Walmart Inc. has ended its layaway service as customers continue to embrace the buy now, pay later trend.
The Bentonville-based retailer now allows customers to pay for certain items with Affirm, a short-term financing option that requires a qualifying credit score and offers a variety of repayment terms and options.
Walmart has worked with Affirm since 2019. Last year, the company said it was reducing the number of its stores offering layaways during the Christmas shopping season, citing a drop in usage.
In a statement released Monday, Walmart said, “We have learned a lot over the past year as the needs and buying habits of our customers have changed.
“This past holiday season, we removed seasonal layaways from most of our stores with the exception of certain jewelry items in certain stores, and based on what we have learned, we are confident that our payment options provide the right solutions for our customers, ”the company said. noted.
Walmart said shoppers interested in buying now and paying later can fund their purchases through Affirm as well as a Capital One Walmart Rewards card that offers 5% cash back on Walmart’s e-commerce site and 2% in The stores.
Layaway, which dates back to the Depression days, allows customers to reserve merchandise for deposit and interest-free payments. It fell out of favor as the use of credit cards increased.
However, it remained popular with people with limited disposable income or without credit, and benefited retailers by allowing them to sell to low-income buyers with little risk.
Walmart ended its year-round layaway program in 2006 to cut costs and make room for the store delivery service it was starting. But it revived the service for the Christmas shopping season in 2011, when many families were still suffering financially from the 2008-2009 recession.
Steve Dennis, president and founder of SageBerry Consulting LLC, said that a big advantage of buying now and paying late over layaway is that buyers get the products they buy immediately.
But the tradeoff, Dennis said, is the credit check and finance charges that come with some of these plans.
More generally, according to Dennis, “These services greatly simplify and digitally integrate the different types of installment plans and zero percent financing promotions offered by retailers – and make them available across a wider range of products. “
While Affirm, Afterpay, and Klarna are some of the more well-known Buy It Now plans, others include Zip (formerly QuadPay), Sezzle, ViaBill, Perpay, and PayPal’s “4 in 1” plan.
In many cases, the services can be used both online and in stores. Some retailers offer multiple plans, while others offer only one.
The list of merchants offering one or more of these payment models is large and growing.
Amazon.com, which previously had its own five-installment plan, jumped on the Affirm bandwagon in August. Other retailers using at least one of the plans, according to a quick internet survey, include Little Rock-based Dillard’s Inc., Target Corp., Best Buy, Macy’s Inc., Bed Bath & Beyond Inc., Peloton, ThredUP and Pottery Grange.
The terms and conditions of all of these plans can differ significantly. Some don’t require a credit check and charge no fees unless payments are late.
Affirm allows qualified buyers to choose the terms under which they will pay for their purchases. The Affirm website gives several examples of this, based on a hypothetical purchase of $ 1,000.
A three-month plan bears no interest, while the six-month and 12-month plans carry an interest rate of 15%. This means that the buyer could end up paying up to $ 1,083 for a $ 1,000 purchase.