway plans to reserve holiday gifts and pay for the purchases over time. But many retailers — including the nation’s largest, Walmart — have done away with or scaled back these programs. One reason is shoppers have new tools at their disposal to spread out payments.

A popular option for consumers are buy now, pay later plans. Retailers are big fans as well. The point-of-sale loans are easy for retailers to manage, and research shows these options lead to bigger baskets and greater customer loyalty. RBC Capital Markets estimates a BNPL option increases retail conversion rates 20% to 30%, and lifts the average ticket size between 30% and 50%.

Adding incremental sales

“It’s all about incrementality,” said Russell…

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