50% of Acquirers Prefer Merchants to Offer Installment Payment Options During Checkout

buy now, pay later

The use of split-pay plans is already widespread, and the last holiday shopping season was no exception, with consumers relying on different installment plans. The question of whether consumers will continue using these plans is already answered — they will — but another question has arisen: when is the perfect moment to offer split-pay plans to consumers?

Pay-later options are offered by merchants either before, during, or after a purchase is made, but acquirers, merchants and consumers differ on the best time. PYMNTS Intelligence research has found that 50% of acquirers prefer merchants  to offer individual consumers card installment options during the checkout process, while 39% prefer it to happen after the purchase is completed and the remaining 11% before checkout.

chart, installmentpayment options

According to the same study, 60% of consumers used an installment plan to pay for consumer products at some point in the last 12 months. The products and services for which consumers turned to installments most often include high-spending categories such as home furnishing and appliances (29% of consumers), hotel and travel services (23%), but also essential goods like groceries or gasoline, at 34% and 24% respectively.

Jacqueline White, president of i2c, confirmed in a recent interview with PYMNTS that in 2024, buy now, pay later (BNPL) will be increasingly on consumers’ radars as payment option they expect from all financial institutions and merchants. “More consumers are looking to use BNPL to pay for the necessities of life … all the way around to fun things like travel and entertainment,” she said.

More and more merchants across retail and eCommerce categories are offering pay-later options to make shopping easier for their customers. On the retail side, one of the latest is Walmart, which recently announced a partnership with Affirm to offer pay-over-time options at self-checkout kiosks in over 4,500 stores across the U.S.

The partnership is conceived to generate additional sales. Affirm Senior Vice President of Revenue Pat Suh said in in a press release that “Recent Affirm research found that 76% of consumers would either delay or not make a purchase without Affirm.”

Following Walmart’s move, PYMNTS reported in December that Google Pay had launched a pilot program in collaboration with Affirm and Zip to offer BNPL options. The goal of this initiative is to highlight the different BNPL schemes offered by these platforms at specific apparel, theater, and travel merchants in the U.S. that accept Google Pay for online transactions. Drew Olson, senior director at Google Pay, told PYMNTS that consumers shopping on Google are demanding more choice at checkout as they grow more familiar with BNPL as a form of credit.

A PYMNTS Intelligence study found that 1 in 4 online shoppers prefer to know about installment options during the checkout process, which reflects their focus on immediate, transaction-driven experiences. By contrast, half of them prefer to receive pre-purchase installment offerings in categories such as travel and leisure, suggesting a longer decision-making timeframe in these categories.

With major retailers offering split-pay options and embracing BNPL partnerships, the expansion of split-pay plans may continue in 2024 amid high prices and struggling economy.