The Rise of Credit Card Installment Plans: A Growing Trend in Online Payments

General-purpose credit card installment plans are gaining significant traction among merchants and consumers, according to insights from global payment solution provider Splitit, as outlined in The Fintech Times. Merchants are increasingly embracing these payment options, citing benefits like reduced declined transactions and faster processing times.

A recent report by Splitit and PYMNTS Intelligence titled «Divided, Not Conquered: Acquirer and Merchant Confusion Clouds Split-Payments Landscape» reveals that 78 percent of merchants are looking to enhance their ability to accept these payments. This growing trend is driven by consumers, especially those with higher incomes, who are utilizing installment plans for better spending management, particularly for larger purchases.

Nandan Sheth, CEO at Splitit, expressed optimism about the future of card-attached installments despite some disconnects between merchants, acquirers, and consumers. He highlighted the appeal of white-label card-based solutions, such as Splitit’s, to a broad range of highly qualified shoppers with higher FICO scores and fewer delinquencies overall.

The report also uncovered disparities between merchants and acquirers regarding installment plans, including consumer preferences and the timing of offering options. While 50 percent of acquirers claim to support general-purpose credit card installment plans during checkout, analysis shows it’s closer to eight percent.

Furthermore, the survey revealed that while 30 percent of merchants believe consumers prefer early payment option disclosure, 66 percent of shoppers want to see options before deciding. Only four per cent of merchants offer pre-checkout installment plans, missing out on potential sales boosts and competitive advantages.

Splitit emphasized the importance of adapting split-payment offerings to evolving consumer preferences. Enhancing payment systems to accommodate more credit-card-based installments and offering transparent payment options earlier in the buying process can optimize sales and enhance customer satisfaction.