‘Buy now pay later’ is replacing layaway at Walmart this holiday season.
Walmart is reportedly expanding an existing partnership with financial products and services company Affirm in lieu of its layaway service.
According to Business Insider, the discount giant is eliminating its layaway program ahead of the 2021 holiday season. Walmart has already been in the process of phasing layaway out since 2020, when it limited the delayed payment plan to select jewelry items.
Under the terms of its layaway offering, Walmart would hold customer purchases while they made interest-free installment payments, eventually giving the products to a shopper once the final payment had been made. In contrast, Walmart’s new “buy now, pay later” (BNPL) service offered in partnership with Affirm enables customers to take home purchases right away and then pay them off in installments.
Walmart first collaborated with Affirm in February 2019, allowing customers to use Affirm to make installment payments on purchases at more than 4,000 Walmart Supercenter stores nationwide. Walmart also integrated Affirm as a payment option on the Walmart.com e-commerce site.
As reported by Business Insider, customers who are approved to use the Affirm service can select a payment plan ranging from three to 24 months. While Walmart did not charge interest on its layaway plan, some Affirm customers may have an annual percentage rate (APR) between 10-30%, depending on their credit rating.
The Affirm service will be offered for purchases valued between $144 and $2,000. Products including alcohol, groceries, food, personal care products, and pet supplies will not be eligible for Affirm financing.
"We've learned a lot in the past year as our customers' needs and shopping habits have changed," a Walmart spokesperson said to Business Insider. " We are confident that our payment options provide the right solutions for our customers."
BNPL is becoming an increasingly popular means of financing retail purchases, especially among desirable younger consumer demographics. More than 45 million U.S consumers ages 14 and older will use a buy-now-pay-later (BNPL) platform this year, up 81.2% over last year, according to data from eMarketer. This represents more than one-fifth (21.5%) of digital buyers in the U.S. By 2025, the figure will grow to more than one-third.
Younger consumers are driving adoption of flexible payments, eMarketer said. Millennials account for 42.7% of BNPL, followed by Gen Zers, which account for 30.3%.
And a survey conducted by CouponFollow for the 2020 holidays season revealed that 73% of surveyed consumers who have made a BNPL purchasesaid their most recent BNPL purchase allowed them to add something to their cart or buy something more expensive due to the monthly installment option . One in three respondents would not have been able to make their latest purchases without a BNPL plan.
Products respondents most commonly purchased via BNPL included consumer electronics (54%), beauty and health (46%), home and garden (38%), games, books, entertainment and media (37%), baby products (24%), and automotive parts/accessories (24%).
Walmart operates approximately 10,500 stores and clubs under 48 banners in 24 countries and e-commerce websites.