A new study by Splitit and Pymnts has found that general-purpose credit card installment plans are a reliable way to increase sales and improve customer satisfaction. The report “Divided, Not Conquered: Acquirer and Merchant Confusion Clouds Split-Payments Landscape” found that 78 percent of merchants intend to improve, or are currently improving, their ability to accept these payments.
“Fewer declined transactions and faster processing times are two of the benefits to card-attached installments cited by 48 percent of the merchants surveyed, while 44 percent of the acquirers surveyed cite greater transparency in payment processes,” the report’s authors said. “While nearly one-third of the merchants surveyed believe that consumers will spend more when using general purpose credit card installments, 76 percent of merchants expect the consumers’ use of card-attached installment plans to increase.”
Nandan Sheth, chief executive officer at Splitit, said the data shows that more than three-quarters of merchants surveyed plan to improve their systems due to higher average order values and greater consumer satisfaction. “Although some disconnects between merchants, acquirers and consumers were found in the report, the future is very bright for card-attached installments,” Sheth said. “We know that providing a white-label card-based solution, such as Splitit’s, is appealing to a broad range of highly qualified shoppers with, on average, higher FICO scores and fewer delinquencies overall.”
The research also revealed that while 30 percent of merchants polled believe that consumers would prefer to know about their payment options early in the customer journey (before making their purchasing decisions), “more than twice as many shoppers — 66 percent — say that they want to see their payment options before they decide what to buy,” Splitit said adding that just 4 percent of those polled said they even offer a card-based installment plan before checkout.
The report also showed that 100 percent of respondents who said they want to offer installment plans before checkout “say that this will lead to increased sales, meeting consumer demand, improving customer satisfaction, reducing declined transactions and gaining an advantage over their competitors.”
The poll also showed that 64 percent of consumers who make more than $100,000 a year use installment plans, “challenging assumptions about credit card use and income,” Splitit said.
“Overall, as consumer preferences continue to move toward more flexible payment solutions, merchants and acquirers will need to tailor their split-payment offering mix to meet shoppers’ expectations,” the report stated. “Improving their payment systems to allow for more credit-card based installments, as well as providing greater transparency on payment options earlier in the purchasing journey, will allow merchants to maximize sales and increase customer satisfaction.”
