If you have an e-commerce business, you may be interested in adopting the new point-of-sale option that has been launched in New Zealand. PartPay will allow the New Zealand consumer to split their payment over a few weeks without the nasty interest rates as expected with short-term loans. This will encourage more consumer spending and repeat business.
How does PartPay work for the consumer?
When you get to the checkout of your online retailer, you will be given the option to pay by credit, debit or PartPay. Should you take the PartPay option, you will enter a real-time credit check and once approved, you will need to pay 25 percent of the total cost. The remaining costs will be paid off over the next six weeks; three instalments at 25 percent or six instalments at 12.5 percent. Transactions can be between $50 and $1000.
Director John O’Sullivan who has seen its success overseas says the idea is not to encourage debt but better money management. “Credit on top of credit is not a good fit with what we are doing”. O’Sullivan says there are no catches or small print. If the consumer pays the agreed amount on time, there will not be any additional cost or interest fees.
How does PartPay work for the New Zealand Business?
Sign up is free. PartPay pays the retailer in full the next day, minus an agreed (single digit) percentage. The retailer ships the product as normal. The debt is then between the consumer and PartPay - who assumes full risk and will be paid the interest should the consumer default on their payments.
Who does it benefit?
The simple model is beneficial for both the consumer and retailer. Consumers can purchase products before payment day and can split it into manageable amounts over six weeks. Assuming they do not default on their payments, there are no extra charges. This system is likely to be popular around Christmas.
This point of sell product encourages consumer spending and reduces the need for culling or abandoning the shopping basket at payment time. The average documented online shopping cart abandonment rate is 69.23%. One of the main reasons for this is a consumer was just browsing and not yet ready to buy. PartPay will incentivise the consumer to buy now manage their payments in instalments. Consumers will favour sites that offer flexible payment options and a better user experience.