Point-of-sale (POS) installment plans have captured the attention of consumers and merchants, alike, as each explores new credit options to manage spend and boost sales, respectively.
For a merchant, the addition POS installment options is often directly tied to an increase in customer frequency, basket size and conversion rates.
For consumers, POS installment plans provide a different way to access and use credit to make purchases. When using them, consumers can expand their purchasing power using repayment terms of equal, fixed amounts over a defined period of time that directly link payments to the payoff of the item purchased.
Cetin Duransoy, Visa’s global head of installment solutions, told Karen Webster in a recent conversation, that it’s time to make installment plans ubiquitous options available at checkout to consumers everywhere — just like they use their traditional credit cards today.
Duransoy told Webster that Visa’s launch today of its installment credit solution pilots in the U.S., Visa Installments, uses Visa application programming interfaces (APIs) and a network of enablers to streamline issuer and seller integration at the seller’s digital POS. Visa Installments turns already approved issuer credit lines into installment payment options at the digital checkout for Visa cardholders.
“With Visa’s installment solutions, our focus is on enabling the enablers and accelerating the direction of our product,” Duransoy said. “Given how much the demand for installments is increasing, we are also using the already existing parts of the credit system today to scale installment payments with every [Visa] card across the board.”
The first U.S. phase of Visa’s push for installment payments’ ubiquity starts today, with credit card products, with the announcement of several installment plan pilots.
TSYS is the first issuer technology partner to offer Visa’s new installment solution so that participating financial institutions can, in turn, offer installment plans to their cardholders. Commerce Bank is the first U.S. issuer to launch an installment plan pilot to selected Visa cardholders.
FinTech firm ChargeAfter, launched Visa installments in the U.S. with two of its clients: 42nd Street Photo and Tire Agent. Additionally, The RoomPlace is offering Visa’s installment solutions as a payment option for its eligible customers.
The Kibo Commerce marketplace will soon allow its sellers to offer Visa’s installment plans via the deployment of a customized app.
Duransoy told Webster that these pilot programs are but the beginning of an effort that will expand over the next year across America, continuing worldwide.
“These pilots are just a small part of our larger vision of ubiquity,” he said. “But given that we focus on enablers, our growth rate is expected to be a little less linear as we bring more enablers who can, in turn, bring in their own clients. We expect the [expansion] to be big.”
Perfecting The Installment Experience
The Visa installments program will offer consumers an ability to tap into an installment plan experience at the digital POS using their already established credit line on their Visa credit cards.
“Issuers already have a longstanding track record of handling consumer risk,” Duransoy said. “With [Visa Installments], what we are basically saying is: ‘Hey, they already know how to handle that specific consumer’s risk. and they’re in the best position to make that decision without requiring any application or additional evaluation.’”
That, in turn, expands the number of potential use cases, products, services and sellers that could benefit from a consumer with an already approved line of credit that can be easily converted into a series of installment payments at the POS.
When checking out at participating merchants, consumers choose their Visa credit card as their preferred payment method. Behind the scenes, the POS system automatically checks to see if the cardholder is eligible for installment payments via the Visa installments solution.
If so, the consumer is presented with an option to pay via six equal monthly payments. There’s no break in the action, nor any navigating away from the site to sign up and get approved for an installment payment option. Duransoy said that, with Visa installments, the experience is a very natural, organic part of the checkout process — and for any purchase amount that is up to and including their approved credit limit.
That’s to start, and similar to how the program was introduced in Russia last month. But, Duransoy told Webster that as Visa installments becomes more widely available and merchants experience a basket-size and conversion boost, he fully expects to see it become more of a “deeply integrated” option across the consumer’s entire journey to checkout.
“I suspect we’re going to see it move up in the purchase journey, showing up in places like banners on the landing page and even on product pages,” he said, adding that it will be a natural evolution as sellers see the value and will want more consumers to choose it as a payment option.
“We want to introduce it into the [shopping] conversation as soon as possible with the customer,” Duransoy explained, including at a later point, the option to use installment options using debit cards.
The pilots that have launched, in the U.S. and Russian markets, Duransoy said, represent just the beginning of Visa’s journey to put Visa installments on a global stage. ChargeAfter, he noted, in parallel to its integration with U.S. partners, is also working with Cybersource, Visa’s global payment management platform, to bring installments payment capabilities to Cybersource’s sellers worldwide.
As for who will use the new offering, Duransoy said digital installment payments are most often associated with millennials, who have long been thought to be hesitant to use traditional revolving credit products.
However, he said Visa’s market data show that the concept has a much broader demographic appeal. He said he believes that with support from Visa — and a lot of support from issuers, acquirers, FinTechs and merchants worldwide — consumers of all kinds will embrace the program whenever they find a Visa installment option presented to them.
“The solution is quite attractive in almost every demographic group all over the world because predictability is something many people actually love, as it turns out,” he said.