Walmart Inc. has laid its layaway service to rest as customers continue to embrace the buy now, pay later trend.
The Bentonville-based retailer is now allowing customers to pay for certain items with Affirm, a short-term financing option that requires a qualifying credit score and offers a variety of repayment terms and options.
Walmart has worked with Affirm since 2019. Last year, the company said it was cutting back on the number of its stores that offered layaway during the Christmas shopping season, citing a decline in usage.
In a statement Monday, Walmart said, “We’ve learned a lot in the past year as our customers’ needs and shopping habits have changed.
“Last holiday season, we removed seasonal layaway from most of our stores with the exception of select jewelry items at select stores, and based on what we learned, we are confident that our payment options provide the right solutions for our customers,” the company said.
Walmart said shoppers interested in buying now and paying later can finance their purchases through Affirm as well as a Capital One Walmart Rewards Card that offers 5% cash back on Walmart’s e-commerce site and 2% back in stores.
Layaway, which dates back to the Depression era, lets customers reserve merchandise for a deposit and interest-free payments. It fell out of favor as the use of credit cards grew.
However, it remained popular with people with limited disposable income or no credit, and benefited retailers by letting them sell to low-income shoppers at little risk.
Walmart discontinued its year-round layaway program in 2006 to cut costs and make room for the ship-to-store service it was starting. But it revived the service for the Christmas shopping season in 2011, when many families were still suffering financially from the 2008-2009 recession.
Steve Dennis, president and founder of SageBerry Consulting LLC, said that a big advantage of buy-now-pay-later over layaway is that shoppers get the products they’re purchasing right away.
But the trade-off, Dennis said, is the credit check and finance fees that come with some of these plans.
More broadly, in Dennis’ view, “these services greatly simplify and integrate digitally the various types of installment plans and zero percent financing promotions retailers offer — and make them available on a wider range of products.”
While Affirm, Afterpay and Klarna are among the better-known buy-now-pay-later plans, others include Zip (formerly QuadPay), Sezzle, ViaBill, Perpay, and PayPal’s “4-in-1” plan.
In many cases, the services can be used both online and in stores. Some retailers make several plans available, while others offer just one.
The list of retailers offering one or more of these payment models is wide-ranging and continually growing.
Amazon.com, which previously had its own five-payment installment plan, jumped on the Affirm bandwagon in August. Other retailers using at least one of the plans, according to a quick internet survey, include Little Rock-based Dillard’s Inc., Target Corp., Best Buy, Macy’s Inc., Bed Bath & Beyond Inc., Peloton, ThredUP, and Pottery Barn.
The terms and conditions on all these plans may differ widely. Some require no credit check and charge no fees — unless payments are late.
Affirm lets qualified shoppers choose the terms under which they’ll pay for their purchases. Affirm’s website gives several examples of these, based on a hypothetical purchase of $1,000.
A three-month plan incurs no interest, while the six-month and 12-month plans carry a 15% interest rate. That means the buyer could end up paying as much as $1,083 on a $1,000 purchase.