Target adds 'buy now pay later' options with Affirm and Sezzle ahead of holiday shopping season

Kelly Tyko

Target is the latest retailer to jump on the "buy now, pay later" bandwagon.

Ahead of the busy holiday season, Target is offering shoppers additional ways to pay for their purchases with new installment plans from Affirm and Sezzle, the retailer told USA TODAY exclusively Wednesday.

Installment plans, which are beginning to replace traditional layaway plans, are increasingly popular with retailers. Amazon and Walmart have adopted them, as have Macy’s and Bed Bath & Beyond. Newer entrants include Paypal, which bought Paidy, and Square, which bought Afterpay.

Not only can installment plans boost sales, they allow shoppers who don't have the cash at the time to snag deals and stock up on holiday gifts.

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Consumers who use buy now, pay later tend to be younger, and some don't qualify for credit cards. The advantage: They can spread out the cost of a purchase over a few weeks or months in installment payments.

Target says the new options allow consumers to buy what they need to “take advantage of our best deals” and pay at a pace that works for them. 

“Through our partnerships with Sezzle and Affirm, we’re offering guests additional flexible payment options that meet even more of their needs no matter how they choose to shop," Gemma Kubat, Target’s president of financial and retail services, told USA TODAY.

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How popular these installment plans will be with holiday shoppers is unclear, but more retailers have added them in recent months.

According to a report by Lending Tree, interest in store credit cards plunged in 2021. But the report also found that consumers were still slightly more likely to use store credit cards for holiday shopping than the buy now, pay later installment plans.

Sezzle CEO Charlie Youakim said his service is different from a credit card, which benefits when consumers carry a balance and pay interest.

“We don’t win in that scenario," Youakim told USA TODAY. "Where Sezzle wins is when we extend the right amount of credit to the customer, so that they can repay us. We know that we're getting a lot of young customers that are new to financial services and credit so we're trying to become the right training wheels product.”

Target's announcement comes ahead of its three-day Deal Days sale, which begins Sunday. The sale kicks off the retailer's holiday shopping season and launches a new price match guarantee.

Purchases with Sezzle and Affirm also qualify for the price match guarantee, Target said. Sezzle is for smaller purchases, while Affirm is for purchases over $100.

Sezzle offers no interest and no fees for consumers who make payments on time. Affirm interest rates vary and are subject to approval.

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The end of traditional layaway

Walmart also is working with Affirm after removing seasonal layaway from most of its stores last year.

“We've learned a lot in the past year as our customers’ needs and shopping habits have changed,” Walmart said in a statement to USA TODAY. “Based on what we learned, we are confident that our payment options provide the right solutions for our customers.”

Affirm also is working with Amazon and select customers now have the option to split the total cost of purchases of $50 or more into monthly payments.

“Over half of Americans are interested in using a pay-over-time solution for their holiday shopping this year and the majority (69%) will do so because they believe it helps them to better budget,” Silvija Martincevic, Affirm's chief commercial officer, said in a statement.

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Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko. For shopping news, tips and deals, join us on our Shopping Ninjas Facebook group