At Stonemaier Games, our philosophy on installment payments–offering customers a way to pay for an order over several months instead of all at once–has been that we don’t want to encourage someone to buy something they can’t currently afford (and don’t need). As a result, we do not offer installment payments on our webstore.
However, the more I talk with people about this topic, the more nuanced I think it may be. Today I’ll share those thoughts with you and invite you to share your opinions.
Importantly, as we discuss this subject, I think it’s good to acknowledge that people have different experiences, backgrounds, cultures, and budgets. It may be really easy for you to pay $100 for a board game at any time, while someone else might only have $20 for their monthly tabletop budget.
Also, you might be like me and think that you’ve never used installment payments. Why pay for something you can’t afford, right? But I’ve had mortgages, car loans, and student loans. I’ve chosen the option when getting a new cell phone to pay for it as part of my monthly mobile plan instead of up front. I also regularly use a credit card; albeit one that I pay off in full at the end of the month, but it’s still essentially a delayed payment. Debt is universal.
Briefly, here’s how installment payments work for ecommerce (like Gamefound and Shopify): If a publisher chooses to offer this option, customers will see it when making a purchase. There’s often a minimum amount to enable the installment option. The customer pays the first installment right away, and a third-party payment provider is then responsible for triggering the remaining payments. Typically the installment payments add up to exactly the same amount as if you paid in full up front, but if you miss a payment the payment provider will charge you fees and interest.
Here’s a summary of the data and opinions I gathered from ambassadors, livecast viewers, and others:
- 32% of Stonemaier Ambassadors reported that they have used installment payments for something (this was a broad question, not necessarily about board games).
- A number of people said they don’t like installment payments for things that aren’t essential and that publishers bear some responsibility for not encouraging people to spend money they don’t have.
- A number of people also said they live on tight budgets, and the occasional installment payment has allowed them to prioritize their needs while also allowing some wants to enhance their life.
- The price itself seems to have a big impact on whether or not it’s reasonable to offer installment payments. People felt differently about $200-$300 all-in pledges vs $65 pledge levels. As part of this discussion, people praised campaigns like Nemesis Retaliation that offer a cheaper, standard version of a game as an alternative to the expensive super deluxe version.
- Several people said that installment payments are a good way to serve crowdfunding backers specifically, as they’re paying for something they likely won’t receive for at least 12 months.
It was interesting for me to hear such a range of opinions and parameters. My goal is to serve our customers. For installment payments, I thought we were serving customers by only asking them to spend within their means, but I’m open to reconsidering if that philosophy is only serving some customers.
What do you think? I’m curious to hear your opinions and experiences with installment payments, and I’d encourage you exercise empathy in your comments. What’s true for you may not be true for someone else.
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43 Comments on “Installment Payments: Is This a Good Way to Serve Customers?”
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Personally, I use By Now, Pay Later for many different types of purchases.
While hobbies feature prominently, it’s also invaluable for larger purchases like travel.
My go to is AfterPay – the reason being you pay off in 4 fortnightly instalments, which synchronises with my pay cycle at work.
They also are striving to be financially responsible.
This has allowed me to pursue my hobbies in a way I would never done before.
I monitor closely and have never had an issue with paying on time.
For StoneMeier, I think it all comes down to which BNPL provider you would choose – a reputable one with a custom deal could be invaluable as an addition to your payment options.
While I applaud your decision to be ethical and to care for your customers so they don’t take on unsustainable debt, at some point you have to weigh up the value of giving them flexibility and options.
I do appreciate being able to use the interest-free pay-in-4 options through the Stonemaier web store so I don’t have to worry about specific immediate numbers when there’s a flash sale or whatnot. I almost always use it for small nonessentials (games, books, art, art supplies) when it’s available. I suppose I could use a credit card in the same way, but the bimonthly autopay reminders keep me from forgetting what I’ve purchased and ending up with a higher bill than anticipated, and the annoyance of putting it in the register 4 times keeps me from running more than 1 or 2 at a time. The line between paternalistic and predatory is one I’m glad I don’t have to walk!
Thanks for sharing this, Alix! We’ll take it into consideration.
I understand the objections from some but I’m essentially a purist, interest free credit is good for me. I get to keep my money working for me for longer before handing it over to work for someone else.
Where it seems to crop up most in board games these days though is crowdfunding, and I think that’s a very different thing. “Get your item straight away, pay for it over the next year” is very different to “pay for your item over the next year, and then get it a few months after that”. It’s basically just a piggy bank/savings pot.
IMO, adding installment payment support adds a bunch of risk for you, the supplier, in the form of non-payment, while gaining you very little. FWIW, i’d unreservedly recommend against it.
i’m wholeheartedly in the camp of, “if you don’t need to be spending money on it right now, don’t spend money on it right now,” and installment payments incentivizes the opposite, tempting people to go into debt (or further into debt, as is the case in most of the Western World population).
I appreciate you getting input from your community, but ultimately you must do what aligns with your own ethical principles. The arguments for and against will never lead to a clear conclusion. I, for one, am more likely to support a company that sticks to their values, even if the reasoning boils down to “It just doesn’t feel right for us”. Sometimes that’s enough.
I enjoyed listening to this NPR’s Marketplace “Financially Inclined” podcast about “Buy Now, Pay Later” services. The explained that one study showed that people who use these services tends to spend about 3 times as much money as they would otherwise. I get the psychology, paying 4 installments of $25 feels like a lot less than paying $100 all at once. It’s fine if you have plenty of money, but missing scheduled payments can have consequences.
As boardgames get more expensive, I think it’s important for Stonemaier to be responsible and try to keep their customers’ best interests in mind. I would recommend erring on the side of trying to prevent customers from going into debt to pay for boardgames. Marketing tactics that hide the true costs of games encourages people to spend money they don’t have on products that really aren’t necessities, as much as we love them.
I apologize, I forgot to include a link to the “Financially Inclined” podcast episode about “buy now, pay later” services. I thought it had good advice about the pros and cons. Here it is:
https://www.marketplace.org/shows/financially-inclined/when-to-use-buy-now-pay-later-services/
Thanks for the thoughts and the link, Asa!
This is a sensitive topic to handle, but also, I feel, an important one.
Jamey, you seem to always genuinely have your customers’ best interests in mind, and I appreciate you taking time to think this through.
One or two things that I don’t think has already been pointed out so far- While a customer missing a payment may not hurt the retailer *directly or immediately*, the occurrence will often result in the customer feeling bad (or at least worse) about the purchase, after the fact. I think this could negatively impact any retailer in the long run, though it might not overwhelm the “bottom line” for many retailers (as more purchase options can often mean more customers). But since Stonemaier is very big on spreading joy, this also seems to run at cross-purpose to core values.
“Buyer’s remorse” is a real and common issue, and not a new one; return policies are one way to mitigate that issue. In contrast, installment payments push “buyer’s remorse” into the future, where it is no longer the retailers’ problem – at a potentially steeper cost to the consumer, instead.
In general, I lean away from installment payments. Typically, installment payments mean paying full price (or potentially more) in the long run for something I want right now. Frequently, I’m better off just setting the same amounts of money aside each month until I have set aside enough to buy it anyway, and often a sale or discount or gift card might come up in the meantime, saving money in the long run.
For some reason, it does feel to me to be different in principle to have installment payments on a product that won’t be received yet, such as a crowdfunded project. If I’m willing to pay now for a product I will receive later, that already isn’t as much the “impulse buy” that most installment plan purchases are. But, maybe I’m still better off setting that money aside in the meantime, and buying a retail copy when the opportunity comes. If it comes. And see, that’s where the gray area is still a little grayer for me; if I get an opportunity to buy something that I didn’t already plan to (a new game being crowdfunded), and I can buy it now for cheaper than once it goes to retail (at full price, anyway), the installment plan looks very tempting. And if I don’t buy it now, will I ever get that opportunity to buy it at retail? FOMO kicks in, and if there are exclusives involved, it kicks in much worse. And that’s a terrible state in which to be making decisions about spending future money, right now.
Jamey, I can’t tell you how much I appreciate your move away from “exclusives”, and I believe that whichever way you decide regarding installment payment options, I believe it will be because you genuinely expect it to be the best move for your customers in the long run. But personally, the one instance I would be most interested in using it (for better or worse) would be at pre-sale opportunities.
These are excellent points about buyers remorse for something you receive now vs well in the future!
There are two kinds of installment payments –
(1) the kind where you get the goods and pay over time. That’s what credit cards are for.
(2) the kind where you keep depositing money somewhere and when you get enough, you swap the money for goods. That’s what piggy banks are for.
Either way, I can’t see the upside for a small, non-financial, business to
get involved in the finances of a customer for a small one time purchase.
Dave,
They don’t get involved. As Jamey stated above it’s handed off to a 3rd party who deals with the payment and any delinquencies associated with it. It’s just one more alternative way to pay at checkout.
I have some the installment option on multiple boats game campaigns now (like Firefly Big box & Nemesis: Retaliation).
I find it a fantastic way to fit these larger budget games into my board game budget.
I want the games, I’m ok paying for them, but it makes it a LOT easier if a pool to swallow when I don’t have to throw down $250+ at one time and I can spread it out a bit longer and not more out on a game I otherwise might pass on even though I really wanted it.
Jamey this
Definitely! That makes perfect sense for a $200+ order that Kevin won’t receive for many months.
I think payment plans are fundamentally equivalent to credit cards- really useful tools in the hands of responsible, informed consumers and extremely dangerous tools when mishandled by consumers that use them irresponsibly or are misinformed. The key difference is that payment plans are newer and so we haven’t done as good a job as a culture figuring out how to mentally process them.
As a company, I think it would be incredibly condescending to say “credit cards are dangerous. We don’t trust our customers with them, so we don’t accept them.” I think you need to trust your customers to responsibly handle their own finances.
However, I think it’s completely appropriate for Stonemaier (or any company) to take steps to make sure their customers are informed about a new payment system they’re offering. A blurb talking about the fees charged if you miss a payment and the importance of not overspending just because you can feels like a nice middle ground.
I think there’s a big gray area here. It’s like with the subprime loans that played a major role in the 2008 recession. Sure, if those loans were paid off properly, there’s no problem–you could say that it would be “incredibly condescending” for those lenders to not trust customers with those loans. But as history showed us, those lenders absolutely should not have offered subprime loans–it was a predatory practice that had a huge impact on the world. Credit cards fall into the gray area too–sure, they’re on the far end of the spectrum from subprime loans, but they’re still on that spectrum. A lot of people don’t pay their credit card bills in full every month, which immediately shifts into predatory interest rates. Maybe we should take more responsibility as publishers about accepting credit card payments for really expensive games. Or maybe not. But I do believe that Stonemaier Games should look after the best interests of our customers as people, even if that sometimes may mean protecting them from themselves. I’m not necessarily saying that installment payments fall into that category, but I do believe they fall into the gray area, and you make a great point about the value of any publisher who offers them to educate customers on the consequences if they can’t make the payments.
I really appreciate that drive to look out for the customer first.
Thinking through it a little more, I guess the key difference between credit cards and BNPL programs (as i understand them) is that typically a business accepts virtually any credit card but has to partner with a specific BNPL program to offer it, which does shift the responsibility for making a choice that’s in your customer’s best interests more onto your shoulders. I really like seeing that you take thst responsibility seriously and don’t want to inadvertently send your customers into a predatory system.
I know basically nothing about the process of setting up such a partnership, but I think a reasonable lens you could view it through is to define what a BNPL program would have to look like to not be predatory (a grace period of X length, interest rates under Y% after missed payments, etc.) and commit to offering one once you can find a partner that meets your standards.
If you can do that, it will then be on the customers to manage their own finances just as it is when they’re paying in any other way.
This makes sense
Pros:
1. Gives customers more options to choose what’s best for them.
2. Doesn’t make judgments about their financial situation/decisions.
3. Can actually SAVE people money. If they’re paying installments with no interest, it’s cheaper than paying up front (due to the future value of money), and also easier to avoid big credit card interest with smaller amounts.
Cons:
1. If someone makes the first payment, then stops, is Stonemaier simply out of luck for the rest of that purchase? This would add risk to the company’s sales and ability to project revenue.
2. The opposite of #3 above–what saves the customer money is also costing the company money, by receiving payment later. (But this could be made up for by more customers that wouldn’t have otherwise purchased?)
3. Could be perceived as predatory, even if it’s not the intention.
Ultimately, I think installments are generally good for responsible consumers. The problem is that they are very bad for people who aren’t responsible OR for people that have something unexpected come up which impacts their planned ability for future payments. It’s not a company’s job to decide if you’re responsible or not, but it IS a Stonemaier hallmark to do what’s best for consumers, which may include not offering situations that could lead to trouble.
Thanks for sharing your thoughts! As for Con #1, I think the installment payment provider pays us in full right away, and from then on the customer is indebted to the payment provider (which is fine for us, but it creates the potential for predatory situations from the provider).
I can understand the desire to dissuade people from taking on unnecessary debt, but it’s ultimately not a company’s role to either solve systemic problems like debt or make financial decisions for individuals.
By way of comparison, I use an HSA account to pay for medical-related expenses. I remember attempting to buy something with my HSA card at Walmart one time and their point-of-sale system would not let me buy the item I was trying to buy because their system did not have it listed as an approved HSA expense, even though I knew it was a legitimate HSA purchase. I felt the same way at that time—this company was trying to make that decision for me.
It’s great to offer options, and it’s not on you to decide if a specific option is financially wise or not. People can just as easily pay full price on a credit card and it be a worse decision than the payment plan if they don’t pay it off immediately. It is not predatory to offer payment options.
totally agree
It is predatory, and it is insidious because it doesn’t appear to be predatory at first glance. When people talk about the widening wealth gap in the US and increasing poverty, payment processors like this are contributing to it. They disproportionately affect the poorest members of society, keeping them in poverty.
Now, you might argue “free market” and that is another lens to look through. And financing one or two board games per year isn’t contributing to poverty as much as say a company like Walmart letting people finance their groceries. In a similar vein, having a bit of extra plastic in a board game isn’t contributing to climate change as much coal power plants, but becoming eco-friendly was nonetheless a choice that Stonemaier Games proudly made.
It’s really up to each individual corporation and their owners to decide their core values and what they can live with and what let’s them sleep at night.
I’d like to add a couple other points to consider as well:
(1) It was my belief that that when you use a processor like this, they charge all the payments to your credit card. In which case, it helps that the buyer doesn’t need to remember to make additional payments. Which suggests to me that the only way payments ever actually get missed are if the credit card gets maxed, or is cancelled, or something like that. So maybe it is a rare situation?
(2) The other day I noticed that my credit card offers the “opportunity” to take a large payment and split it into multiple smaller payments over many months, directly from their online portal. So many consumers do have that ability, even if not directly during the check-out stage of a particular retailer. I suspect other credit card companies will follow suit.
CS: I appreciate you taking personal responsibility, but I also feel a huge amount of responsibility and accountability to our customers. We want to be a part of the solution to systemic problems, not an enabler for them.
Agree
I have a limited entertainment budget each month, and have used payment plans for essential things in the past, opting to save for my entertainment choices. But in the past couple of years I started using payment plan options for nonessential things for a few reasons.
The first is that hobbies are just expensive. Like many in our hobby I do peripheral stuff like paint minis. And paints and brushes are expensive. Even if you’re limiting paints to a few colors to mix for a vareity, you lose a lot of paint that either dries on your pallet or just can’t be returned to the container. So you buy more paints and a wet pallet… and your fingers hurt from your grip on the mini, so you buy some handles to put the mini on… And you’re straining your eyes to see details, so you buy a magnifying glass with light on it… not to mention replacing your brushes fairly regularly… none of these things are truly cheap. And the actual difference they make to quality of life is noticeable enough that you can have a bad experience without them but a great experience with them. So it makes sense for me to put things on credit cards and pay monthly.
But also, crowdfunding sites have created an inflated secondary market. Beyond encouraging people to pay incredible prices for “deluxe” games during the campaigns, the secondary market (including many local game shops) will have the basic games at higher prices. I missed the first Nemesis campaign, so I paid MORE for just the base game than I would have it I had just backed the game WITH the stretch goals. I can always resell if I don’t like the games I get, and I’m out some cash. But if I have to wait until I can “afford” it, I might still have to save up more than expected, and finding upgrades or expansions might be near impossible. And definitely out of budget.
Separately, I just find that payment options to be a good way to break a barrier to entry. I find that because so many hobbies have such a high price point(a set of DnD dice cam be the price of a fast food lunch), many people avoid them. Offering that as an option does, unfortunately, encourage people that shouldn’t be overspending on nonessentials. But it allows for people that couldn’t initially enter the space to become part of the community. And while some people see that as bad because they should be saving, it feels pretty privileged to tell someone some version of, “Because you’re struggling to pay for the things that make life livable (rent, car, food, etc.), you shouldn’t spend on the things that make life enjoyable (games, movies, hobbies, etc.”).
My two cents.
One thing that is usually left out of this type of discussion is risk.
If you have the money already and do installments and are disciplined to not use that money for anything else then the risk is low (an emergency can come up that you use that money for).
However, many use installment payments as a way to pay over time for something they can’t afford now. That’s spending future money. That introduces a lot of risk should that future money not be available when needed. (Also, true costs can be obfuscated with installment plans.)
Everything looks ok when things are going well. But it’s when the storms hit that expose those who put themselves at higher risk.
As a side not, I saw a Gamefound ad on Facebook recently that claimed “new lower price” for Food Chain Magnate and showed the monthly cost. The actual cost was still, of course, exactly the same. That felt predatory and disingenuous. Makes me less likely to ever back a game on Gamefound again.
Kevin: I didn’t see that ad exactly, but I do know that in the Food Chain Magnate campaign, the project launched with a reward level around $300, and midway through the campaign they added a new reward level for around $175 (definitely not the original price). I’m guessing that’s what the ad was referring to, not the stretch pay option, but I could be wrong.
You might be right. I didn’t go back and look at the campaign. The only thing I saw in the ad was an installment plan price and assumed they were alluding to that. Which goes back to what I mean about obfuscating the price. It would have been more helpful to have the actual cost in the ad and not a monthly cost (without a timeframe, so no way to understand the full cost). But I’m sure $30/mo gets more clicks than $175.
I like to have the option when the stuff I want is “expensive” and “not-essential”. I am using this option to access some Gamefound stuff that is above $150. When it comes to retail, if the game is $50 or less, I use cash. If more than $50 I will use my credit card. I have a limit of monthly expenses on not-essential stuff, but I can see other don’t. I see your point on not encouraging people to spend money they don’t have, but you are not really doing that. Having said that, I can see the problems that could be caused to your business by people missing payments, and that for me is a valid business evaluation and decision that you have to make.
I would have assumed that if a customer misses a payment, the processing company is the one that is out the money, not the retailer.
I am not sure how it works. My point is that it’s an individual decision, everyone must be responsible for their decisions ans consequences and no one else should carry that responsability. Reading Kevin Hornschemeier’s comment above, I share his feelings about that kind of “commercial strategy” used by that project. That is messed up.
My stance on this is that it’s fine for something like a Gamefound campaign where I cannot afford it NOW because I didn’t know it was coming or wasn’t sure what the price would be, but I feel secure enough in my job and financials that I WILL have the money when it’s needed, or even well before that. For a retail game, I don’t think I’d be as likely, but I have used PayPal Credit to make a large purchase simply because I’d rather pay out $150 over 6 months at no interest than pay it right now, even if I currently have it. People just scraping by, wondering where their next meal is coming from, it would definitely not be wise to accumulate debt in a situation like this. And I think that’s hard to get across without coming off as though you’re insulting someone for not having a lot of money. 🙁
Installment payments are predatory just like many other forms of credit that people use every day. Provider’s disproportionately collect higher fees from the poorest members of society — those who are most likely to miss payments and be charged fees and interest.
Maybe 80% of customers who choose this option will never miss a payment or pay anything extra, and to those it seems like a great deal with nothing to lose. But the remaining 20% will bear all the fees that keep these payment processing companies in business. What percentage of Americans live paycheque to paycheque again?
Everyone is offering installment payments these days — you can even buy your groceries at Walmart on installments. But is that really serving customers who will now have even less cash to pay for groceries the following month?
Is “everybody is doing it” justification to follow the crowd?
Stonemaier Games is a company that has never followed the crowd, done what is easiest, or done what is the most profitable. You’ve demonstrated a willingness to lead by example with your eco friendly initiatives which have had a real impact on the way people think and act. Choosing not to offer financing would again be going against the grain, but you won’t get a pat on the back for doing so. It would be a thankless initiative.
Offering financing makes no sense in a website where the product is ready to go. It could make sense on a crowdfunding platform or for preorders however. But I’d be inclined to dig in deeper and look at what it really costs for those who miss payments, in terms of both real dollars and percentage of purchase price.
At the end of the day, these payment processing companies make enough money to remain profitable. That profit has to be coming from somewhere. It is not a free service – it is a debt paid by society.
I think as the industry moves from the $20 monopolies to the $90 Expeditions, paired with inflation, offering ways for everyone to access our stuff is a reasonable consideration. I did payments for the first time for a gamefound game, just to see how it works. Won’t be here for a year, won’t be paid for in a year. Seems fine.
Tho some people struggle with this type of ‘temptation’, spending money they don’t have, I wouldn’t shoulder that blame all on your own.
As a distiller and wine maker, I’ve had similar thoughts. A creator of vices and temptations. But I’m in it for the art of the fermentation craft, curating flavors and manipulating the natural fermentation process to bring joy to folks and facilitate social gatherings. the idea of a shot of liquor is absurd to me now. I have to trust others will partake in good faith.
I think the same can be applied here. Some folks will be tempted to spend what they don’t have. And that’s unfortunate. But! Everything is going the Netflix route, $10 a month everything, it’ll make these $100 games more manageable for everyone.
Even if someone did rack up a huge bill on games and couldn’t make payments. It’s not the end of the world (ultimately). Debt/money is made up. They’ll still be alive, alive with some fun games. (And probably a terrible credit score) but that’s ok. We made up credit scores in the 90s too.
For things that are very expensive and essentials (e.g., communication, housing, transportation) I can, and do, use installment payments. I am paying for my phone through my monthly bill, I have a mortgage, and I have had to make payments on a car in the past.
For anything that is very expensive and not essential (e.g., hobbies), I prefer to save the money until such time as I can afford to pay for it outright. It is for this reason that I do not have (and will not get) a credit card. It is just too easy for someone like me to wake up one morning drowning in debt.
If someone has far more willpower than me and can manage things like credit cards and installment payments and the like — more power to them. I know from years of experience that I do not. And so I have my solution.
I have happily used it on 3-4 campaigns on Gamefound. Did I have the money to pay for them entirely up front? Yes. Did I still like using this option. Yes. Why? Not real good reason other than I liked the option to slowly pay as I waited….
Did you or would you use it on pre-orders or buying actual stuff from Stomemaier shop though?
Yes, agree with CS and many of the other posters here. I generally use the installment option when the project is over $200. Many crowdfunding projects are deluxe and won’t fulfill until a year or two out so I’d rather pay over time interest free than tie my money up for something that isn’t instantly gratified.
I, like some mentioned in your article, have a very limited budget. It takes a couple of months of saving and not buying any other want to be able to buy one $60 game. I’ve chosen to work in the non-profit sector, so I know I’ve chosen that reality. While installment payment could be helpful (so my wife doesn’t have to put up with me “borrowing” from the next month’s fun money line item), I typically pay all at once and then live with the consequences. I also very rarely buy games that require me to front more than $50-$60. Installment options might make it more possible for me to support larger projects.