How would you design a “Pay Later” feature for Amazon app?
Google
Amazon- Kane Morgan
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.