New PayPal payment options may woo customers

Industry News

During the holiday season, consumers’ budgets may run tight. In fact, one recent report from the National Retail Federation suggested the average person may spend upward of $804 this year, a 5 percent increase compared to expenditures for the 2013 holiday season. Just because they are spending more, however, does not mean their wallets are any looser.

“While not completely throwing caution to the wind, Americans’ frugal spending habits will still be visible this holiday season as they continue to rely on discounts and sales and comparison shop,” added NRF president and CEO Matthew Shay.

Buy now, pay later

As such, some businesses in the payments industry are looking to find new ways of encouraging customers to spend their money a bit more loosely. For instance, PayPal recently announced it would give customers more leeway to buy now but pay bills later on down the line. Internet Retailer reported the “Pay After Delivery” program was aimed at giving online shoppers more flexibility during the holiday shopping season – not everyone can afford to drop $800 on gifts in one chunk.

“Pay After Delivery” program was aimed at giving online shoppers more flexibility during the holiday shopping season.

Although PayPal is the one launching the initiative, it may wind up benefiting online sellers just as much. Such a program may help reduce shopping cart abandonment. Although PayPal did not provide an estimate about how much merchants could make with the “Pay After Delivery” program, Internet Retailer cited research from Forrester that found 56 percent of carts were abandoned by holiday shoppers last year, suggesting a number of missed sales that could be captured with a more lucrative payment plan.

Program participants need to have a verified bank account linked to their PayPal account. They will be able to defer payment for up to two weeks, allowing them to wait until they receive their next paycheck or simply check an item out before deciding upon whether they actually want to make the purchase.

“There is some risk included but we already have a close relationship with the customer”

“There is some risk included but we already have a close relationship with the customer, and we already have access to their financial information so that’s why we can authorize the transaction,” a PayPal spokesman told the news source. “Most times they’re already funding their PayPal account with another source. It could come out of their PayPal account or it could come out of their bank account if it’s linked.”

Accepting PayPal online

Of course, retailers can only capitalize on this program if they accept PayPal at their online stores, which not every retailer does. Millions of people prefer PayPal as their payment option of choice, as it often saves them time from having to enter all of their payment information. It may also add an extra layer of security.

To that end, it is crucial that merchants leverage anĀ order management system that can seamlessly be integrated into payment processors such as PayPal and other common services.

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