Merchants are seeing a significant increase in the use of credit card-linked instalments, according to a new consumer survey from Splitit, an instalments-as-a-service platform, and PYMNTS, the payments data, news and insights firm.
The report, ‘Innovations and Developments of Card-Linked Installment Plans‘, reveals that merchants have seen an 82 per cent increase in credit card-linked instalments in-store and a 68 per cent increase online. The survey also found that over one-third of merchants expect to innovate their card-linked instalment offers, while only four per cent revealed they have no plans to expand or improve these offers.
Nandan Sheth, CEO of Splitit
“Our research clearly shows that merchants recognise the power of credit card-linked instalments to drive sales and build customer loyalty,” explained Nandan Sheth, CEO of Splitit. “By leveraging the existing credit consumers already have on their cards, these instalment plans offer unparalleled convenience and transparency. In fact, 57 per cent of merchants are increasingly concerned that without this option, they risk losing customers to competitors who do offer it.”
While merchants recognise the benefits that leveraging these instalment options can bring, so too are consumers. In fact, half (50 per cent) of consumers would switch merchants to ensure they can complete their transactions with credit card-linked instalments.
The share of merchants surveyed who believe their customers would switch to a competitor at checkout to pay in convenient interest-free instalments using their credit card has increased by 165 per cent over the past year alone.
Instalment demand on the up
Nearly three-quarters of the 150 merchants surveyed by Splitit and PYMNTS now prefer credit card-linked instalment plans over other Buy Now, Pay Later (BNPL) options, an increase of nearly 17 per cent from last year.
Twenty per cent of acquirers also believe that their business clients were very likely to switch acquirers in order to have the ability to offer interest-free instalment plans, up 133 per cent since October 2023. In light of this, 52 per cent of acquirers plan to innovate their credit card-linked capabilities – to meet growing consumer demand for more flexible payment options.
Of the 4,993 consumers surveyed, 60 per cent were more likely to choose credit card-linked instalments over BNPL plans for expenditures in excess of $1,000.
Finally, 37 per cent of merchants are offering select credit card-linked instalment options to individual customers during checkout, up from 32 per cent in December 2023.
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