BNPL: Affirm Recommends Longer Payment Plans to Minimize Supply Chain Challenges

Affirm (NASDAQ: AFRM) notes that with supply chain blockages leading to new challenges every day, you might be facing difficult decisions regarding increasing prices while preserving margins.

Although significantly higher prices might discourage customers just as the holiday shopping season arrives, you could soften the overall impact for many shoppers by providing pay-over-time plans—especially with longer terms, Affirm recommends.

The Fintech company also mentions that the “sticker shock” of an $1800 sofa, for instance, may  put “less stress on a shopper’s budget when the total cost can be divided and paid over 18 months.”

Affirm further notes that by providing longer terms (beyond 12 months) is “a good way to help shoppers retain more spending power despite rising prices in the current economic environment.” The company adds that the resulting lower monthly payments can “reframe the total purchase price in a more budget-friendly way.” For example, the payments for a high-tech piece of fitness equipment “could become similar to a monthly gym membership.”

Affirm also points out that you may “unlock maximum benefits from longer terms by making sure shoppers know they have a pay-over-time option before checkout.”

The company adds that onsite banners, messages on product display pages, and social media placements are just “some of the ways you can direct attention to the option of longer terms early in shoppers’ decision process.”

The Buy Now, Pay Later (BNPL) provider also notes that “displaying as low as monthly payment calculations alongside an item’s price is one method.”

This can “reduce friction at checkout when shoppers see they don’t have to pay the total cost immediately,” the company adds while noting that after seeing a comparison display—like these from Casper and Room & Board—customers may “also opt to upgrade or add another item they might not have bought otherwise.”

As noted by Affirm:

“The displays can increase average order value (AOV) for your business, as shoppers discover they may be able to afford more if they spread the payments over time. In fact, furniture/homeware businesses that partner with Affirm to offer pay-over-time options saw an average 89.5% lift in AOV during September.”

The Fintech firm also mentions that the predictions of supply chain pain will “likely limit the discounting options of many retailers in the coming months.” But there is “a way to reduce the impact that higher prices may have for your customers and your business: offering payment plans with longer monthly terms from Affirm.”

It may be “just the thing to brighten your holiday season,” the company adds.

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