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When Walmart Announced It Was Ending Its Layaway Program For Most Shop Categories in favor of the Buy Now, Pay Later format, with social media users expressing their confusion and sadness with nostalgia Tweets,

Retail experts and financial lending providers are not surprised by this change. In fact, some are even saying that buy now, pay later is the new system.

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Walmart Ditching Layaway Options for the 2021 Holiday Season

“Consumers increasingly want to be able to take their purchase home immediately, and then pay for it in installments,” from Floris de Cort Explorer Technologies told Granthshala Business. “Buy now, pay later means they can do just that, and they don’t have to wait to pay for their purchase in full before experiencing their product or service.”

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Walmart has partnered with Affirm to launch its Buy Now, Pay Later financing program. Other big box retailers such as Target and Macy’s have partnered with competing financial lending providers, including Afterpay and Klarna.

What is Afterpay?

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Customers who make purchases through these third-party lenders typically receive their items interest-free, as long as the items are paid for before the end of the promotional period.

“often, [buy now, pay later] That includes four equal installment payments every two weeks until the loan is paid off,” said Matt Schultz, chief credit analyst lending tree, “Buy now, pay later loans also include long-term financing offered at the point of sale. Depending on the size of the purchase, the length of the terms can be anywhere from 3 to 24 months, paid monthly. Unlike ‘pay in 4’ loans, these loans usually include interest and rates can go up to 30%.

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Consumers will face charges for late arrival (even once) or missed payment. It’s also added to your credit report, which drags down your overall credit score, according to Howard Dworkin, CPA & President. loan.com,

Dvorkin said that not all Buy Now, Pay Later providers are the same and may offer different rates and terms.

Retailers benefit from the Buy Now, Pay Later model as the store receives instant payment from third party servicers. Financial lending institution, on the other hand, also takes on credit risk.

“with layaway [retailers] Was forced to take an item out of inventory without a promise that the shopper would end up paying in full,” said Deanna Tra, chief marketing officer bold commerce,

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“Most consumers under the age of 40 don’t even know what a layaway, buy now, pay later (BNPL) is all they know,” she continued. “We have seen increased adoption of BNPL among consumers over the past few years, and it will soon become as common as a credit card, while layaway has become a payment option of the past.”

A recent consumer survey from go cardless It was found that 75% of Americans consider layaway to be pointless. Meanwhile, four out of 10 reportedly “had no idea” what layaway was. That number jumps to about six in 10 when targeting Gen Z buyers.

Takeaway programs were created during the Great Depression in the 1930s and the shopping model saw a rise and fall in the 20th century. Even though takeaway isn’t as common as it used to be, the shopping program is still in place at select chain stores—including K-Mart, Sears, Big Lots, and Burlington Coat Factory.

“Buy now, pay later plans are essentially just new, evolved versions of long-standing credit offerings such as takeaway, with retailers finding a way to refresh this century’s approach,” said revtrax CEO Jonathan Treber. “The layaway still exists and it, along with other point-of-sale loan options, resurfaces in times of consumer need, such as the 2008 financial crisis and last year’s economic downturn during the pandemic.”