New Study Finds Acquirer Confusion Clouds Installment Plan Landscape

Merchants affiliated with acquirers offering installment plans are interested in their potential to boost sales, as consumers may make larger purchases if they can spread out the payments over time. Although 56% of acquirers claim they facilitate general-purpose credit card installment plans before or during checkout, PYMNTS Intelligence’s research finds that the actual figure is likely nearer to 8%.

Nonetheless, all the acquirers in our survey report offering some kind of support for business clients that want to offer customers the ability to pay using installment plans. The growing interest in credit card installment plans represents a significant development in the payments landscape. The concept of modern installment plans — especially those popularized by products using the buy now, pay later (BNPL) model — is reshaping purchasing behavior, even as what counts as a modern installment plan remains somewhat murky.

These are a few of the key findings explored in “Acquirers’ Navigation of an Uncertain Installment Plan Landscape,” a PYMNTS Intelligence and Splitit collaboration. This report examines consumers’ use of installment plans for completing common purchases and draws insights from an original survey of 50 acquirers conducted from Sept. 1 to Sept. 25, as well as a follow-up survey of 36 of the original 50 acquirers conducted between Oct. 23 and Nov. 6.

Other key findings from the report include:

Acquirers prefer general-purpose credit card installment plans over merchant/store card plans and BNPL, partly because the plans increase client satisfaction.

Current support for installment plans by acquirers reveals the inroads made in recent years to meet consumer demand. Improved client satisfaction is the benefit most frequently cited among acquirers reporting that they offer general-purpose card installment plans; 50% cited this. But client satisfaction with general-purpose credit card installment plans significantly lags client satisfaction with merchant/store card installment plans and BNPL.

Although consumers prefer to be offered card installment plan options before checkout, acquirers and their clients differ in their capacity to offer them at that time.

Due to differing capabilities, discrepancies persist between when acquirers and their business clients can offer various installment plans, such as those that are merchant-card-based or BNPL. Notably, 39% of acquirers have plans to support their clients with the ability to offer general-purpose credit card installment plans during checkout in the future, as most acquirers recognize this move is paramount to accommodate changes in consumer preferences.

Approximately two-thirds of acquirers think their clients would be highly likely to sell more items or increase their higher-priced sales if they offered installment plan options before consumers decide what to buy.

Acquirers believe their business clients would not only increase their sales of higher-priced items if they offered bank-issued card installment plans to clients before checkout but also sell more items overall. Among acquirers generating annual revenues that exceed $1 billion, 86% predict an increase in the sale of higher-priced items or services.

Although modern installment plans have begun reshaping purchasing behavior, acquirers remain confused about the term’s definition and applications. Download the report to learn more about what acquirers need to know about offering installment plans.