Partial payment facility in E-commerce allows offering customizable payment plans and customers can pay in instalments, layaway plans or EMI.
Before an E-commerce era, would you prefer to buy goods and services on installment often? Have you observed that you are spending more money than ever before? Have you noticed that you prefer to buy more from an online store than a retail store?
Today, let’s decode how the change in generation impacts the customers’ spending habits. Also, we will understand how astonishingly a partial payment option is helpful for customers as well as online store owners. Layaway (lay it away) payment methods became popular after the great depression in the United States when the retailers started offering it to generate sales from cash-strapped customers.
If you are a Magento 2 store owner, you are in luck because Meetanshi has developed Magento 2 Partial Payment extension to offer installment payment facility and layaway plans to allow customers to pay in installments.
If you are thinking why should you install the Magento 2 EMI extension, read further to know the benefits of partial payments in E-commerce stores.
According to Trading Economics, the US customers used to spend $2000 billion quarterly in 1960. This number increased to nearly $13,000 billion in 2020! That’s huge! The data demonstrates that consumption has been increasing, so it is mandatory to take advantage by providing quality shopping experience and generate more sales.
Another data from Statista shows that the number of online shoppers in the USA is expected to reach 230.5 million in 2021, which is more than 70% of the US population.
As the massive growth of E-commerce has been observed, it is tremendously important to offer convenient payment facilities like partial payment so that the customers can pay a small amount periodically to buy products and services.
Let us now understand the benefits of having partial payment or installment payment options for your E-commerce store.
Top 6 Benefits of Partial or Installment Payment for Ecommerce Stores
1. Reaching New Customers:
The partial payment facility helps the customers to pay on a weekly, biweekly or monthly basis.
Credit and debit cards for payment options are not sufficient these days. If you wish to maximize your reach, you need to have multiple payment options so that the customers can make payment as per their choice.
Therefore, allowing multiple types of payment options helps to reach out to new customers
2. Best Option to Purchase High-Value Goods
Not all customers can buy high-value goods easily. That’s the reason, if the customers wish to buy high-value goods, it would be difficult for them to pay the full amount at a time. Some customers avoid paying a full amount for the products as it may ruin their personal finance.
According to Baymard Institute, nearly 70% of all the online shopping carts are abandoned. Expensive products is the second reason behind cart abandonment. Thus, the store owners should focus on improving the conversion rate by offering convenient payments system such as partial payments. The customers can pay a small amount every month and they do not need to pay the full amount at once.
For instance, the online jewellery store owner should allow the installment facility as the products are expensive and more customers would consider choosing the weekly or monthly payment option.
3. Increases Affordability of Customers
A well-known recruiting solutions firm, CareerBuilder, found from the survey conducted in 2017 that 78% of workers live paycheck to paycheck in the USA. As millions of people live paycheck to paycheck, if the online store offers an EMI (Equated Monthly Installment) option, the customers feel more comfortable buying the products.
By allowing the EMI option, the customers can pay partially for the products they wish to purchase. Customers who cannot afford to pay the full amount would choose the partial payment option. This is how the instalment payment option increases the affordability of customers.
4. Gives a Competitive Advantage
The EMI facility in the E-commerce store helps to stand out amongst the competition. When your competitors do not have such a feature that delivers a better payment experience, it is the best time for you to provide partial payment options to your customers and increase sales. Moreover, you may get word of mouth promotion too.
If the competitors do not have a partial payment facility, the customers may choose your store over the competitors’ for the purchase.
The research conducted by one of the most popular business news channels globally, CNBC, explains that 44% of consumers would prefer to use the ‘buy now, pay later’ option. By not paying the full amount at once, customers save money.
As per Forbes, millennials have less than $1,000 in their savings accounts, and a significant number have no savings at all. In this situation, attracting millennials for purchase can be easy if you offer a partial payment facility in your online store.
6. No Cost EMI
In India, according to Business Standard, nearly 20% of Gross Merchandise Value (GMV) of sales made on Ecommerce on platforms was financed through the no-cost EMI route in 2018. As the trend continues, today, in 2021, this number would be higher than 20%. So, if you offer and market your top-selling products with “No Cost EMI” option, you may get more customers.
Partial payment or installment or EMI has tremendous benefits for eCommerce stores and the customers as well. That’s the reason, every eCommerce store owner should leverage partial payment for his/her store and take the maximum advantage. Even the experts in E-commerce industry suggest leveraging partial payments system in the online store for customer satisfaction, attracting a larger customer base, and much more.