With the growing number of payment plans available, many website owners struggle to decide which is the best option for their business. Should they offer all the available options, or select only one? Do they ask their customers what they want, or make the choice themselves? We discuss what the benefits of offering a payment plan are, what your choice options are and how to choose the right one for your business' website.
Benefits of Offering a Payment Plan on Your Website
For a business owner to want to offer a payment plan, there must be clear benefits for their business, their customers or for both. Payment plan providers state that there are benefits for both parties including:
- customers can purchase items and use them now, paying the purchase price over several payments
- suggestions that offering a payment plan to customers can increase both the quantity of sales, plus the total purchase price
- the business doesn't need to handle payment collection from the customer; the payment plan business does that
- many payment plans work both online and instore
- no cost to sign up for customers
- opportunity for increased conversions due to reduced cart abandonment
- you get paid the amount in full and don't have to chase payments
These benefits don't come without one key disadvantage, (which the payment plan businesses are quick to say is covered by increased sales); a merchant fee for every sale made using that payment plan. Usually these are charged as a total percentage of the transaction, though this does vary between providers.
What Are My Website's Payment Plan Options?
Payment plans are a relatively new option, where as a business you sell the goods to the customer, who then pays the payment plan company the full cost of their purchase in split payments. The payment plan company pays you the full amount up front, charging the customer interest or a fee if they fail to meet a payment. In order to use a payment plan, a business must first sign up to have an account with them. The customer also needs to have an account too.
There are three payment plan options currently available to Website World customers:
- offers customers the chance to split their purchase price into six weekly payments. There is no additional charge to the customer if their total purchase cost is paid in full within the timeframe. If it isn't Laybuy will charge them a fee.
- offers merchants the opportunity to increase their customer base, the number and dollar amount of sales, reduce fraud risk and receive the full purchase price up front from Laybuy, minus a merchant fee.
- offers customers the chance to pay 25% of the purchase cost over four fortnightly payments. They pay 25% at the time of purchase, with the remaining three 25% payments split over the next six weeks. There are no fees or additional costs unless the customer fails to make a payment on time, when they will be charged late payment fees.
- offers merchants the full payment price upfront minus a merchant fee, lower fraud risks, opportunity to increase sales quantity and price. This is a NZ owned company.
- offers customers the ability to purchase something now and pay for it over four equal fortnightly payments. The only additional fee charged to the customer is if they fail to make a payment on time. It also lets customers use their app, plus purchase both instore and online.
- offers merchants an upfront payment minus a merchant fee, reduced fraud risk and the opportunity to increase sales in price and quantity.
How to Choose Between Payment Plans
You've decided to add at least one payment plan option to your website. The choice is now, which one(s) should you sign up for a merchant account with?
There really is no hard and fast rules about how to make that decision. But here are a few questions to ask yourself and find the answers to:
- what % is their merchant fee?
- which payment plan are your customers asking for and/or using?
- do you want to work with a well established payment plan business, or a new one, or you're not bothered?
- when do you get paid the full purchase price, minus merchant fee?
- what is their returns policy?
- how large is their customer base?
- how easy it is for a customer to sign up with them?
- what do you need to do or provide in order to sign up as a merchant?
- is it supported by your website platform?