Target Begins Testing Buy Now, Pay Later Pilot

Need to Know

• Sezzle, the buy now, pay later (BNPL) platform, is launching a test pilot on Target.com.
• The pilot will run as a small number of tests and make buy now, pay later financing available to a portion of Target.com customers in two product categories.
• The pilot is temporary, and there is no guarantee of a subsequent partnership between Sezzle and Target.
• BNPL has gained a major following in North America as leading payments companies such as PayPal, Visa, Mastercard, and more look to incorporate different methods of payment as options.

Analysis

As buy now, pay later financing options become more popular—particularly among online shoppers—retail giant Target is launching a pilot program with Sezzle to test BNPL functionality on its website.

The pilot will incorporate Sezzle’s BNPL tech on Target.com, running a small number of tests making financing available to customers shopping in two product categories, in order in order to determine the efficacy of BNPL financing on Target’s website. The press release announcing the pilot test did not specify what those categories would be, nor how long the test would be running.

The BNPL pilot between Target and Sezzle “does not represent any guarantee of a future commercial contract” according to a press release announcing the temporary proof of concept.

Buy now, pay later financing has spiked in popularity during the COVID-19 pandemic, as more shoppers turn to e-commerce while experiencing financial insecurity due to the economic impacts of the pandemic. The financing function has been adopted by individual consumer brands, such as Fender, which debuted BNPL functionality in May, as well as payments systems operators such as PayPal, which made BNPL financing available for purchases between $30 and $600 in August. Online retail giant Amazon, meanwhile, teamed up with Citibank in August to launch Citi Flex Pay, which allows shoppers purchasing on Amazon to select payment options, which range from three- to 48-month terms, at checkout.

For its part, Sezzle has seen massive growth in the four years since its launch, announcing that it hit one million members in February 2020. If Target adopts BNPL tech, it would be just the latest step in the big-box retailer’s commitment to digital innovation in the wake of a wave of shoppers migrating towards e-commerce during the pandemic. The company added 10 million digital customers in the first six months of 2020, posting massive profit spikes due to the jump in online shopping.

Looking ahead into the final months of 2020, Target has continued its commitment to digital, revealing last week that the majority of its seasonal hires will be dedicated to fulfilling online orders, including facilitating in-store and curbside pickup and adding additional staff to order fulfillment centers.