Amazon has started offering UK customers a deferred payment system when they spend more than £400 ($588) in one transaction. The new checkout feature – dubbed Pay Monthly – aims to extend the e-tail giant’s ‘one-click’ payment system.
Only available for products sold on Amazon.co.uk itself (third-party and marketplace seller purchases aren’t eligible), the “instalment loan” scheme is detailed alongside the usual list of payment methods at checkout. It includes a routine online credit check, which is usually completed in one minute.
Requiring no deposit, the first instalment is due 30 days after the order has been shipped, and the loan can be spread over two to four years, depending on the size of the order. Amazon charges a fixed interest rate of 16.9% – a competitive alternative to standard credit cards, which currently carry an average interest rate of 17.8% (Moneysupermarket.com, 2015).
The service was created with UK-based financial services company Hitachi Capital, which is also working with British retailer John Lewis to offer interest-free credit on investment items such as furniture.
Offering credit at e-checkouts is proving to show significant results. Businesses using similar services, such as PayPal Credit (a sub-business of US online payment system company PayPal) saw spending rise 25% above the average purchase amount, along with a 20% increase in the size of orders last year (PayPal and Shop.com, 2015).
For more on the continued legacy of post-recession spending, see Purchasing in Portions in Inconspicuous Consumption, part of our Austerity Opportunity Macro Trend. For more on Amazon’s strategic retail strategies, see Amazon Moves into Multi-Channel, New Grocery Delivery, Amazon Car-Boot Delivery Service and Amazon Launches High-Speed Delivery.