Buy now, pay later plans help to reduce online cart abandonment

Buy now, pay later plans help to reduce online cart abandonment

Alexi Horowitz, photographed for NPR, 2 August 2022, in New York, NY. Photo by Mamadi Doumbouya for NPR.

Transcript¹

A payment option called buy now, pay later is growing in popularity. While these services offer consumers a convenient form of interest-free installment³ credit, they've raised regulators' concerns.

RACHEL MARTIN, HOST:

If you have shopped online recently, you may have noticed a new kind of payment option available. It's called buy now, pay later. And the basic model, offered by companies like Afterpay and Klarna, allows customers to buy what they want immediately and pay for it later in four interest-free installments⁴. Alexi Horowitz-Ghazi of our Planet Money podcast explains the potential pros⁵ and cons².

ALEXI HOROWITZ-GHAZI, BYLINE⁶: When you use buy now, pay later, you are essentially⁷ taking out a little loan. It's kind of like paying with a credit card.

TERRI BRADFORD: The difference is you aren't paying interest. It almost is, like, too good to be true.

HOROWITZ-GHAZI: Terri Bradford is a payments specialist at the Kansas City Fed. And she says buy now, pay later feels too good to be true because as long as you're able to clear a pretty low bar, like a soft credit check that won't show up on your credit score, these companies will front you the money for whatever you're buying. Then they'll collect in four installments from whatever bank account or debit⁸ or credit card you want. And it's all interest-free, which raises a pretty big question.

BRADFORD: Interest-free loans. Where's the value proposition in that? So where was the money coming from, right?

HOROWITZ-GHAZI: Right. Lending money is usually profitable because of some combination of interest and fees. But Terri and her research partner, Julian Alcazar, found that the fees in this model generally aren't high either.

JULIAN ALCAZAR: I was always expecting this gotcha moment. You know, when you watch a scary movie and you can hear the suspenseful⁹ music and then there's Michael Myers behind the door, that's what I was expecting.

HOROWITZ-GHAZI: It turns out instead of gouging¹⁰ their customers with hidden fees, buy now, pay later companies are taking their cut from the other side of the transaction by charging the businesses actually selling the goods. It costs them between 4 and 9 1/2% per sale. Credit card companies usually charge less, from 2 to 4%, which raises another question - why are more and more retailers¹¹ opting¹² for buy now, pay later?

BRADFORD: Yeah, it doesn't quite seem to jibe¹³, does it?

HOROWITZ-GHAZI: What makes it jive (ph) is that buy now, pay later is helping¹⁴ businesses sell more stuff because it helps them reach people who don't usually buy on credit, people with bad credit or younger customers. On top of that, Julian says, buy now, pay later helps retailers with a problem they call cart abandonment, when people fill their shopping carts, but then when they head to check out...

ALCAZAR: They'll be like, I don't need to spend $200. What buy now, pay later does - it actually reduces cart abandonment because it makes large purchases seem smaller to the consumer.

HOROWITZ-GHAZI: Which can be dangerous. Amelia Schmarzo experienced this a couple of years ago when she started buying clothes online using buy now, pay later.

AMELIA SCHMARZO: It literally¹⁵ made the price, like - I kid you not - like, $8. So in that mindset, I was like, oh, my gosh, I can afford the world.

HOROWITZ-GHAZI: Amelia fell into a kind of shopping spiral. Before, her credit card statement had only ever been a few hundred dollars at the very most. But when she got the bill that month...

SCHMARZO: I saw that it was $2,000, which was my limit. And then I saw my debit card went from $700 to, like, $20. And that's when I was like, I am going to throw up.

HOROWITZ-GHAZI: Stories like Amelia's are part of the reason that regulators, like the Consumer Financial Protection Bureau, are now looking into how these services fit into existing credit regulations and mapping out the risks they may pose to the people who use them. Alexi Horowitz-Ghazi, NPR News.

(SOUNDBITE OF LOVE ABOVE'S "MOKHOV")

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 cons   

n.欺骗，骗局( con的名词复数 )v.诈骗，哄骗( con的第三人称单数 )

参考例句：

• The pros and cons cancel out. 正反两种意见抵消。 来自《现代英汉综合大词典》
• We should hear all the pros and cons of the matter before we make a decision. 我们在对这事做出决定之前，应该先听取正反两方面的意见。 来自《简明英汉词典》

3 installment   

n.(instalment)分期付款；(连载的)一期

参考例句：

• I shall soon pay the last installment of my debt.不久我将偿付我的最后一期债款。
• He likes to buy things on the installment plan.他喜欢用分期付款法购买货物。

4 installments   

部分( installment的名词复数 )

参考例句：

• The first two installments were pretty close together in 1980. 第一次和节二次提款隔得很近，都是在1980年提的。
• You have an installments sales contract. 你已经订立了一份分期付款的买卖契约了。

5 pros   

abbr.prosecuting 起诉；prosecutor 起诉人；professionals 自由职业者；proscenium （舞台）前部n.赞成的意见( pro的名词复数 )；赞成的理由；抵偿物；交换物

参考例句：

• The pros and cons cancel out. 正反两种意见抵消。 来自《现代英汉综合大词典》
• We should hear all the pros and cons of the matter before we make a decision. 我们在对这事做出决定之前，应该先听取正反两方面的意见。 来自《简明英汉词典》

6 byline   

n.署名；v.署名

参考例句：

• His byline was absent as well.他的署名也不见了。
• We wish to thank the author of this article which carries no byline.我们要感谢这篇文章的那位没有署名的作者。

7 essentially   

adv.本质上，实质上，基本上

参考例句：

• Really great men are essentially modest.真正的伟人大都很谦虚。
• She is an essentially selfish person.她本质上是个自私自利的人。

8 debit   

n.借方，借项，记人借方的款项

参考例句：

• To whom shall I debit this sum?此款应记入谁的账户的借方？
• We undercharge Mr.Smith and have to send him a debit note for the extra amount.我们少收了史密斯先生的钱，只得给他寄去一张借条所要欠款。

9 suspenseful   

adj.悬疑的，令人紧张的

参考例句：

• If his experiences then had been carefully recorded, it would undoubtedly have made a suspenseful and moving book. 若是把他所经历的事实记录下来，那就是一部充满着大智大勇，惊心动魄的小说。 来自《现代汉英综合大词典》
• Lily is an atmospheric and suspenseful tale of love, loss and obsession. 这是一个关于爱情、失落与迷恋的故事，充满情调与悬疑色彩。 来自互联网

10 gouging   

n.刨削[槽]v.凿( gouge的现在分词 )；乱要价；（在…中）抠出…；挖出…

参考例句：

• Banks and credit-card companies have been accused of gouging their customers. 银行和信用卡公司被指控欺诈顾客。 来自辞典例句
• If back-gouging is applied, grinding to bright metal is required. 如果采用火焰气刨，则应将其打磨至可见光亮的金属表面。 来自互联网

11 retailers   

零售商，零售店( retailer的名词复数 )

参考例句：

• High street retailers reported a marked increase in sales before Christmas. 商业街的零售商报告说圣诞节前销售量显著提高。
• Retailers have a statutory duty to provide goods suitable for their purpose. 零售商有为他们提供符合要求的货品的法定义务。

12 opting   

v.选择，挑选( opt的现在分词 )

参考例句：

• What courses are most students opting for? 多数学生选什么课程？ 来自《简明英汉词典》
• Wells doesn't rule out opting out and then re-signing with Houston. 威尔斯没有排除跳出合同再与火箭重签的可能。 来自互联网

13 jibe   

v.嘲笑，与...一致，使转向；n.嘲笑，嘲弄

参考例句：

• Perhaps I should withdraw my jibe about hot air.或许我应当收回对热火朝天的嘲笑。
• What he says does not jibe with what others say.他所说的与其他人说的不一致。

14 helping   

n.食物的一份&adj.帮助人的，辅助的

参考例句：

• The poor children regularly pony up for a second helping of my hamburger. 那些可怜的孩子们总是要求我把我的汉堡包再给他们一份。
• By doing this, they may at times be helping to restore competition. 这样一来, 他在某些时候,有助于竞争的加强。

15 literally   

adv.照字面意义，逐字地；确实

参考例句：

• He translated the passage literally.他逐字逐句地翻译这段文字。
• Sometimes she would not sit down till she was literally faint.有时候，她不走到真正要昏厥了，决不肯坐下来。