Online retailers are increasingly offering more payment options to consumers in a bid to make it easier for them to complete a transaction. As consumers grow increasingly mindful about where and how they spend their money, several companies plan to overhaul the shopping experience with alternative payment services to cash and traditional credit.
The market competitors all offer subtly different services, with the most common being to split the payments into four equal installments. Unlike traditional credit issuers, these companies don’t charge interest and instead make the bulk of their income from service fees paid for by participating retailers. Although consumers will pay the same amount for the item over time, they need only pay one installment upfront to complete the purchase and receive their item.
“Installment payment plans lead to lower cart abandonment at the point of checkout, as the initial payment is just a quarter of the full price,” said Nick Molnar, CEO of payments platform Afterpay.
The option to pay in installments is visible on the product page, so customers are aware as soon as they start browsing. Some services can divide a purchase into even smaller payments, with platforms like Splitit offering up to 10 installments. Plans with a