This newly introduced payment option gives customers the opportunity to hold items and complete the payment in five instalments, either by credit or debit card, without having to go through a credit check or pay any associated fees. To reserve the items they want to purchase, customers must make a 20% initial payment of the total purchase cost, the remaining balance having to be paid off in four monthly instalments, after which they can come into possession of said items.
In the event customers require a cancellation of the layaway plan or fail to carry out the payments, Amazon has stated that they will refund the amounts that have already been paid, without additional service or cancellation fees being applied.
The creation of the Amazon layaway programme follows a customer demand for a year-round, pay-over-time, online payment option where a credit check is not required. The programme is beneficial for Amazon in that it is being provided with no-interest loans sourced by consumers.
BNPL (Buy Now, Pay Later) has been gaining traction in the past couple of years in the ecommerce space. Offering instalments and deferred payment options without interest fees on the consumer side, the BNPL payment method gives consumers the ability to purchase and receive their required items when needed, without having to pay any amount upfront. BNPL providers (e.g.: Affirm, Klarna) have partnerships with retailers that allow consumers the option of paying their purchases off over multiple interest-free instalments, generally due a couple of weeks following the purchase, that can result in late fees and other penalties when missed.
As opposed to BNPL, when purchasing via a layaway programme, consumers must first pay off the reserved product over a set period of time, and only after the payment is done in full can they receive the product.
Apart from layaway, Amazon also offers a BNPL-like programme, which the retailer refers to as ‘monthly payments’. The eligibility of the customer is determined by past purchases on the Amazon website, a credit check not being needed. However, as opposed to layaway, a valid credit card must be linked to make the scheduled payments.
In November 2021, Amazon expanded its partnership with Affirm, the US-based BNPL provider, to allow the purchase of items over USD 50 to be paid off into monthly payments, a service that was available beforehand only to select customers. The company is Amazon’s only US BNPL provider until January 2023, a result of their agreement which enabled the retailer to buy shares of Affirm’s stock. The BNPL option requires a credit check based on which consumers are charged a finance fee that can be an APR (annual percentage rate) ranging from 10% to 30%.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now