Are Consumers More Likely to Shop Online with Instant Financing?

March 19, 2018, Written By Lynn Oldshue

Are consumers more likely to buy an online item if the merchant offers an instant financing option? According to a new study from payment provider Klarna, 82% of online merchants believe that offering financing at checkout would increase their sales.

eCommerce retailers are particularly concerned about cart abandonment—when a customer proceeds to checkout but leaves the site before completion. Nearly half (46%) of online merchants say instant financing could decrease cart abandonment rates. Hesitant customers would have an extra incentive to complete their purchases.

Instant financing is a line of credit directly through the merchant. It spreads the price of the purchase over several installments. The merchant can set the terms for the financing, which typically includes a relatively low interest rate.

This model has been used for decades in TV sales. Platforms like QVC and most infomercials use “X easy payments of $19.99” to make a high-ticket item seem more affordable. Today, more online merchants are tapping into the same sales tactic.

Klarna conducted a similar study last year focused specifically on consumers. The survey revealed 75% of consumers were more likely to choose store with instant financing over one that did not offer financing. 39% of respondents said they would spend more money on a purchase if instant financing was available.

Online merchants who do not offer instant financing may still be able to help their customers with PayPal Credit. This is PayPal’s financing program that offers no interest financing for six months on purchases of $99 or more. If you have checked out with PayPal before, you may have noticed a PayPal Credit link below “Choose a way to pay.” This takes you to an application where PayPal will show the payment amounts and frequency, if you are approved.



The information contained within this article was accurate as of March 19, 2018. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Lynn Oldshue

Lynn Oldshue has written personal finance stories for LowCards.com for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue