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In the burgeoning
e-commerce world, payment formats play a crucial role in the overall customer experience.
Choices presented to shoppers at checkout can make or break a sale. They can also impact customer loyalty. Which payment methods a retailer chooses—and how flexible options are—can determine where consumers shop, how often they shop and how much is spent with a particular merchant.
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Retail Pain Points / Pay Monthly Solution / Pay Monthly Benefits / Customer Success Stories
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Retail Pain Points
Checkout behaviors are prompting many e-commerce players to broaden their portfolio with more flexible payment options that let customers "pay at a pace that works for them" versus "pay now."
By teaming up with a payment partner that offers a broad range of payment solutions and billing plans, retailers can meet customers' ever-changing needs, generate loyalty and stand out in a competitive market. These solutions can also alleviate credit card glitches and sales lost to cart abandonment.
What's Going on in Retail Today
flexible
digital
pay on
own terms
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How alternative payment options are powering e-commerce growth and customer experience
Flexible payments, stronger sales
Customers benefit from flexibility at checkout. This gives them what they want on their own terms, making the checkout experience a crucial part of landing the sale. Consequently, retailers gain new customers while encouraging existing ones to return.
Discover our solution...
What Customers Want
Retail Pain Points
While credit cards are the most common payment method in the booming e-commerce world, glitches can occur that prevent the sales from being completed. And some consumers are uncomfortable using cards online. These scenarios can lead to cart abandonment. A wider assortment of payment options can prevent this.
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Payment Options Can Make or Break Sales
Shoppers may be disappointed that there are no digital payment options, feel uncomfortable using a credit card online or have their credit card denied for unknown reasons. Once a card is declined, many consumers will not shop that retailer again and/or will spread negative information about that ecommerce site.
On the retailer’s end, credit cards can eat into sales and profits, with credit card processing fees typically costing retailers about 1.5% to 3.5% of each transaction’s total.
In some instances, shoppers simply change their mind about a purchase or decide to delay it. But in many cases, credit card issues lead to cart abandonment.
On the retailer’s end, credit cards can eat into sales and profits, with credit card processing fees typically costing retailers about 1.5% to 3.5% of each transaction’s total.
The Covid-19 pandemic and consumers’ desire for contactless shopping caused U.S. e-commerce sales to grow at unprecedented levels.
Lockdown Fuels
Online Sales
(click) Charts: Cart Abandonment Rates by Category
U.S. E-commerce Sales, 2012 to 2021
A lack of choices in payment options is often to blame for cart abandonment and lost sales.
Cart Abandonment: $18 Billion in Lost Revenue
E-commerce sales could be even higher. According to Forrester Research, shopping cart abandonment causes e-commerce companies to lose as much as $18 billion.
Source: Nov. 2021, https://baymard.com/lists/cart-abandonment-rate
A Baymard Institute comparison of multiple e-commerce sites found that shopping cart abandonment rates average a whopping 70%.
Cart Abandonment Rates by Category
>
U.S. eCommerce Sales, 2012 to 2021
>
click here
Source: https://www.insiderintelligence.com/chart/252053/us-total-retail-sales-by-channel-2019-2025-trillions-change
U.S Total Retail Sales, by Channel, 2019-2025
Ecommerce Sales
X
Sales in Billions (USD)
$1,000
$750
$500
$250
$0
2019 2020 2021 2022 2023 2024 2025
$0.598
15.1%
$0.792
32.4%
$0.919
16.1%
$1.065
15.9%
$1.230
15.5%
$1.412
14.8%
$1.607
13.8%
Shopping cart abandonment rates have improved somewhat over the past two years due to pandemic-driven growth in online ordering and curbside pickup efficiencies. This is particularly true in grocery. With consumers demanding contactless shopping, grocers rushed to improve online technologies, expanded payment choices and improved physical curbside pickup infrastructure. But this is not the case for all categories, with abandonment rates in luxury goods, fashion, baby/child and automotive still in excess of 80%.
Source: SaleCycle, June 2022
https://www.salecycle.com/blog/stats/how-coronavirus-is-affecting-ecommerce-stats/
Cart Abandonment Rates by Category
X
Luxury
Fashion
Cosmetics
Cosumer Electronics
Sport & Outdoor
Gardening & DIY
Groceries
Retail
Baby & Child
Pharmaceutical
Automotive
2020
90.61%
90.68%
85.73%
85.49%
84.21%
90.34%
83.97%
84.51%
94.36%
76.98%
96.88%
2021
87.78%
88.57%
75.35%
70.65%
75.67%
80.21%
61.13%
76.34%
85.10%
71.51%
89.11%
2022
87.93%
87.79%
70.11%
50.03%
70.30%
79.23%
50.03%
71.24%
84.86%
70.06%
85.97%
Credit Card Glitches
of consumers have abandoned a purchase because they didn’t trust the site with their credit card information.
Among shoppers, 25% reported at least one declined credit card order over the past 12 months.
36%
25%
Source: RIS News/ClearSale, fall 2021
WHAT ONLINE SHOPPERS DO WHEN CREDIT CARDS ARE DECLINED
Click to enlarge
62%
40%
34%
WHAT ONLINE SHOPPERS DO WHEN CREDIT CARDS ARE DECLINED
(Percentages exceed 100 due to multiple response options.).
Source: RIS News/ClearSale, fall 2021 https://www.risnews.com/checkout-checklist-how-stop-cart-abandonment-costing-sales
https://www.clear.sale/
34% would post something negative about the merchant on social media after a decline.
40% would probably never order from that merchant again.
62% might try one more time after a decline
62%
40%
34%
X
How Pay Monthly works
With Pay Monthly, monthly payments can span a 6 to 24-month period.
The first payment is due one month after purchase, and then a payment is due each month for the remaining months of the selected plan. There are three possible plans of varying lengths with risk-based APR ranging from 9.99% to 29.99%.
Shoppers can set up automatic payments, seamlessly tracking them online and via the PayPal app.
Monthly payments can be made via a bank account or debit card.
There are no fees or late charges.
All purchases are backed by PayPal’s Purchase Protection.
Other Pay Monthly Perks:
Pay in 4 allows shoppers to break purchases of $30 to $1,500 into four interest-free payments. The first payment is due at time of purchase, with three subsequent payments made every two weeks.
How is Pay in 4 Different than Pay Monthly?
When making a purchase, consumers will be able to select the PayPal Pay Later solution that best fits their budget at checkout.
Pay Monthly
Pay in 4
PayPal balance
Pay Monthly
1 month
6 month
24 month
Consumers can select the plan that best suits their budget and lifestyle.
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An Established Brand Consumers Trust
In the short time it has been available, millions of retailers are already benefitting from Pay Monthly, including:
69% of PayPal customers feel more secure shopping at merchants that accept PayPal.
70% of PayPal users believe PayPal is more convenient than other payment methods.
It gives U.S. e-commerce shoppers more options by allowing them to make monthly payments on high ticket purchases of $199 to $10,000. There are no penalties or late fees, making this BNPL concept even more convenient.
Introduced in June, Pay Monthly is PayPal’s newest Buy Now, Pay Later (BNPL) solution.
Pay Monthly Follows Pay in 4’s Success
close
-Greg Lisiewski, vice president of shopping and Pay Later, PayPal.
How consumers look to pay for larger purchases is evolving and there is a growing demand for flexible payment options. Pay Monthly builds on our commitment to deliver leading payment solutions that offer customers choice to ensure checkout matches their needs and budgeting preferences.
read:
65%
of Americans are saving for a big purchase
79%
are looking to create and maintain a budget
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Pay Monthly Drives Shopper Conversion Without Risks or Added Fees
Retailers do not incur credit risks.
1
Merchants can accept PayPal Pay Later solutions through their existing PayPal integration and processing rate.
2
PayPal does not charge merchants when PayPal's Pay Later solutions are used.
3
Retailers are paid in full, upfront when a purchase is made.
4
Merchants can offer Pay Monthly, Pay in 4 and PayPal Credit concurrently.
5
ways Pay Monthly
can be Beneficial for
Large Enterprises:
5
potential ways
Pay Later solutions are attractive to Customers:
Pay in 4 and Pay Monthly broaden payment options, providing more choices.
1
Shoppers can pay off eligible purchases on their own terms.
2
Consumers avoid credit card processing inconveniences.
3
BNPL solutions are particularly attractive to younger consumers and those who are uncomfortable with online credit card purchasing.
4
4
Secure Pay Later Solutions
Pay Monthly meets shoppers’ desire to break big ticket price tags into manageable payments.
Pay Later Benefits
Buy Now, Pay Later is Popular
Among Young Adults
It is no secret that young adults would do everything with their smart phones if they could. BNPL is no exception, with Gen Z and Millennials the earliest adopters and the most frequent users of PayPal's Pay Later solutions.
They also trust PayPal to keep their personal financial information secure.
BNPL Demographics
>
BNPL Products Engage Shoppers Worldwide
>
Globally, PayPal’s various BNPL solutions have driven a greater than
compared to PayPal’s standard AOV.
2x average order volume (AOV)
PayPal processed approximately 50M BNPL transactions.
PayPal's BNPL solutions transaction volume was about $7.9B.
Around 12.2M unique consumer accounts used PayPal BNPL solutions.
BNPL Products Engage Shoppers Worldwide
Globally in 2021...
X
65% of Gen Z and 75% of Millennial BNPL PayPal users are repeat customers.
8 in 10 have heard of PayPal’s BNPL solutions.
Among shoppers
ages 18 to 39:
More than half (53%) trust PayPal to keep their personal financial information secure.
55% of Pay in 4 sales are from consumers under 40 years of age.
BNPL Demographics
75%
65%
55%
X
At the height of the pandemic in 2020, PayPal unveiled Pay In 4, its first Buy Now, Pay Later (BNPL) solution in the U.S. Since then, Pay in 4 has been helping retailers attract new customers, build loyalty with existing ones and broaden the range of secure, deferred payment options.
Pay in 4:
a Win with U.S. Consumers
How do PayPal's
Pay Later solutions
help businesses?
Find out
here
PayPal's Pay Later solutions boost merchants’ conversion rates and
increase cart sizes by 39%.
950,000 businesses
X
Since its 2020 launch...
Click:
$6.6B
50.3
87%
69%
73%
73% of customers have used Pay in 4 again within 12 months of the original transaction
87% of transactions are from repeat users
69% of users have used Pay in 4 again within nine months of their initial transaction
Pay in 4 has processed 50.3M loans
Pay in 4 has $6.6B
in TPV
Customer Success
Stories
PAY IN 4 CASE STUDIES & VIDEOS
JTV (Jewelry Television) is one of the largest jewelry retailers in the United States. Offering many high-ticket items, it understands the value of providing loyal customers with flexible payment choices. Thirteen years ago, it first partnered with PayPal to issue a first private label credit card. The relationship has grown, with JTV now offering PayPal Pay in 4 as one of its payment options.
Click to view full case study:
PayPal’s brand recognition is critically important. The PayPal brand not only provides us with an opportunity to acquire new customers, it helps us increase conversion.
-Tim Engle, Chief Strategy Officer, JTV
increased 22%
over 90%
JTV’s Pay in 4 PayPal sales have
since the launch.
PayPal Pay in 4’s approval rating has been
since the launch.
Omaha Steaks has been bringing tasty, succulent meats to Americans’ homes since the 1950’s and is a pioneer in home food delivery. Following a dynamic messaging test involving 65% of customers, it rolled out Pay in 4 in March 2021. Pay in 4 has since helped attract new customers, including younger age groups who adore mobile shopping.
Click to view full case study:
Our number one goal is attracting new customers across all demographics. The fact that Pay in 4 is helping to drive a younger demographic is impressive. It demonstrates that we’re appealing to as many people as possible.
- Mike Cortinas, search and digital manager, Omaha Steaks
2.1x
35%
10.4%
higher rate of Pay in 4 use by Digital Natives compared to standard PayPal transactions
increase in mobile use of Pay in 4 shoppers vs. standard PayPal shoppers.
AOV growth with Pay in 4 dynamic messaging.
PAYMENT CHOICES and CHECKOUT BEHAVIOR
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Source: https://www.prnewswire.com/news-releases/paypal-introduces-pay-monthly-to-give-consumers-more-choice-at-checkout-301568133.html
Pay Monthly is subject to consumer credit approval. Merchant-funded 0% APR for consumers is in addition to your applicable PayPal transaction rate. PayPal, Inc.: RI Loan Broker Licensee. The lender for Pay Monthly is WebBank.
12
month
First Payment due
About Pay in 4: Loans to California residents are made or arranged pursuant to a California Financing Law License. PayPal, Inc. is a Georgia Installment Lender Licensee, NMLS #910457. Rhode Island Small Loan Lender Licensee.
Source: https://www.forrester.com/report/Understanding-Shopping-Cart-Abandonment/RES56827
PayPal has been providing consumers with reliable, digital payment solutions for more than two decades. Popular in online shopping, its consumer payment options are recognized and trusted worldwide.
Customers benefit from flexibility at checkout. This gives them what they want on their own terms, making the checkout experience a crucial part of landing the sale. Consequently, retailers gain new customers while encouraging existing ones to return.
Discover our solution...
Source: PayPal, US tracker US858
Source:US tracker, PayPal
Source: An online study commissioned by PayPal and conducted by Netfluential in November 2020, involving 1,000 US online shoppers ages 18-39. (Among PayPal users, n=682).
Screen images are for illustrative purposes only.
Source: PayPal US Tracker
Source: PayPal Internal Data October 2020-November 2021
Source: PayPal US Tracker
Source (all stats above): PayPal Q4 Earnings-2021, based on PayPal internal data and includes Australia, France, Germany, Italy, Spain, U.K., and U.S. and does not include Japan (Paidy). The acquisition of Paidy closed in Q4-21 (on October 13).
Source: PayPal Q2 Earnings-2021
Source: RIS News/ClearSale, fall 2021
Source: PayPal Internal Data Q4 2020-Q2 2022
Source: PayPal Internal data from Oct. 2020 – August 2021. Results include Pay in 4 (US).
Source: PayPal Internal data Q4-2020-Q2 2022
Source: PayPal internal Data October 2020 - August 2021
Source (both stats above): An online study commissioned by PayPal and conducted by Netfluential in November 2020, involving 1,000 US online shoppers ages 18-39. Next-gen consumers are Gen Z (aged 18-23) and Millennials (aged 24-39).
Source: PayPal Q1 Earnings 2021
Source: PayPal Internal data from Nov. 2020 - June 2021
Source: PayPal Internal data from Nov. 2020 - June 2021
About Pay in 4: Loans to California residents are made or arranged pursuant to a California Financing Law License. PayPal, Inc. is a Georgia Installment Lender Licensee, NMLS #910457. Rhode Island Small Loan Lender Licensee.
Source: https://www.insiderintelligence.com/chart/252053/us-total-retail-sales-by-channel-2019-2025-trillions-change
In 2021, e-commerce sales hit $933.30 billion, an 18.3% increase from $811.6 billion in 2020, indicated by the U.S. Census Bureau. In 2020, e-commerce sales increased 42.4%. By 2025, eMarketer predicts U.S. e-commerce will total more than $1.6 trillion, representing almost 24% of all retail transactions. Year-over-year growth should average 13.7%.
In 2021, e-commerce sales reached $919 billion, a 16.1% increase over 2020, indicated eMarketer. In 2020, the growth rate was more than double at 32.4%, with e-commerce sales totaling $792 billion. By 2025, eMarketer predicts U.S. e-commerce sales will reach $1.6 trillion, an increase of 13.8%, and will account for about 22% of all retail sales.
Source: Census.gov
U.S. eCommerce Sales, 2012 to 2021
X
Sales in Billions (USD)
$1,000
$750
$500
$250
$0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$231.4
$260.8
$297.3
$337.6
$383.4
$443
$507
$569.8
$811.6
$960.1
trillions and % change