How To Start a Layaway Program for Your Store (2026)

Layaway captures sales from budget-conscious customers who might otherwise delay a purchase. 

In the Federal Reserve’s 2025 report, 46% of adults said they delayed a major purchase in response to higher prices. Meanwhile, a study published in the Journal of Marketing found that offering an installment payment option can entice roughly nine out of every 100 customers who would otherwise have walked away empty-handed to complete a purchase. On top of that, customers who do buy spend about 10% more per order. 

This guide explains how layaway works and how to start a layaway program online or in-store.

What is a layaway program?

Layaway programs are retail payment models where customers pay for merchandise in installments before receiving their purchase. They often include service fees for storage. 

In a survey of 2,572 customers who use buy now, pay later (BNPL) programs—which also spread out payments—Numerator found that customers who use it used it most for:

• Apparel (42%)
• Electronics and gadgets (32%)
• Furniture and home décor (26%)
• Home appliances (22%)

Layaway plans took root during the Great Depression, when installment credit dried up and retailers turned to deferred payment to keep customers buying, according to The New Yorker. With installment credit drying up during the economic downturn, retailers instead offered installment payments to retain customers. 

How does layaway work?

Layaway plans follow a process:

1. Down payment. The customer pays a percentage of the total purchase price or a minimum dollar amount to reserve the item.
2. Installments. The customer makes regular, interest-free payments until the balance is paid in full.
3. Possession. The customer takes the item from the store, or the seller ships it to them.

Who uses layaway programs?

Data from the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve identify four primary groups that use BNPL—the best studied and most common type of installment payment— to manage their finances:

1. Underbanked households. The FDIC reports that 14.2% of US households—about 19 million—are underbanked, meaning they have a credit or savings account, but still use banking alternatives such as payday loans, check cashing, and tax refund anticipation loans. The same report found that 9.7% of underbanked households use BNPL services, over three times as much as fully banked households (3%), and around six times as much as unbanked households (1.6%). 
2. Credit-constrained shoppers. The FDIC also found that 17.4% of underbanked households lack access to traditional credit options, while this 2024 economics paper found that low-creditworthiness customers’ purchases are two to three times more responsive to BNPL offers than those of high-creditworthiness customers. Layaway provides a way to buy products while avoiding a credit check or revolving debt. 
3. Seasonal planners. Consumers use installment plans to pay for large, predictable expenses, with Numerator finding that 39% of BNPL shoppers use the services for holiday purchases. The National Retail Federation (NRF) reports that holiday shoppers planned to spend about $890 in 2025, while back-to-school families planned to spend about $875. 
4. Budget-stretched adults. The Federal Reserve found that 37% of adults can’t cover a $400 emergency expense with cash. These individuals can use layaway to avoid debt and purchase essential items. 

Advantages and drawbacks of a layaway program

Here’s how layaway can impact retail operations and consumer budgeting:

Benefits

For merchants

Store owners use layaway to: 

• Convert budget-constrained customers. Purchasing data from Numerator shows that shoppers also use installment payments to participate in major shopping events, presumably allowing them to take advantage of sales without risking their monthly budget.
• Increase overall sales. A 2025 Journal of Financial Economics paper found that buy now, pay later (BNPL) increased merchant sales by 20%.
• Collect money upfront. In 2025, pawn store and pawn loan provider EZCORP recorded $33.1 million in customer layaway deposits. 
• Self-fund a financial program. Store owners can use layaway service and restocking fees to cover the operational costs of tracking inventory and payments. 

For customers

Customers choose layaway because it: 

• Helps them avoid credit card interest. Shoppers can use layaway to avoid revolving credit card debt and high interest charges. The Federal Reserve reported an average annual percentage rate (APR) on credit cards of 21.52% in February 2026. Low-fee layaway plans are cheaper than carrying a balance.
• Can make purchases feel more affordable. There is good evidence that while spending large amounts of money can be psychologically painful, splitting payments reduces the psychological barrier posed by high prices. A 2025 Federal Reserve report found that 58% of BNPL users said payment splitting was the only way they could afford their purchase. 
• Appeals to customers who dislike credit checks or interest. A 2026 New York Fed report found that younger and less creditworthy consumers show higher demand for products that avoid interest charges. Layaway is a non-credit alternative. 

Drawbacks to consider

For merchants

Cash flow management is a significant concern for product-based merchants: 43% of home and garden businesses surveyed by Shopify in 2025 reported struggling with cash flow in their first year, the highest rate across all verticals. For store owners considering layaway, this slower cash-flow trade-off is worth weighing against the benefits of securing sales you’d otherwise lose.

Some other potential risks to consider include: 

• Tied up inventory. When store owners set aside merchandise, it ties up inventory before a sale is final. To mitigate this, Cato returns items to the selling floor if a customer doesn’t pay within four weeks, whereas Burlington holds layaway merchandise for only 30 days.
• Retail markdown potential. If a customer defaults and the item returns to the floor after a trend cycle has passed, the store owner may need to sell it at a reduced price. 
• Added operational complexity. Layaway programs require systems to track inventory, installments, and state-specific fee exceptions. For example, Burlington, a clothing store, requires a minimum deposit of $10 or 20% of the total, nonrefundable service fees, and a 30-day hold for layaway purchases.

For customers

Shoppers also face potential drawbacks: 

• Delayed gratification. Stores hold items for a predetermined amount of time. Customers can only pick them up after they’ve paid in full.
• Higher total costs. Burlington charges a $5 nonrefundable service fee and a $10 cancellation fee. Cato adds an administrative fee to each sale and a restocking fee when customers default.
• Limited refunds. Burlington will only issue store credit for canceled layaway items and will not refund layaway program service fees. 

How to start a layaway program

Follow these steps to start a layaway program:

1. Research legal considerations

Understand how consumer protection and contract laws might affect your program. Review guidance from the Federal Trade Commission (FTC), including the Federal Trade Commission Act and the Truth in Lending Act (TILA).

TILA focuses on disclosures for credit terms, finance charges, annual percentage rates, and advertising claims. Check whether your payment terms, fees, or promotional language create disclosure obligations.

State and local agencies regulate layaway programs. If you’re in the US, consult your state attorney general’s office or local consumer protection agencies for guidance.

2. Create layaway agreements with your customers

A layaway program is a contract between a store and their customer. 

Layaway agreements include these areas:

1. Layaway plan schedule. The schedule covers all installments, from the down payment to the final payment. Set the repayment frequency, such as weekly or monthly. 
2. Service and cancellation fees. Service fees, also called program fees, cover administrative costs like storage space and labor. Define these fees in specific amounts so customers understand the total cost before signing.
3. Adjustable terms. Store owners have options for flexible payment and pricing. For instance, you could offer a lower price to customers who pay off a purchase in three months rather than six.
4. Return policy. Stores often create different return policies for items purchased on layaway. You might, for example, offer free returns within 30 days for traditional purchases, but charge a restocking fee for layaway returns. 

3. Choose a payment and accounting system

Use your checkout and accounting system to handle layaway installments. Shopify POS supports multiple and partial payments for in-person sales, and you can use it for a manual, deposit-style workflow. It isn’t a built-in layaway program with balance tracking and item holding, but used with apps like Layaway Control Panel and Downpay, it can support deposits, partial payments, product reservations, and preorder-style payment flows.

Whatever system you use, make sure it can: 

• Track partial payments and remaining balances
• Mark layaway items as committed, so they don’t get sold to another customer
• Connect checkout activity with accounting records
• Monitor cash flow as payments come over time
• Keep inventory counts accurate while items are reserved

Shopify’s November 2025 Shopify Merchant Survey found that businesses that maintain regular financial reviews are less likely to face cash flow and inventory management challenges. The survey also found that 69% of established store owners review their finances at least weekly.

4. Market your layaway program

Once you’ve set up your layaway program, get the word out. Physical signs on the sales floor near higher-ticket products tell shoppers about the in-store option. 

Online, mark the layaway option on product pages and the checkout page so shoppers see it on higher-ticket items. For example, luxury resale brand AYAINLOVE has a dedicated layaway page that directs shoppers to contact the brand by email, WhatsApp, or Instagram DM to start a layaway or payment plan.

According to Shopify’s 2025 Merchant Survey, 53% of merchants named word of mouth as a primary growth strategy, while 35% cited social media.

Market your layaway program through these organic channels by encouraging existing customers to share their stories and including layaway in social content during peak seasons.

Layaway vs. other payment methods

Layaway vs. Buy Now, Pay Later (BNPL)

Unlike layaway, BNPL buyers get their items immediately. BNPL plans may involve credit checks, late fees, or credit reporting consequences if payments are missed, says the FTC.

Layaway vs. credit card payments

Credit cards provide immediate access to products and may also include purchasing protections such as insurance against theft, loss, or damage. card protections. Store owners typically pay processing costs for card payments, including interchange fees, although some pass them onto customers as a surcharge.

Layaway vs. store financing

Store financing allows customers to take higher-ticket items immediately. The Consumer Financial Protection Bureau (CFPB) warns that no-interest-if-paid-in-full offers often include deferred interest. Customers may owe back interest if they don’t pay the balance by the deadline.

Layaway vs. rent-to-own programs

Rent to own, also called lease to own, allows customers to take products like furniture or appliances immediately without upfront payments or traditional credit. Long rent-to-own terms can lead to higher total payments, according to the FTC. If the customer misses the payment, they could lose the item and the money paid toward it.