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Episode 4 - The Future of Ecommerce: Buy Now Pay Later

Let's dive into this thriving market to understand what is in store for the future of buy now, pay later tools.

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Mia Bernad
VP, Product of Sezzle
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Podcast transcript

I'm Derric Haynie, your host. Please email me with your feedback, requests, questions, problems, or if you'd like to be on an upcoming episode, it's



What is in Store for the Future of Buy Now Pay Later Tools? (0:07)

Get it now for three easy payments of 1999. The first infomercial was for a commercial product a Vitamix, blender, and was recorded in 1949 broadcast in 1950.

And from the infomercial, the concept of paying in installments was born, but does it still work today? Of course it does. And better than ever thanks to the technology and the increasing ease of use of Ecommerce in general, according to World Pays global payments report the buy now pay later industry is set to double in size by 2023. Meaning that 3% of all Ecommerce transactions globally will use a buy now pay later tool by 2023.

This is especially big in Europe, the USA, Canada, and Australia, but it is definitely taking over in a global phenomenon. So let's dive into this thriving market to understand what is in store for the future of buy now pay later tools,

Intro clip...

What Are Buy Now Pay Later Tools? (1:39)

Before we begin, I thought I would help clarify really what buy now pay later tools are because I'm sure there are a few people out there that aren't really clear on what we're talking about, and there's nothing wrong with that. I actually get this question quite a lot of are these really a thing?

Do people really use them?

This is a multi billion dollar industry and considered a one point $5 trillion opportunity. So yes, people use them.

Now, what we're talking about specifically is an alternative payment method. So you're thinking about checking out with PayPal or using a credit card or shop pay or Apple pay.

This is another one of those options that a consumer would see at checkout on a merchant site. So you, as the merchant, you would add this to your site, and then they're selecting that as the payment method, the reason they select it as a payment method is the offer, which is that in certain cases, it's different for everybody now pay later tool, but in certain cases, it's 0% interest doesn't affect your credit and allows you to just simply pay an installment, usually using a debit card.

And that's why people are attracted to that tool. And as you'll see in this episode, generally leads to massive increases in conversion rate in average order value. And even in retention.

Now that we're clear on that, let's continue.

How Buy Now Pay Later Tools Affect the 4 P's of Marketing (3:07)

Hey, it's Derric. And welcome to the future of Ecommerce today's episode is sponsored by Sezzle.

As you may have guessed they are buy now pay later tool, more about them later in the show.

So are you familiar with the four P's of marketing?

It's actually, let me give you a second to try and guess it's product price, promotion, and placement. It's funny before the internet, these things were the most important parts of marketing and one of the first things you learn in college when you're studying marketing or business, but for some reason, when the internet democratized the ability to create a site and promote your own product or service, everyone became a marketer.

And most of people without formal training started to overlook what I consider to be the basics of marketing. The four piece, when it comes to buy now pay later tools.

We're obviously talking about changing the pricing, right from one large payment into multiple easy to pay installment, but we're actually also talking about changing the way we promote the product.

The product offer in a way is fundamentally changed. It's framed sort of like a discount, even though it isn't and framing is very important. Let's listen to this infomercial clip to give you a feel for how it works

Infomercial Offer Uses Installment Payment Methodology (4:30)

"During this introductory TV offer. You won't pay $1,000. You won't pay $500, $300 or even $150 call now and get the complete bullet express system, including a super powerful meal maker and meal mixer attachments with a low, low price of just six payments of only 19,909. You'll also receive the bullet express ready."

Understanding the Psychology of Installment Payments (4:55)

I mean six payments of $19.99. Most Americans probably don't even know how much that is. They don't even say the actual final price because you don't even care as a consumer. 

Do you, you care about how easy it is to pay $20 a month for six months. It's no big deal at all. It's $120 by the way. So it is less than $150, but I bet maybe when you were hearing that $1,000 tear down all the way to $150. 

You're thinking maybe the price would land at $100. I was at least. And you know what? I'm not really bummed about that extra $20. And that just goes to show how they really maximize the profit by using the installment framework here and methodology.

This is just a crucial example of how we have to get our pricing, right. And we will have another episode planned completely on the deep dive into pricing strategy.

A Price Testing Tool: Leaflet (05:48)

So I'm not going to go too much into it here, but just note the pricing is a crucial aspect to not just how you're going to close customers, but the growth rate of your business, profit margins, everything. 

On that note, I do want to take a second to give a shout out to a tool called Leaflet, which is the only Shopify integration that I'm aware of that allows you to test your product pricing appropriately. 

If you believe, as I do that, there may be some profit opportunities left to be unlocked by fine tuning your pricing. Then I'd recommend checking them out at

The Psychology of Purchasing in Installments (6:52)

Moving on, let's talk about the psychology of purchasing in installments. Credit cards, loans, and the entire financial institution is built around this idea of borrowing money and paying it back at a later time.

With loans it's typically because you can't afford to buy something outright all at once. So you're really leveraging your future earnings at the cost of an APR (annual percentage rate). 

With credit cards well, we use those for a few different reasons, don't we? First we do put larger purchases on them that we plan to pay off over time. 

And that of course hits us with large interest fees because the APR is typically much higher than a loan, but you also typically can't get a loan for a bunch of smaller purchases that add up on your credit card bill. 

But we buy on credit for a few other reasons, right? One is to float money for a certain period of time. And the other is to accrue credit card points. 

And maybe another one is just the convenience of pain with the credit card for fraud prevention. And to ensure that we are getting the product that we are deserved.

And finally credit card is just a common option when you're buying online. And so the world of buy now, pay later tools really plays into a lot of the benefits of credit cards without all of the downside potential. 

And that's what I think makes them so attractive to consumers, especially the younger generations, which you'll hear in just a minute. Don't always own a credit card. Now I'd like to take it over to Mia Bernad who is the head of product at Sezzle. 

She's been with the team since the beginning and has a deep understanding of the consumer, why they choose to use buy now, pay later tools, the credit system in general. And she's going to walk us through the typical process a consumer might go through when choosing to buy with a buy now, pay later tool.

Mia Bernad, Head of Product, Sezzle: (08:35)

"Most consumers would go to their favorite store, see something for a hundred dollars, you know, see that they can break it up into four easy payments, add $50 more through their basket because now it's more manageable. 

And then find out about Sezzle that way. And then so when they get to the checkout page, they select Sezzle. And I think the reason that they select Sezzle is because it's easier for them to budget. 

It gives them more flexibility to do what they want to do with their money at that day. And it's something that we see a lot in our survey responses where, you know, why do you use Sezzle

The number one reason that bubbles up to the top is always budgeting, which is something that have been really interesting to us because lending products and budgeting don't really go well together. 

It seems like it seemed like they were always at odds with each other. So having more debt doesn't really slow well with budgeting and spending the money that you have, which is what budgeting is at the end of the day. 

And so seeing that reason, budgeting really empowers us to think about our products as something that helps consumers today, but also it helps their financial lives in the long run because they're able to budget better."


And let's hear her walk us through the origin story of Sezzle and how they stumbled across the power of buy now, pay later themselves.

Mia: (10:12)

"So we really found out back in 2017 that cart abandonment was in part due to the fact that millennials didn't have the right payment methods that they can use. Even though spending power was more than the previous generation spending power. 

And so we started testing a buy now, pay later option in our checkout pages and people started clicking on it. And even though the product wasn't live yet. So that's when we found out that this is something that consumers want."

Derric: (10:45)

"And this is on your own stores or client stores."

Mia: (10:49)

"These are some client stores. So we had a handful of merchants that were willing to work with us. And instead of offering their consumers, our product at the time, which was an ACH payment system. 

We instead changed their messaging and said, buy now, pay later, it's 0% interest. And instead of having, you know, 10 transactions a day, we got a hundred clicks in that day."

Derric: (11:16)

"Wow. Is this before what we now know is buy now, pay later tools really existed. Was it, is this back in the day?"

Mia: (11:23)

"Yeah, this was back in 2017 and at the time, you know, Affirm was around Clarinet was around. But it wasn't really mainstream at the time. Merchants didn't really see the value in them quite yet. As much as they do now. 

It really stems from this generation, not liking credit cards and the fees attached to them. And even, you know, the longer repayment cycles kind of spook them and make them think of their parents and how their parents handle credit and how that's just scary to them. 

So in a study with Jason Dorsey at TGK, we found out that no fees or interest is the top spot. When consumers were asked, you know, what does your ideal payment method include? And that doesn't really apply to credit cards. 

Credit cards, if you pay over six weeks or over months, you're going to be slapped with fees and interests, and it could hurt your credit score as well."

Sponsored : The Power of A Buy Now Pay Later Tool like Sezzle (12:29)


We alluded to in the beginning, you can see the younger generations, especially those that either don't own a credit card out of sheer inability to, or those who have decided not to own a credit card as a financial responsibility choice are turning to buy now, pay later options and loving it. 

That's that by the way is 67% of younger generations don't own a credit card. So I'd like to take a second to tell you about our sponsor of the day, Sezzle and why they make such a great buy now, pay later option. 

Honestly, one of my favorites, especially for growing merchants, now it costs nothing to install the tool. The catch is, and I want to be upfront about it. It's a 6% service fee or financial charge for the accounts that use Sezzle at checkout. 

And it's really important to note that Sezzle does not find a high amount of cannibalization, meaning people aren't going to move to Sezzle from credit card and cost you money.

That's very much should not be a concern. And in fact, the increase in your cart size, the, your average order value and the increase in your conversion rate would far outweigh the minor possibility of cannibalization.

So you can put that ease to risk. Now, the way that they charge you is 6% on all purchases that go through their app. And usually, probably right now, you're paying something like 2.9% payment. So that's an extra 3%, and that's something to consider because obviously you have your cost of goods sold and you have your margins. 

But assuming you can make that work, the, again, the increase in cart size increase in conversion rate, it makes perfect sense to install this on your store. And don't take it from me. Let's hear Mia as she has the raw data from her merchants.

Mia: (14:26)

"So the average order value increase that we're seeing across merchants is about 30% to 50%."


Another really crucial benefit that a lot of people overlook here is Sezzle's marketplace. 

They actually have their own marketplace of those stores that have installed Sezzle because they found that people that buy from one store that has buy now, pay later options would like to buy from other stores that have buy now, pay later options. 

And this marketplace reaches millions of active customers every month. In fact, let's hear a little bit more from Mia on why they started this market.

Mia: (15:07)

"So when we saw that behavior on our website where people would cross shop, we actually also added the store directory to our customer dashboard. And we saw even more engagement there because these are people who are logged into their dashboard are generally more active. 

We're not trying to be Amazon with this marketplace, but we just see the store directory as a good opportunity to promote merchants and even features the merchants that are maybe having a sale at the moment and really right on that trend. 

And we work a lot with our retailers to make sure that they get the visibility that they need from our platform."

Derric: (15:48)

Okay. So that is Sezzle in a nutshell, I'd highly recommend checking them out. And if you use my link, you will actually get a discount on your rate forever for life. It will be down from that 6%. We just talked about to 5.5%. 

That is a significant amount of savings in the long term. You can go to

Introducing Patrick Campbell (16:27)

I'd like to bring it over to Patrick Campbell who has studied pricing extensively and has a few ideas on how to implement a buy now, pay later option using data and understanding customer segments. 

Patrick Campbell is the co-founder of ProfitWell, which is a great tool and team that really understands subscriptions and retention better than practically anybody in the industry. And they've tested things like pricing and understanding of customer segments, more than pretty much anybody in the ecosystem. 

He also has a great podcast called Protect The Hustle and a video series with the same name. I highly recommend checking those out, and I'd like to pass it over to Patrick to hear what he has to say about buy now, pay later tools.

Patrick Campbell, co-founder of ProfitWell: (17:21)

"You know, buy now, pay later is like a payment option, basically. And I think one of the another really underutilized, you know, kind of optimization a lot of businesses is offering up the right payment options that are not only good for your business that, you know, you can kind of protect your margins, but also are good for the buyers that you're serving. 

And there's a good portion of the base that offering up a buy now, pay later option is going to bring more people through. It's one of those things where I think it's, you know, thinking back to your segments, there's a segment of your population that either needs that in order to afford your product, or they just prefer like paying over time. 

And if you have a base that has those preferences, it's important to offer it.

Now on the flip side of this, you tend to look not as luxury when you're using these types of options. Now, I have examples against that Peloton, a luxury brand, and they use Affirm for buy now, pay later. 

But I think it's one of those things that's super super important just to understand your customer base. And then if you can offer in a clean way, do it, if not, it's one of those things that make that decision with as much data and as much insight as you can."

The Importance of Testing Out a Buy Now Pay Later Tool (18:32)

And that's the real goal here, isn't it? Is to make more money and be certain that we're making more money. And in order to do that, we need data and we need to test things. 

So one of the things you could do, and we have seen some people do is test payment options at checkout and see which ones your customers use and which ones end up actually increasing conversion rate, or perhaps even increasing your profit margin. 

Other things you might look for are payment options that reduce customer service inquiries, or increase retention rate. But to keep it simple, I think the number one thing you should be looking for, is that overall conversion rate, getting more customers is goal number one for most people, most of the time, and that small impact on margin should be seen as the cost of getting an additional customer. 

And then as you grow your business, your find better ways to retain that customer and sell more things to them and therefore, grow the business.

Final Thoughts (19:36)

Now, this has been a peek into buy now, pay later tools. And as we mentioned at the top of the episode, this industry is set to expand to 3% of global Ecommerce purchases in 2023. I think it'll go a lot higher than that actually. 

And I think what's driving. This is the change in consumer mindset of especially of course, we've said it before the millennials, the younger generations and what they want to do as far as owning a credit card, instead of one credit card paying for multiple different store transactions, they kind of want it to feel more like, I think the store is kind of taking the risk of the transaction with them. 

I think that's what they're kind of doing here. Even though as a merchant, you don't take any risk. It's actually completely on the buy now, pay later tool the same way. Maybe the risk is on the credit card company.

But when you check out with the buy now, pay later tool, you're making a commitment to pay. Mostly, I would say you're feel like you're paying the brand over time. 

And in that way you build an affinity for that brand. You think about them when you make those payments, you think them, as you get closer to paying off that bill and owning what you technically already own.

So as you think about the future of Ecommerce for your business, as you think about serving younger generations, I think there's only one option and that's offering this payment method of some form of buy now, pay later at checkout. 

And while there are a host of different options out there, if you are selling at a price point of between $40 and even three, 400, maybe $500 on your store, I highly recommend checking out Sezzle as your payment option. 

Again, you can find them at

That's it from me for today. I want to thank you so much for listening to this episode. If you learn something, I could use an honest review on our Apple store, Stitcher, Spotify, or wherever you're listening. 

I'd love your feedback and insights into how buy now, pay later tools are working for you. Or if you see other payment options that are even better, you can contact me at

For the full show notes of this podcast, you can head over to our website and you can find that at

In future episodes, we will be discussing:

  • Ecommerce technology at large and how the fundamentals of market consolidation are affecting your abilities as a merchant.
  • The increased in value from the tools that you're using and how you need to be thinking about purchasing tools based on the landscape changes.
  • We'll be talking about upsells and cross sells and how to better implement them.
  • Your overall pricing strategy.
  • Accounting, and finances, and how to manage those.
  • Web and app push notifications. 
  • The rise of the digitally native vertical brand.
  • How to start using mobile apps
  • Product imagery and branding.
  • Subscription strategies.
  • Abandoned cart tools.
  • Shipping.
  • Product detail pages.
  • Financing options.
  • And much more. 

I look forward to seeing you back here for The Future of Ecommerce.

How to Get Involved

And if you’d like to get involved in the show, if you’re a brand or you believe you have a unique vantage point on the future of Ecommerce, email me, I’m, or you can go to

I truly value your advice and feedback. Listen, enjoy, review, and let’s have the most in-depth and public conversation we can about the future of Ecommerce.


Thank you to our intro soundbyte contributors:

Sharon Goldstein - Limespot

Robert Rand - JetRails

Kurt Elster - Ethercycle and The Unofficial Shopify Podcast

Jason Anderson - Andzen

Ben Parr - Octane AI

Ty Givens - The Workforce Pro

Phil Roireau - Gorgias

Jill Liliedahl - Inventory Planner