An Old-Time Touch for the Modern Shopper

Bill Me Later, which has 700 e-retailer partner sites such as the Apple Store or eToys, runs credit checks based on the user's date of birth and the last four digits of his or her Social Security number. Bill Me Later pays the e-retailer immediately and sends a paper bill to the customer up to 14 days later. The consumer can then mail in payment or pay using Bill Me Later's Web site.

Bill Me Later's customers tend to spend more money online than customers who use Visa, MasterCard, PayPal and American Express. A Jupiter Research survey found that 54 percent of Bill Me Later users spent more than $250 over three months. By contrast, only 36 percent of MasterCard customers spent that amount over the same time period.

This is probably because customers most concerned about fraud are those with larger credit lines and because Bill Me Later only accepts users with good credit, Forrester Research analyst Sucharita Mulpuru said.

Bill Me Later, which has 3 million customers, tries to encourage more people to shop online by working with e-retailers to offer discounts, interest-free financing offers and other deals.

But consumer advocates warn that delayed-financing offers such as Bill Me Later can be confusing for consumers who don't know their rights when a purchase goes awry.

"This is a situation where the law probably hasn't kept up with technology to clearly spell out what people's dispute rights should be when using new forms of payment," said Susan Grant, National Consumers League vice president for public policy.

"It's confusing enough for consumers anyway who don't even really understand the difference between credit and debit cards," she said. "With these new forms of payments, consumers don't really think about what the recourse might be until there's a problem."