Imagine walking into a store, trying on a few outfits, then taking those clothes back home for a few days before paying. While that might sound strange for U.S.-based eCommerce shops, you’re describing an increasingly common payment method called Payment-After-Delivery, or PAD. Though this payment type originated from the European market, now it’s something eCommerce shops should be looking into for the U.S. market as well. But it doesn’t just stop there. PAD is becoming essential for companies of all sizes that dream of breaking out into the global online market. Here’s what PAD is and why it’s such a popular payment method in eCommerce shops here and around the world.
What is Payment-After-Delivery?
The Payment-After-Delivery method is pretty straight forward. It’s a payment method that allows you to buy something now and pay for it later. Merchants provide buyers with an invoice for the balance, which you can pay off with recurring payments or all at once after you’ve received whatever you bought. These types of invoice payments, as you can imagine, are great for consumers:
- No racking up credit card debt to buy expensive products.
- No chasing down a refund after returning unwanted items.
- No constant, unnecessary payment reminders.
And what about merchants? If it seems like a risky move for sellers, don’t let the I’ll-pay-you-later model fool you. Paperless invoice services and other offerings, like access to accounts via mobile app, make it easier for merchants to guarantee payment. Sellers don’t need to worry about issuing refunds and can offer customers the benefit of an easy return process.
Why Offering Payment-After-Delivery is Trending in the U.S.
With the flexibility to pay installments on an expensive product or hold onto your money until the product has been delivered, you can see why this is such a popular payment method. That’s why eCommerce shops based in the U.S. are starting to offer Payment-After-Delivery. These PAD services guarantee merchants are paid for products consumers keep, and consumers can simplify their returns. It’s a real win-win for everybody buying and selling products online.
This might be the first time you’re hearing about PAD, but it’s certainly not a new payment method. Though it’s not terribly common in the U.S. (yet!), Payment-After-Delivery was around in Europe well before the internet. Now, it’s actually the preferred payment method for many European countries, especially in markets where consumers have fewer credit cards, return products at higher rates, or are wary of providing bank information.
Jumping on Growth Opportunities in Europe with PAD
In many countries, including Austria, Germany, Sweden, and Switzerland, PAD accounts for more than 40% of their entire payment mix. This mix is the combination of preferred payment options available to consumers. That’s a massive opportunity for companies looking to expand to new markets by offering preferred payment types!
As mentioned above, PAD is especially popular among consumers with high return rates and order values, like in Germany, the second-largest online retail market in Europe. Since German shoppers are very selective about the quality of the products they buy, PAD is the perfect option. Merchants don’t have to worry about refunds, and consumers can easily return items without worry.
Millions of shoppers in European countries expect merchants to offer PAD, which is crucial for eCommerce shops looking to get into these markets. After all, did you know that 37.5% of shoppers will abandon their cart if their preferred payment choice isn’t offered? In Austria and Sweden, the majority of their combined 10+ million online shoppers turn to stores abroad for better selections at better prices. In both of these countries, PAD is the second most utilized payment method. For eCommerce shops looking to expand globally, offering PAD could make or break their success in certain markets.
Get Used to Seeing Payment-After-Delivery, Here and Abroad
Even though it might not be a familiar payment option for Americans, eCommerce shops across the country are jumping on board. It may not be long before all online retailers, those selling locally or globally, start offering PAD to consumers. There’s certainly a case to be made about how easy it is to purchase expensive items without worrying about damage during delivery, ill-fitting garments, or low-quality products. European countries have been enjoying PAD for a long time now, so if European expansion is in your sights, you should find a PAD solution that fits your needs.