There’s a different between “Can we offer post payment?” from a feasibility/value standpoint and “Should we offer post payment?” from an ethical standpoint. This blog scratches the surface on both.
Post Payment, including buying with a credit card, is profitable for businesses. And it is profitable for businesses that offer post payment as a service to other businesses (Klarna, Riverty etc.). It is profitable because of:
– Higher conversion rates (people buy more often)
– Bigger basket sizes (people buy more per time)
– Reminder fees
– Interest rates
And probably some other things as well
The risk appetite deals with the question: “ Can we offer post payment?”. It’s all about the risk appetite. Usually, not every customer is offered post payment. The business does one or several risk assessments. Most common are the credit risk (do we think the person has the money, but also is the person already in debt collection) and fraud risk (what’s the chance and impact for this order or customer of deliberately not paying or worse). Combining the risk assessments with a risk appetite gives you a means to determine how much post payment is offered to who.
The ethical part deals with the question: “Should we offer post payment?” Here are some ethical considerations:
– 🗓️ Post payment separates the date/time of buying from the date/time of paying. And by doing this, customers have and feel freedom. It can be considered as their fundamental right to choose when they order and when they pay.
– 👮♀️ Post Payment is legal. It is up to the market on how this exactly works, how post payment is offered to whom and how much it costs. More and more countries have legislation and rules for post payment and the processes behind it (e.g. only give 1 reminder fee for all outstanding orders instead of a reminder fee per order), limiting what’s legal or not.
– 🐛 Post payment opens up a whole can of worms concerning fraud, the simplest one is just deliberately ordering something and not paying. Therefore there is more fraud in the world with post payment than without.
– 🌍 Post payment enables us to consume more than we need. This has great impact on the environment and how we treat our planetary resources
– 🎄 Post Payment offers a way for poor people to buy something for their kids for Christmas or Sinterklaas. But they also know they cannot afford it, deliberately putting them in debt (even further).
– 💉 Shopping can be an addiction and post payment offers a more easy way to not feel the “pain” immediately
– ❓ What other ethical considerations do you see?
🤔 My opinion
I’m concerned that organisations know these ethical considerations, but that with every chance or adjustment in the system, technology or just the risk appetite, they aren’t actively answering the question if they should. The ethical discussion should always be part of any change or experiment with post payment and the organisation should make a conscious decision not just on the business case but also on what other impact it might have on their customers.