Image: Who’s a Good Shopper, Klarna. Credit: 72andSunny
With consumers now given the option to buy now, pay later, Elizabeth Bennett explores how delayed payments have the potential to encourage shoppers to spend without considering the consequences to either their bank accounts or the planet.
Forget forking out the money for your clothes at the checkout, nowadays shopping online often means you can postpone paying for weeks and sometimes months. If you head to boohoo.com right now and choose the Ditsy Floral Ruffle Sundress (reduced from £22 to £16.50), you’ll be given three options to pay on the main product page and none involve spending any cash. “Pay £5.50 in 3 monthly installments with Klarna, pay £4.14 every two weeks with ClearPay or pay £2.75 every 6 weeks with LayBuy,” the buttons below the ‘select size’ bar flash at you.
Klarna, ClearPay and LayBuy are just some of the financial companies selling Buy Now Pay Later products (BNPL for short) which offer customers the chance to delay payments or spread out the cost of purchases. Over the last five years they have soared in popularity with payment processors Worldpay finding these schemes are growing at a rate of 39% a year.
Looking at it in terms of consumption, BNPL schemes make it even easier for consumers to purchase clothes without much consideration. Often by simply entering an email you can complete your order and not worry about payment until further down the line. For fashion retailers, these payment plans are excellent for business with Klarna telling potential partners via its website: “A customer’s order value increases by 55% when shopping with instalments.” In fact, Comparethemarket.com research found that 40% of shoppers say these schemes encourage them to spend more than they usually would.