Walmart does away with layaway, which didn't carry any fees, and announces buy now, pay later program that may charge customers interest

• Walmart decided to get rid of layaway before the 2021 holiday season.
• The company announced it's using Affirm, a buy now, pay later service the retailer partnered with in 2019.
• Walmart started to phase its layaway out last year, only allowing it for select jewelry purchases.

Walmart has decided to scrap its layaway program completely before the 2021 holiday season, replacing it with a buy now, pay later financing option.

The retailer is now using the company Affirm, which partnered with Walmart in 2019, to replace layaway. Instead of having stores hold items from late August through mid-December while customers make payments until paid in full, shoppers can now take the item home immediately and pay it off with Affirm.

Unlike layaway, purchases made with Affirm may charge customers interest. Although Affirm does not charge any hidden or late fees for using its services, customers can have an APR rate on purchases of 10-30% depending on their credit and 0% for select promotional items on Walmart.com.

Not all Walmart customers may be eligible to use Affirm depending on their prequalification status. The service can be used on purchases ranging from $144 to $2,000 and excludes items like alcohol, groceries and food, personal care products, and pet supplies.

Last year, Walmart, the world's largest retailer, started to phase out layaway, only offering it on select jewelry items.

"We've learned a lot in the past year as our customers' needs and shopping habits have changed," a Walmart spokesperson told Insider. " We are confident that our payment options provide the right solutions for our customers."

Affirm's services operate alternatively to a credit card. Customers will purchase the item immediately, and pay for the items over a three to 24 month period. Customers can select their own payment plan and Affirm will match them with a lender who will provide them with a loan for the financed item.

Walmart shoppers can return any purchases made with Affirm for a refund, but the amount they paid in interest will not be refunded. Partial payments or late payments may impact a consumer's credit score or ability to receive new loans with the company, according to Affirm.

Some Walmart customers expressed concern on social media, worried about how families would be able to purchase gifts for the holiday season if they don't qualify for Affirm.

-THEE STEP MUVA (@Stepmuvalex) September 25, 2021

"Walmart took away layaway and replaced it with Affirm, which checks credit… right before Christmas," one Twitter user wrote. "So many low income families are not gonna be able to give their children gifts."

Some customers seemed to not mind the change, making jokes that without layaway they have no place to hide their children's gifts during the holidays.

Walmart has recently undergone several company-wide changes, including raising its minimum wage, getting rid of its employee bonus program for hourly workers, and opening Ghost Kitchens inside select stores.