Shopify has launched Shop Pay Installments, its buy now, pay later product specifically designed for Shopify merchants. Shop Pay Installments helps merchants give their buyers flexibility when paying for purchases at checkout. Buyers can split payments into four equal installments, interest-free and with no additional fees.
The solution is supported by Affirm in the US and is now available to hundreds of thousands of US merchants. It will be automatically enabled for new merchants when they enable Shopify Payments and Shop Pay.
Merchants retain a centralised view into everything from performance to product pages to inventory. Shop Pay Installments is expected to boost sales. One in four merchants using it during the trial saw 50% higher average order value compared to other payment methods. In addition, merchants saw 28% fewer abandoned carts after switching from a third-party buy now, pay later solution.
“Our average cart size on Shop Pay Installments is double that of the regular checkout. More customers are buying larger bundles of our socks,” said Daniel Shim, co-founder of ONDO. The company is an ethical apparel brand. “Having Shop Pay Installments on the same platform where we run our business has helped us get more data-driven. It has led us to launch new products for the summer.”
Merchants can unlock benefits
Access to one of the largest US consumer networks of any buy now, pay later provider through Shop Pay. Shopify’s accelerated checkout method. In addition to Shop, the company’s shopping assistant app. Merchants can serve the millions of consumers already using Shop Pay to complete their purchases and using Shop to get real-time shipping updates on their orders.
Shopify says its checkout experience has higher conversion and order values. Shop Pay Installments allows merchants to offer a easy checkout experience through Shop Pay. Instead of sending buyers offsite and risking abandoned purchases. Shop Pay checkouts:
- Are 4x faster than regular checkouts.
- Have an average checkout-to-order rate 1.72x higher than regular checkouts.
- Convert at almost double the rate of regular checkouts on mobile
Merchants can measure their performance, sales, and fees in one place — the platform where they run and grow their businesses. Shop Pay Installments is fully integrated with their Shopify stores, including their inventory. Merchants can avoid overselling at critical moments like flash sales when offering a buy now, pay later option to customers. This saves them time and gives shoppers a better experience.
Transparency that builds trust with buyers.
Through Affirm, Shop Pay Installments helps merchants provide buyers with increased flexibility and affordability at checkout. This is achieved with the option to split purchases into four equal interest-free payments. There are no additional, hidden, or late fees, helping merchants build trust with their customers.
“We built Shop Pay Installments to give merchants a critical and easy-to-use financial tool to grow their sales,” said Kaz Nejatian, VP, Product, Merchant Services at Shopify.
“Our partnership with Affirm combines their technology and expertise in buy now, pay later. Together, with our deep understanding of our merchants’ unique needs and the power of our commerce platform. We are delivering the best possible buy now, pay later experience for merchants and their buyers,” Nejatian added.
“All businesses regardless of size deserve access to technology that can help them grow and succeed. This is why we custom-built Shop Pay Installments in partnership with Shopify,” said Max Levchin, Founder and CEO of Affirm. “At a time when consumers are demanding more flexible and transparent payment options. Providing pay-over-time solution that doesn’t hit consumers with late or hidden fees is no longer a nice-to-have, but a must. We are thrilled to make a Shop Pay our solution immediately accessible to hundreds of thousands of Shopify merchants in the US. This will support the millions of consumers they serve, as we advance our vision of becoming ubiquitous.”
Enterprise Times: What this means for business?
One of the unfortunate side-effects of the global pandemic has been the slow-down in the economies in virtually all countries. As a result, consumers are expected to have less cash in their pockets. For many retailers, a possible solution to shoring up revenues in 2021 is the buy-now-play-later (BNPL) model. This model is becoming more popular in the US and Australia at a time of improving consumer confidence. Another US company at the forefront of the trend is Sezzle.
BNPL appeals to Generation Z and Millennials, the audiences who have been most impacted by the economic downturn. Compared to using a credit card, buying through BNPL is a win-win situation for the consumers. Consumers can’t get over-extended on credit and all the evidence suggest it tends to increase their order value. It will be interesting to see if this business model translates to the UK and Europe over the next few years.