Flexible payment plans gain traction with decor shoppers

With interest rates high and retail prices on the rise, consumers are looking for flexible payment options for their purchases without assuming more debt. As a result, Buy Now, Pay Later(BNPL) and Lease-to-Own (LTO) platforms are seeing a surge in attention and use, with projected growth doubling in the next decade. The BNPL market valuation is projected to increase from $235.94 billion as of 2024 to $541.32 billion by 2035, in Market Research Future’s most recent “US Buy Now Pay Later Market” report. The report suggests that in addition to consumer demand for flexible payment options, BNPL growth is being driven by mobile technology, which facilitates integration and accessibility, particularly for younger consumers who are looking for ways to make purchases with flexible payment options.

According to Derek Medlin, president and chief growth officer at Katapult, a lease-to-own platform, consumer demand is behind the growth of these payment options. “As more and more consumers express the financial pressures they are facing, they are looking for payment options that are affordable and flexible,” Medlin noted. “Nearly 80 percent of shoppers say they’re feeling financial pressure heading into the 2025 holiday season with 65 percent citing inflation as their top worry, and one in four pointing to limited credit or financing options.” In Katapult’s recent consumer survey, he continued, 60 percent of shoppers said they would prioritize low monthly payments and 45 percent said they would prioritize low up-front costs. “This shows how much value consumers place on flexible and transparent, predictable payment schedules,” Medlin said.

BNPL/LTO Value at Retail 

BNPL and LTO payment options are no longer just for the highest-ticket purchases, either. Medlin noted that Katapult, for example, is seeing consumers show interest in LTO and BNPL payment options for lower-priced goods as well. “The number of $300 average LTO purchases has grown significantly, often driven by repeat customers returning to shop for smaller items,” he said of the Katapult program. Katapult is available for LTO purchases at such home furnishings retailers as Pottery Barn, Ashley, Rooms-to-Go and Wayfair.

BNPL and LTO aren’t only available for the larger retailers, however. Almost any retailer can leverage LTO or BNPL options to help bring in new shoppers with more flexible payment options. Home furnishings retailer Coco & Dash recently began offering Affirm‘s BNPL payment on its website.

Co-owner Courtney Garrigan said Coco & Dash began offering the Affirm option in the hopes it would bring in a younger buyer who might prefer to split up payments for a quality piece of goods. “There’s a set of people that want to invest in quality. My hope was that offering Affirm would help reach that group,” Garrigan said. “It’s not unattainable anymore.”

While Coco & Dash has not had customers utilize the new Affim option yet, Garrigan is confident it provides an opportunity to expand the retailer’s customer base going forward.

In addition, there isn’t a risk to offering this option as there are no upfront costs. If a customer does choose Affirm at checkout, the BNPL platform takes on the liability of possible delayed payments or defaults. Katapult’s Medlin added that for retailers, LTO and BNPL can also be a growth strategy.

“Katapult helps retailers reach millions of consumers who are often overlooked by traditional financing, driving both incremental sales and long-term customer value,” he said. Some of the advantages of BNPL and LTO options at retail include higher conversion rates and larger basket sizes, more access to loyal repeat customers and co-marketing support, he added. In addition, there is no risk or recourse on consumer defaults or returns and no interchange costs, preserving retailer margins. In addition, Katapult provides a seamless and transparent customer experience with no late fees, flexible payment schedules and upfront visibility as to total cost of ownership, Medlin continued.

Choices, Choices

Like so many other technology platforms, there are myriad BNPL/LTO platforms to choose from that provide payment flexibility for consumers. Beyond Katapult and Affirm, retailers can choose from Klarna, Flex Pay (formerly Uplift), Afterpay, Zip, Sezzle, Perpay and more.

What are the differences? Following are some details on how Affirm’s BNPL platform and Katapult’s LTO platform perform for retailers:

Affirm 

With more than 50 million customers, Affirm is an established BNPL provider with approximately 337,000 merchants in its network. Affirm provides two extended payment options to consumers with a soft credit check: Pay in 4, and monthly payments. Consumers typically utilize Pay in 4 for purchases of $50 to $1000, with payments due every other week and with no interest. Monthly payments tend to service purchases of $50 to $5,000, according to the company, with interest ranging from 0 percent to 36 percent, and time to pay ranging from three months to 60 months. Affirm handles the credit risk and chargebacks, paying the retailer in full within one to three days of purchase. Retailers can also tailor their payment solutions, including offering 0 percent APR periods. Retailers pay between 3 percent and 6 percent plus a flat fee of $.30, when a customer chooses Affirm upon checkout. There are no monthly fees or integration costs.

Katapult

Katapult is an LTO platform that considers itself a strategic growth partner for its more than 200 retail partners, introducing them to new customers that may have been overlooked for financial reasons. Katapult, like BNPL companies such as Affirm, pays retailers at time of purchase (within one to three days) while providing consumers with extended payment options. Integration with POS, ecommerce and wallet systems is flexible and seamless. For returns and exchanges, Katapult mirrors a retailer’s return and exchange policies.

Katapult brings new customers to retailers as it does not do credit checks on consumers and offers several repayment programs, allowing buyers to pay within 90 days or create a longer scheduled lease payment plan. Katapult assumes liability for defaulted payments and retailers remain paid in full for merchandise. Katapult claims it has a 60 percent loyalty retention rate, bringing customers back to retailers again and again.