Is Layaway The Same As Point Of Sale Consumer Financing?

As a merchant, there are two or more phrases that really should spike your attention. Buy Now Pay Later, or POS financing, and Layaway. And while they both bode similarities, they do differ in a lot of ways. As a merchant, it is imperative that you fully understand the difference between the two. Here’s the thing. The eCommerce world is filled with phrases that sound the same but deliver different outcomes.

But not to worry because we’ve got you covered. Here is everything you need to know about the difference between online layaway and Buy Now Pay Later.


To put it simply, layaway is a type of purchasing method where a customer ‘lays’ down a deposit on goods they plan to buy until they are financially able to pay to complete the full payment. Only after they have paid for the goods in full will they actually receive the goods.

This happens over an agreed time period. But, if the time agreement passes and the customer has not paid the total amount within the agreed time frame, they lose the reserved goods. However, the customer does get the deposit they initially put down back, but they may be charged a small fee. 

Layaway was a popular method of payment during the Great Depression period. Many people weren’t able to financially purchase goods they wanted or needed. So, savvy merchants who were well aware of the economic situation made the most of this and started offering layaway as a form of payment. However, layaway isn’t as transparent as you may think. At least not for the consumer. Typically, layaway items need to be paid off in an 8 to 12 week period and come with interest. For merchants, layaway can slow down the purchasing experience, and you risk turning the customer away forever.


Buy Now Pay Later is one of the most popular methods of payments today. There isn’t one main factor for this, but there are a lot of pointers. For example, Millennials and Gen Zers in particular are quickly becoming the largest consumer group of all time. And they hate credit cards.

Buy Now Pay Later, is also known as:

  • Consumer Financing
  • Point of Sale (POS) Financing
  • Online Financing
  • Instant Financing

BNPL is self-explanatory. You buy the goods that you want, then pay for them later. Usually, it’s interest-free. However, that’s only if you keep up with the payments within the given time frame.

BNPL has a high approval rate, is quick, you don’t have to fill out lengthy forms, and you get to take the goods home on the spot!

Even if you have bad credit, there is still a high possibility that you will be approved for BNPL.  For example, with reputable companies like, which use a multi-lender financing method, approval rates are as high as 80% due to the various terms and payment plans available whereas some companies who only use single lenders only offer an approval rate of 60% to 65%.  

If you are a merchant that hasn’t implemented BNPL, then you are seriously missing out. Why? Because consumers actively look for this option before they decide to make a purchase. In many ways, it’s about affordability, but there are other levels to it.

Sometimes you are hit with unexpected finances, like the breakdown of your car, or damage to your home. BNPL makes the sudden change in finances affordable. But even if affordability isn’t a problem. Consumer behaviour shows that shoppers like to spread out their finances instead of paying for it all in one go. 

More and more consumers are also opting to buy luxury goods, and BNPL is an affordable way to do so.


With layaway, you risk losing your goods if you can’t make payments within the given time frame. Plus, you can’t get your hands on the goods before you pay the amount in full. With BNPL, it’s the opposite. You get to enjoy the goods and worry about paying for them at a later date. Here’s the thing. The common problems in the layaway method you can find the solution for in consumer financing.

Both the consumer and merchant benefit from BNPL. The merchant gets the sale, the consumer receives the goods, and opens up communication to build a long term relationship. Plus, with BNPL, consumers are more likely to keep coming back.


Today, the average consumer wants convenience, flexibility, and no-fuss payment system. All of which BNPL offers. When choosing between BNPL and layaway, the best way to decide is to look at your consumers. Ask yourself what they really want? What method are they more likely to use? Do your research and make sure you implement a suitable payment method to suit your customers’ needs.

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