Buy Now, Pay Later Online

Discussion
Jul 06, 2004
George Anderson

By George Anderson

Although credit cards are still the payment method of choice, e-tailers are finding ways to offer the one in five adults without plastic, or those who simply don’t want to use
it, a way to buy online.

According to an Associated Press report, consumers are now being given the option of buying with check or, in some cases, on account.

Many other online merchants including Walmart.com now accept e-checks.

The market research firm, Celent Communications, predicts e-checks will be used in nine percent of online transactions by next year. That represents a significant increase over
the six percent number in 2003.

Merchants including 1-800-Flowers.com, Ross-Simons and Odimo, all offer to invoice consumers for purchases. Others, such as ashford.com, have programs offering delayed payments
on purchases of $250 or more.

Gwenn Bezard, senior analyst at Celent, said the market for those not wishing or able to use credit cards may be relatively small, “but as a retailer, if you are able to tap
into that — even if that represents a few percentage points in sales increase — that’s worthwhile.”

Moderator’s Comment: Do you see the factors driving online purchases without the use of credit cards, such as fear
of fraud or not having a credit card, becoming more or less prevalent in the future? Does offering purchasing options such as e-checks or invoicing provide a retailer with a competitive
advantage over those who do not?

We were at first skeptical as to why a retailer would offer customers an invoice option rather than requiring payment when the purchase was made. But a
company offering the service, I4 Commerce, says it pays merchants within 24 hours of a transaction.

“We own all the risk and responsibilities associated with the loan,” said the company’s chief executive, Gary Marino.

According to the AP report, “I4 Commerce approves and denies loans based on information from credit bureaus and from merchants, which can tag preferred
customers.”

George Anderson – Moderator

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