Online Layaway: Outsourcing the Headaches

Publish Date: 
Feb 25, 2010
By Holly J. Wagner

WITH EVERY OTHER FACET of commerce available online, it was bound to happen. Once the economy started grinding down, online layaway companies sprang into the breach.

“For merchants, they understand the value of layaway but there is still that administrative headache,” eLayway.com founder and Chief Marketing Officer Sergio Pinon says. So in 2006, he started a company to handle those headaches.

eLayaway works mostly with independent retailers, but also offers the service on items from retailers like The Home Depot. The Apple Store and Best Buy, hospitality companies including Carnival Cruises and Hyatt Hotels, and even on season tickets for major sports franchises.

“We’ve learned one thing: affordability is relative,” Pinon says. “We’ll have someone making $10 a month payments for an iPod, and others paying $4,000 a month for a $12,000 [sports] season ticket package.”

Shoppers (about 70,000 are registered with eLayaway) pay a one-time 1.9% fee on each purchase, plus agree to a $25 penalty for backing out of a transaction. Then eLayway debits their bank account on a regular, agreed-upon schedule until the item is paid off.

Retailers pay a monthly fee of $9.99, plus a processing fee between $20 and $150 per month, based on transaction value. The $20 fee covers up to $10,000 in layaway transactions per month; $150 covers up to $100,000 worth. The sales value includes completed transactions only.

“They pay for only the transactions we have processed, not for each payment the consumer made,” Pinon explains.

The company’s software is already integrated into some e-commerce platforms, is easily installed on others, and the company will negotiate fees to integrate into a specific retailer’s system, when the first two options are not available. (Continued)