Acquirers Eye Expansion of Installment Payment Plans Amid Consumer Demand

Acquirers — the financial institutions that provide the infrastructure for merchants and businesses to accept card payments — operate behind the scenes but can play a pivotal role in enhancing customer experience.

Yet, as PYMNTS Intelligence found in compiling its study, “Acquirers’ Navigation of an Uncertain Installment Plan Landscape,” confusion appears to linger with respect to the percentage of acquirers that offer consumers installment payment plans when they  complete their purchases.

While 56% of acquirers say they enable general-purpose credit card installment plans (those split-payment plans that work with standard credit cards rather than merchant or store-branded cards) before or during customer checkout, PYMNTS Intelligence data showed the actual share is closer to 8%.

Despite the deviation, our data also indicates more acquirers plan to offer installment options in the coming months, with 39% that do not currently offer general-purpose credit card installment plans planning to rectify that in the future, suggesting they recognize the significant consumer appetite for more flexible payment solutions.

And consumers won’t be the only ones welcoming more installment options. Acquirers will likely see benefits in enabling installment plan options as well, since they can generate more revenue from transaction fees and interest charges. Enabling installment plans may help attract a broader range of merchants.

So, what is the best installment plan an acquirer can offer?

Sixty-eight percent of acquirers surveyed for our report say they are very or extremely satisfied with general-purpose credit card installment plans, while another 28% say credit card plans have delivered a somewhat satisfying return on investment (ROI).

Meanwhile, less than one-third of respondents are very or extremely satisfied with the ROI they are seeing using merchant card installment options. Almost 60% said the merchant card ROI is only somewhat rewarding.

Despite the growing popularity of buy now, pay later (BNPL), only about 69% of respondents say they find the ROI somewhat satisfying, while less than 19% say the BNPL ROI supports the current hype.

Taken together, the data shows there is a strong consensus forming among acquirers that offering installment payment options — across general-purpose credit cards, merchant cards and BNPL — can result in noteworthy ROI.