eTail West   //   March 1, 2024

As payments platforms pitch more services, some brands fear too many options

This story is part of Glossy and Modern Retail’s series breaking down the big conversations at eTail West.

Los Angeles-based retailer Curacao was founded in Los Angeles in the late ’70s as a way to help immigrants make payment plans for high-ticket purchases. In addition to being a department store, the company offered a private-label credit card that could be used by people who had no credit history so they could pay for electronics, furniture and other household goods sold in-store without any financing charges. To this day, CMO Ariela Nerubay said at least 90% of its sales at its 11 stores and e-commerce site are made using the private-label credit program. 

“We’ve been playing for 40 or 50 years before Klarna, Affirm and all these new buy now, pay later plans came into the market,” she said during a panel at eTail West.

But the proliferation of new, fee-free ways to pay is becoming mainstream — and it’s becoming table stakes for brands that are trying to grow their online business. More than half of Americans say they use digital wallets more than cash or cards, according to Forbes Advisor, while BNPL had a record-setting $8.3 billion in spending during Cyber 5, a 17% jump year over year. In some cases, offering payment plans leads to new customers, or easier ways to drive repeat business.

For Curacao, Nerubay said the new range of payments available means the company is “at a place of reinvention” in terms of how it discusses its value proposition. Part of that means positioning payments as an acquisition tool. “We do credit marketing, we do product marketing,” she said. “Sometimes we lead with credit and put the product in the background, sometimes we go with the product and always have credit in the background. But it’s very symbiotic.”

But how to incorporate the multitude of payment structures in an online environment can be a challenge. In conversations with Modern Retail, some brands questioned the value of having too many buy now, pay later-style options on their checkout, wondering if it would look too cluttered and scare away the shopper. “It looks too busy,” said the vp of marketing for one apparel company.

But others talked about making sure they know that their target audience is offered their preferred method of payment; a clothing brand aimed at 55+ women, for example, said it sees significant PayPal activity, with about 85% of Gen X and 71% of retirees using a PayPal account. But a manager at the brand told Modern Retail it likely wouldn’t bother to introduce a similar setup from a vendor that may have a younger user base, such as Venmo. “We know she’s using PayPal,” they said anonymously.

Meanwhile, a C-level executive who works for a subscription service in the beauty space said having multiple payment methods increases conversion rates. “Sometimes it’s convenience,” they said, but other people “feel more secure using something like PayPal so they don’t expose their credit cards.”

Fear of a cluttered checkout, though, isn’t deterring payments companies from pitching their services at industry events.

From the fintech side, offering bespoke products for brands can help cut down on clutter while still providing a customer-facing payment plan. Pat Suh, svp at Affirm, shared during the only payments-focused keynote at eTail West that Affirm’s clients are increasingly interested in offering more than a “pay in 4” plan. That includes longer-term financing models that can stretch on for years for high-ticket purchases.

Some brands wind up seeing new customers from these offerings. When furniture retailer Room & Board offered 0% plans from Affirm, over 35% of those who used the plan were new customers. And, a Bay Area-based fitness products company Tempo added a 48-month, zero-interest plan that led to 16% growth in customers under 40.

Affirm also has a physical card that can be used at any store, as well as a payment plan that rolled out at 4,500 Walmart self-checkout kiosks.

“We really partner with a lot of our retailers, in getting very integrated into the solutions and growing with the retailer,” Suh said during the keynote conversation with Modern Retail on Tuesday.

Colin Mellon, head of sales for SplitIt, attended eTail West to introduce the payment technology to more brands. SplitIt provides white-labeling installment services for brands and is planning to roll out similar products with banks later this year. SplitIt’s research, Mellon said, shows that 37% of customers are more likely to buy something if they can split it up into payments. 

“Optionality is becoming a must-have,” he said. “It’s not like you can only pay with cash, check or card like back in the day.”