*Availability is subject to factors outside of Visa’s control, including participation by issuers, acquirers and merchants.
Visa has developed installment solutions
Visa has released capabilities on Visa Developer Portal to allow clients to develop and pilot installment experiences to offer to their customers.*
Introduction to installment payments
Installment payments (installments) refer to the option to pay for purchases over time by dividing the purchase amount into smaller equal payments. Consumers will typically use installments to buy medium and large ticket items (e.g. electronics, furniture). But in some markets, they may even use them to make everyday purchases (e.g. groceries, retail). So, what’s the key benefit for consumers with installments? They get to spread their purchases, including transparent fees, into periodic (usually monthly) repayment amounts.
The following example shows how installments payments work for a large ticket purchase of $800 paid for over 4 months, 0% fees:
Paid $200
1st installment
Paid $200
2nd installment
Paid $200
3rd installment
Paid $200
4th installment
Common installment payments models
There are three primary models in the global installment payments landscape: Pre-Purchase, During Purchase and Post-Purchase. These models differ by when the consumer is offered installments, who presents the installment payments plan, and who pays for the cost of providing credit.*
*Financial institutions are solely responsible for its own installment program.
Pre-purchase
Consumer opts-in for installments pre-purchase
During purchase
Consumer prompted at merchant checkout to pay with installments
Post-purchase
Consumer converts a recent card transaction into installments
Create plan
API for issuers to create installment plans. Issuers to define plan attributes such as:
- Duration of installment loan
- Participating merchant and cards
- Interest and fees
Check eligibility
API for acquirers, technology pltforms and merchant to look up eligible installment plan(s) for an installment transaction. Merchant can display eligible installment plans and costs to a cardholder during purchases.
Select plan
API for merchant to confirm the cardholder selected installment plan for a given transaction.
Convert plan
API for issuers to convert the original transaction into an installment plan.
Schedule plan
API for issuers to schedule payments of installment transactions The service will look up cardholder status and calculate monthly installment payments due, so that issuers can manage general ledger and post to cardholder statement correctly.
Visa’s installment solution can provide benefits for all parties in the ecosystem
Consumer
Increase payment options on existing cards in wallet
Merchant
Help increase sales volume and conversion rates
Financial institution
Help increase cardholder engagement and loyalty with new revenue stream
Acquirer
Help protect against volume erosion; new value added service for merchant offering
Note: Depicts conceptual vision in development; features, functionality, availability are subject to change. Issuer is solely responsible for its own installment program.
Installments is a large and growing opportunity
Globally, installments represented $1.6T in market value in 2020. And it’s growing quickly - up 5% YoY. In contrast, credit card expenditure declined by 4% globally.
Global installments market size
Note: 2020 global installments market size ($1.6T) excludes $1.02T in untraceable installments volume (e.g., “debt consolidation”). Growth in global installments and credit cards shown as year-over-year increase in payments volume in 2019 vs. 2018.
Source: Visa commissioned study performed by Euromonitor September 2021