Installment Payments Deliver Flexibility to Consumers

Jun  11 
Mark Hennin and Brad Goad  Senior Vice President, Lending, Global Business Solutions, Fiserv; and Vice President, Global Digital Commerce, Fiserv 

Buy Now, Pay Later programs show growing popularity in retail and beyond

Retrofitting past trends to fuel new innovations has influenced everything from music to marketing strategy. Global retailers are applying that same concept to add a modern twist to installment payments, giving consumers flexibility and convenience through a new way to pay.

Paying for merchandise in separate installments isn't new. It goes all the way back to the Great Depression and layaway plans. But retailers now are teaming up with fintechs to enhance digital engagement by allowing consumers to acquire merchandise now and pay for it later. Those installment programs, enable customers to send equal payments over a set period at no interest or additional cost to the buyer.

Although installment payments have found their home in retail, many nontraditional merchants – travel, health care, government and utilities – are adopting the programs to deliver flexibility and convenience. So whether consumers are paying for a car registration, medication or tickets to a sporting event, installment payments are making it easier to acquire goods and services.

Consumer Adoption Rising Globally

The flexibility of installment payments is generating favorable responses from consumers, especially among those who don't use credit cards or are on tight budgets. For many, the ability to pay over time is a welcome alternative to footing the full cost of that washer and dryer up front or accruing debt and paying double-digit interest later.

Enabling people to pay any way, anywhere is pivotal to providing the commerce experience that today's consumers expect.

The popularity and potential for installment payments are showing up in a variety of ways:

  • They have become the standard for purchasing smartphones, with consumers often paying in 12- or 24-month installments rather than around $1,000 up front
  • Only 33 percent of adults between the ages of 18 and 29 have a credit card, driving retailers to find alternative financing options for that market
  • Buy Now, Pay Later programs have taken off in Australia, where 30 percent of consumers have joined an installment payments plan

Retailers also can benefit from installment payment programs. To start, they assume no risk because they get paid in full at the time of purchase.

Other benefits could include:

  • Increased sales and revenue
  • Higher online conversion rates
  • Increased basket size
  • More repeat business

Paying Any Way, Anywhere

Enabling people to pay any way, anywhere is pivotal to providing the commerce experience that today’s consumers expect. Retailers are delivering on that expectation by accepting installment payments online, in-store and through mobile apps.

By enabling new, flexible payment options that cater to individual consumers, businesses are creating the positive experiences that are critical to success.