Salons and spas are increasingly offering buy now, pay later payment options to customers, according to an executive of Zenoti, which provides software and payment services to those businesses.
BNPL brings in more customers and increases their spending in a business sector where final bills are measured in hundreds of dollars, said Wes Hawthorn, the company's vice president of fintech products.
"We're seeing a large uptick in buy now, pay later, with average ticket sizes above $200," he said in a May 9 interview. "The consumer will spend more when they can break it up into interest-free payments.”
Bellevue, Washington-based Zenoti also counts medical spas among its clients, Hawthorn noted. Customers of those businesses tend to come back multiple times over the course of several weeks for treatments such as Botox injections, he said. "You're seeing payments more closely aligned to the course of treatment," Hawthorn said.
Zenoti has several competitors in the salon payments space. Those competitors include San Luis Obispo, California-based Mindbody, Los Angeles-based Boulevard, along with Square for Salons, which is part of the Oakland-based financial services company Block.
While the scope of buy now, pay later options has greatly expanded in recent years, BNPL companies initially offered the option of paying in four bi-weekly installments.
U.S. consumers are, however, using buy now, pay later to purchase an ever-widening assortment of goods and services, research shows. Groceries, concert tickets and meal deliveries can now be paid for with BNPL plans.
Zenoti was established its Bellevue headquarters in 2014 and signed its first client with over 150 locations the next year. The company has raised $330 million, a spokesperson said. Its customers include the Gene Juarez Salons and Spas chain, which is headquartered in Seattle, and the San Antonio, Texas-based Massage Heights, a chain of massage parlors.
Zenoti’s software offers BNPL through providers such as Affirm and Klarna, Hawthorn said.
The method of payment is also appealing to customers who can't immediately make an upfront payment, which expands a salon or spa's potential pool of clients, he added.
BNPL companies have generally advertised their products as interest-free financing, but some of those companies have delved into interest-bearing loans paid off over the course of several months.
Beyond the financial reasons to offer buy now, pay later plans, salons and spas are serving a young customer base that is comfortable with non-traditional financing options, Hawthorn said. "There is an awareness that wasn't there before," he said
