How would you design a "Pay Later" feature for Amazon app?

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How would you design a "Pay Later" feature for Amazon app?

Asked at Google over a year ago

3.2k views

Product Design category

& 2 other companies

Asked at

& 2 other companies

3.2k views

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Samiksha Deshmukh · Answer 1 · 2022-03-06T15:42:22+0000

Clarify

Will this feature be available for all users or is it only for prime users? All users
Do we want to give them a monthly installment option or lump sum payment after a particular cut-off time? Choose accordingly.
Will this feature be integrated with shopping, prime video, music, and all other purchases? Let's stick to amazon shopping for now.
How long do we want to allow the user to not pay? Any such constraints? (It's up to you to decide)

Goal

My hypothesis is that Amazon wants to attract more customers to buy from Amazon.com by giving flexibility to users. This feature will enhance the customer experience and give more convenience to the customers when they are struggling to pay back quickly.

User Personas

Students
Unemployed - can be risky if given to focus on unemployed.
Minimal wage-earning people (elderly, hourly wage-earning)

I will focus on Minimal wage-earning people is because they consist of a larger chunk of the population which may be limiting them from buying costly products from Amazon.com. This category or user persona is an umbrella that consists of the elderly, and adults with lower incomes, lower credit limits, and bank balances.

Pain Points

Earn minimal wages.
Exhausted credit limits or lower credit limits.
Can’t afford to pay for costly items in one go.
Do not wish to spend lump sum amounts as it is risky.
Have to skip buying costly items.

Of all the pain points listed points, I will try to focus on the 4th point as this will let the people actually get the product and use it without the worry of paying the lump sum in one go.

User journey

User logs in to Amazon.com browses to find a perfect TV costing 600$. The user doesn’t have this lump sum amount in hand and hence looks at the EMI option. The user puts their credit card details. Amazon processes check if the user has paid for all its previous orders on time, validates the credit card, and then approves the user’s request to pay later.

Solutions

The user pays 25% of the total due amount using the credit card and pays the rest in smaller customizable installments. - Still, user is asked to pay some amount.
User pays 0$ but gets the product delivered and pays the total due in monthly installments using their credit card.
The user doesn’t pay any amount but gets the product delivered. The user has up to 60 days to pay for the item. - Doesn’t give too much flexibility.

I choose the second option because in this case, we let the users actually pay later and Amazon keeps getting some money every month. This will reduce the financial burden on the user as well as our company.

Details of the solution chosen: The user will log in, add a product to the cart, add delivery details, go to payment options, choose pay later, get a customized installment amount per month (making sure the EMI are feasible for Amazon to provide). Example: A TV of 500$ with monthly installments of 50$ for 10 months is doable but a TV of 600$ with monthly installments of $20 is not feasible for Amazon. Some feasibility checks need to happen before giving this option per product.

Trade-offs

A person can overuse this feature and buy multiple products at 0% interest rates. This is harmful to Amazon. To curb this we will allow only 1 product on EMI per account.
A customer can buy a product worth even 10$ of this scheme which is not really a need. Give pay Later option only for products above a threshold value. I.e. 100$.

Metrics

Average products bought using “pay later” per week.
# products bought (value greater than threshold per product) in a week.
Ratio of the # products purchased by all payment methods / # products purchased by pay later.

sairah814 · Answer 2 · 2021-10-12T19:40:45+0000

A few clarifying questions:

1. Who is this feature being designed for? My assumption is that any Amazon user could use this (as opposed to just prime members, existing members with a certain level of purchases, etc).

2. What is the goal of the feature? To increase revenue by attracting users who do not want to or cannot pay for an item in one lump sum

3. What does this feature do? The user can pay the full price of an item in installments or at a future designated time

Next, I want to figure out what the pain points or user needs of this feature would be.

User Needs:

1. Customer wants to try an item before they pay the full amount

2. Customer does not have the full payment currently available

3. The customer doesn't want to forget about making payments because they don't want it to impact their credit score

4. The customer wants to break up payments over time to manageably complete the payment, but they don't want to think about how to break it up

5. The customers wants to use one or multiple methods of payment

6. The customer finds it most difficult to make immediate payments for large ticket items

I also want to highlight some business risks/needs:

1. The business wants to decrease the risk of customer defaults

2. The business wants to reduce the possibility that the customer forgets to make payments

Now I will propose some solutions:

Solution	Customer Impact	Business Risk	Effort
1. Allow customer to "trial" an item by letting them purchase the item and automatically charging the customer if item is not returned within 7 days	High -Medium: customer gains trust that they can easily trial items without worrying about it affecting their account balance, customers that take longer to return may be annoyed	Low - business doesn't have to wait a long time for item to be charged	Low
2. Allow the customer to break up the payments for large ticket items into monthly installments for a fixed period (ex: 6 months, 1 year)	High - customer can easily manage payments and see the breakdown	Medium- business knows how much revenue to expect over time, some default risk can be mitigated by using a brokering partner	Low-Medium
3. Allow the customer to set a date for when the payment is completed (based on their payroll dates)	High - customer has control over their payment distribution	Medium- high - Less predictability for the business	Low
4. Use Machine Learning to predict which items and customers have the best payment compliance and would be worth offering a "Pay Later" button for (Payment installations can also be customized based on user history/risk)	Medium - customers with the greatest need for Pay Later may be excluded, especially as data for algorithm may be biased	Low - mitigates risk to business while providing customers with choice	High

Based on the options above, my recommendation would be to go with option 2. It's the best experience for the user with good risk mitigation potential for the business. It has also been implemented in many forms across different industries and so shouldn't be difficult to implement if you were using an insurance partner.

talkhuda · Answer 3 · 2020-07-07T21:28:09+0000

Let’s start by clarifying.. when we talk about amazon app, we mean the mobile app.The user here wants to purchase something today but pay for it later. They want to do this because they probably can’t afford paying for it today. They will do this as they checkout.The goal of this feature to increase # of purchases User personas of Amazon: Business professionals that have stable jobsStudents who are strapped for cash every now and thenParents / Families – who purchase large volumes of deliveries for different family members and sometimes can’t keep up with their expenses. From a user perspective, I would say students and families need it more than professionals as they are more strapped for cash. I would focus first on families specifically the parents as their purchase orders are more frequent and of higher value.Customer needs:1. Make purchases on the go as they are overwhelmed with the many things they need to do2. Purchase things that they might not have cash in hand for3. Receive items as quickly as possible cuz they forget to purchase to last minute4. Be environmentally sustainable with their many online purchasesFrom a customer impact and business revenue perspective, and frequency of the issue occurring, I would focus on the top two needs.Some solutions:1. Offer pay later feature with no interest for amazon prime users or for customers who purchase at least x amount of orders with no interest2. Offer pay later feature to all users with no interest3. Offer pay later feature to distribute payments across 4 months for all types of purchases4. Offer pay later feature to distribute payments across x months that increase as the amount increases5. Offer 1 click 4 payments / 4 months later feature6. Offer pay later feature for only high ticket items above a certain value.

	Value	Impact	Frequency	Business risk	effort
No interest for regular users	High	High	High	low	medium
No interest for all users	Medium	High	High	High	Low
Distribute over 4 months for all purchases	High	Medium	High	low	Low
Distribute with price	High	High	Medium	Medium	High
1 click feature	High	High	High	low	Low
Only high ticket items	High	Medium	Medium	Medium	Medium

Given the above, I would go with options 1, 3 & 5.In summary, amazon wants to add on the pay later feature. It will focus on family needs as they are frequent buyers who can be cash strapped frequently. We will focus on solutions that have low risk (in comparision) and not too much effort building on existing functionality. I would start implementing as an MVP with amazon prime customers.Metrics I would consider, is # of purchases using this payment feature and % growth. # of users and % growth, MAU, $ revenue generated, and CTR of the 1 click feature.