Buy now, pay later programs provide yet another way for retailers to help consumers make a purchase. As noted, layaway and other payment programs are not new, but the way BNPL programs can be deployed today with technology make it extraordinarily convenient especially for younger, digital natives. The growing trend in BNPL also helps address the difficult economic circumstances many younger consumers face. While there is still room for more traditional layaway programs, BNPL is becoming an entirely different proposition, targeted at a different audience.

Moving from layaway to buy now, pay later makes sense for many retailers as it means they can sell goods immediately without having to store them. Some shoppers will also like the immediacy of the service, which allows them to shop later into the holiday season as they don’t need to make payments up front. However buy now pay later isn’t a perfect solution. Some will have to pay interest on the advance which, ultimately, means they will spend more. It could also affect credit scores in a way that layaway didn’t. In general, there is a very casual attitude around buy now pay later but, ultimately, the service is a formal financial loan and can be defaulted on like any other lending. My fear is that there is a bubble here waiting to burst.

This is for sure the future of layaway – buy now, pay later. It takes all of the risk off the retailer around whether the consumer pays and if the retailer will get stuck with the inventory (and if it will have to go back out on the floor as a markdown), and gets them paid much faster. Of course they get less than the full price from the BNPL vendor, but I bet it’s still a better deal at the end of the day.

It also enables the consumer to walk away with the item right away, so it’s a win for both sides.

That said, the proliferation of BNPL suggests that a regulatory crackdown may be coming soon – there are already stories of consumers getting in over their heads on BNPL, and if it gets out of control that will be bad for everyone – retailers, consumers, and BNPL providers alike. So I hope the space gets a little less “frothy” soon.

The differences between layaway and BNPL are clear. With layaway there is no fee but the customer does no get the product until the payment is completed. With BNPL, the customer pays a fee but gets the product immediately. The benefits of BNPL to the retailer are that the consumer may opt for it for the immediate gratification factor, the retailer does not have to risk aging the product that may not be purchased in the end, and the retailer does not have to handle the receivable if they contract with a financial service provider.

The merch is out the door and someone else is guaranteeing payment. Afterpay and the like are the future for so many reasons. I don’t know why anyone would take merchandise off their shelf on a promise of the customer returning diligently to make payments. I used to manage these in stores and often your best merchandise was never picked up and past prime selling times. The risk to the retailer is nil – to those guaranteeing payment, still risky.

Much like credit cards, any program that helps consumers pay later for a purchase they can take home today is going to help retailers sell more products. Buy now pay later (BNPL) and layaway are both important tools for retailers to help customers manage their money while still having access to the products they need. Layaway programs can offer longer and more flexible payment terms without impact to credit reports. BNPL allows customers to take the product home while paying, but can affect credit if they default. To the retailer, the challenge of what to do with defaulted products is always going to be an issue, but with layaway the retailer keeps the product until it’s paid for, assuring new condition for resale if it isn’t too seasonal.

Oh my gosh, I just fell out of my chair while trying to balance a cup of coffee as I when I read “Thirty-three percent of customers as recently as 2018 were planning to use layaway.” It was a staple back in my department store years, but with all the options offered by retailers I would have bet that a large percentage of customers wouldn’t understand what it meant. There’s not enough physical space for successful layaway purchases to sit today in stores. Layaway as we know it today is a dinosaur and is disappearing very quickly.

Buy now pay later transactions are continuing to grow as can be seen in Mastercard’s recent announcement to build its own multi-payment post-purchase card process. The buy now pay later transactions offer retailers significant inventory advantages. Instead of the retailer acting as the consumer’s closet and having to restock canceled layaways after peak shopping days and missing markdowns the merchandise is now paid for and in the actual customer’s closet. Certain niche retailers may continue to offer layaways, but I would expect the use of layaways to wane. It is also interesting to note that the layaway transaction has been dropped from the majority of the POS software available.

Layaway programs are well past their expiration date. It was always a compromise for consumers to wait to get the product and for retailers to have to allocate inventory. BNPL addresses a major pain point and provides a financing option that is well integrated into the shopping experience while (in most cases) avoiding some of the issues consumers have with taking on traditional debt. Whether BNPL business models will ultimately succeed to the degree their sky high valuations imply is a very different question. I’d tread carefully.

Layaway is a way of life for some consumers and it is something they depend on to get the gifts and goods they need but cannot afford right now.

While I understand the instant gratification options programs like Afterpay offer, I wonder if they are the be all, end all solution for every consumer. Not everyone will qualify. What happens to those loyal customers who do not? I agree with Neil; there is a bubble waiting to burst here.

With BNPL, there really isn’t room for layaway programs. If you can have the product right away and not have to pay for it all, why would you find an alternative where you don’t get the product until the end appealing? BNPL is an extremely suited solution to our instant gratification retail culture.

Layaway as a concept, in this modern area — to me is dead. It’s complicated and messy from a process and IT perspective now that BNPL is growing in adoption. The shift of responsibility for payment needs to move to a third party in my mind, and the retailer should be getting this inventory off their books, collecting cash and increasing the inventory turn — and AfterPay and the like should be rewarded, in the feeds and APR gained, for taking on the risk of payment. “Layaway is dead, long-live BNPL!”

Like all abstractions of money (credit cards, mobile payments, chips at a casino) the further removed the buyer is from hard cash, the more likely they are to spend. Great for retailers who want to capture an impulse buy in the short term, but I agree with other commenters that eventually there could be a backlash depending on how those programs are administered. That said, with all the pressure on stores to stage products for BOPIS and Ship from Store, space is at a premium. Layaway stock just doesn’t move fast enough to justify the square footage.

Unfortunately, our world is impatient and entitled. The main benefit is immediate gratification of a desire or want. We want the latest stuff yesterday and expectations through retail have been to deliver. Layaway doesn’t stand a chance and though it will not completely vanish, there will be far smaller and fewer opportunities until the next financial crisis when lenders and retailers remove default risk. The big advantage for layaway is zero interest.

BNPL will be the dominant installment plan purchasing model after credit/debit cards. Gen Z and millennials will be looking to more BNPL (up to 17% and 21% respectively) based on a Future of Money study from Logica. Still room for layaway during financial downturns and low-credit customers.

It is good for the retailer in the short run and provides instant gratification to shoppers. However, it creates a high risk credit bubble for consumers that maybe shouldn’t have received the credit in the first place. Time will tell if this causes a widespread problem.