Introduction

Imagine you are at a checkout counter—either online or in a store—ready to make a purchase. How much easier would it be if you could split your payment into manageable monthly installments? While many financial institutions claim to support this convenient feature, the reality shows a significant gap. According to recent data, only 6% of acquirers genuinely offer installment payment plans at checkout, despite a much larger number voicing their presumed capabilities. This discrepancy between perceived and actual service availability may leave both merchants and consumers wanting more. In this blog post, we'll delve into the intricacies of this issue, understand why this gap exists, and explore the potential opportunities for growth in installment payment options.

The Gap Between Claims and Reality

Many financial institutions—known as acquirers—process credit and debit card transactions for various merchants. However, despite 54% claiming to provide installment payment solutions, only a small fraction actually do. Our data reveals that just 6% of acquirers offer card-linked installment plans, highlighting a sizable gap between perception and reality.

To illustrate, out of 50 surveyed acquirers, merely three provide card-linked installment options before or during the checkout process. This underscores a persistent issue; third-party integration constraints hamper these financial institutions, limiting their ability to offer seamless installment payment features. This gap resonates with previous reports as well, showing consistent shortcomings year after year.

Why the Discrepancy?

Integration Constraints

One of the primary reasons for this discrepancy is the difficulty in integrating existing systems with third-party payment solutions. 22% of acquirers cited this as a barrier, demonstrating that technical challenges significantly restrict their capabilities. This limitation stifles innovation and delays the rollout of much-needed payment options like installment payments.

Varying Definitions

Another factor contributing to the gap is how acquirers define their capabilities differently. While many claim to support installment plans, often these are not integrated directly into the checkout process but offered as a post-purchase option. This inconsistency confuses merchants and consumers alike, making it harder to rely on these claims.

Sector-Specific Disparities

The adoption of installment payment options also varies across industries. For example, higher implementation rates are found in retail, restaurants, and travel, whereas sectors like education and healthcare lag significantly. These latter sectors may require more specialized solutions tailored to their specific transaction patterns and customer needs.

Opportunities for Growth

Despite the evident challenges, the market for pay later options is ripe for expansion. According to our research, 6 out of 10 consumers express a keen interest in installment payment options at checkout. This presents a golden opportunity for acquirers willing to overcome current barriers.

Future Plans and Market Potential

Many acquirers recognize this untapped potential. Our data indicates that 45% of acquirers intend to support general-purpose, credit card-linked installment plans before checkout in the future. Since October, this marks a 15% increase in intended support, showcasing a growing recognition of the necessity for flexible payment methods.

Fostering this shift could significantly enhance both merchant and consumer satisfaction. As more acquirers begin to introduce these options earlier in the purchasing process, they align themselves more closely with market demands, potentially capturing a larger share of the market.

Steps Toward Better Implementation

Direct Integrations

For installment payments to reach their full potential, financial institutions need to invest in direct integrations. This involves partnering with payment solution providers who can offer seamless capabilities, reducing the friction associated with third-party add-ons.

Transparent Communication

Acquirers should aim for better transparency in communicating their payment capabilities. Defining and explaining the specific functionalities of their installment payment options can relieve confusion, helping merchants and consumers understand the real offerings available to them.

Tailored Solutions for Different Sectors

Given the varying adoption rates across sectors, acquirers need to develop industry-specific solutions. For example, adopting more flexible installment options tailored to the unique needs of sectors like healthcare and education can encourage broader implementation.

Aligning with Consumer Preferences

A considerable number of consumers prefer learning about pay later options before making a purchase decision. As such, acquirers and merchants should make concerted efforts to highlight these payment plans early in the shopping journey. This involves clear messaging on product pages, during checkout, and in marketing materials.

Conclusion

The gap between claimed and actual support for installment payments among acquirers is substantial. Yet, the interest in and opportunities for these plans remain robust. Addressing integration challenges, sector-specific needs, and improving transparency are critical steps to closing this gap. By prioritizing these areas, acquirers can meet growing consumer demand, enhancing user experiences and capturing significant market potential.

FAQ

What percentage of acquirers currently offer installment payment options at checkout?

Only about 6% of acquirers genuinely offer card-linked installment payment plans at checkout, according to recent data.

What are the primary challenges in providing installment payment options?

Key challenges include third-party integration constraints and varying definitions of what constitutes a "support" for installment payments.

Which sectors have higher adoption rates for installment payment options?

Higher adoption rates are found in retail, restaurants, and travel industries. Sectors like education and healthcare have lower implementation rates.

Are there plans to increase the availability of installment payment options?

Yes, 45% of acquirers intend to support general-purpose, credit card-linked installment plans before checkout in the future, representing a growing recognition of their importance.

How can acquirers improve the implementation of installment payment options?

Improvements can be made through direct integrations, transparent communication, and developing tailored solutions for different sectors. Aligning with consumer preferences for early information on pay later options can also enhance uptake.

Only 6% of Acquirers Offer Installment Payment Options at Checkout

Table of Contents

Introduction

The Gap Between Claims and Reality