More than one third or 35% of shoppers said they are more likely to make a purchase if a business offers monthly installment payments. This according to a survey carried out by Splitit, a payment solution which gives retailers the ability to provide a payment plan for purchases.
When shoppers are considering an installment plan, close to half or 47% revealed zero interest is the most important consideration. So it is not enough to just offer a payment plan, you also have to provide very low or zero interest otherwise you will lose one in two customers.
For small retailers, online or brick and mortar, providing a monthly installment plan is one of the best ways to increase average order value (AOV). The Splitit platform has been designed to simplify the installment payment process so business owners don’t have to worry about managing the purchases.
The CEO and Co-Founder of Splitit, Gil Don, explained the benefits of providing installment plans in the press release.
Don said, “An interest-free, monthly installment plan offers consumers the best option in alleviating their financial woes and allowing them to shop without burdensome restraints. Offering an effective payment solution is a win-win for both consumers, who can afford more expensive purchases, and for merchants, who can increase revenue and decrease cart abandonment rates.”
The Splitit survey was carried out in collaboration with Google Consumer Surveys in July 2018. More than 1,000 respondents ages 18 to 65+ in the US took part in the survey.
Monthly Installments: Survey Results
In addition to zero interest, no late fees was also an important factor for consumers. Seventeen percent of them said these fees are a deterrent when they are in the process of choosing a payment option.
For 20% of millennials, the issues of late fees carried more weight. They said it was the most important consideration when they signed up for a payment solution.
When making purchases online, 83% said they are afraid of losing control of their cash flow or overspending. This has translated into shoppers making fewer expensive purchases online.
However, 25% of online shoppers said the option of an interest-free monthly installment payment plan would encourage them to purchase the high-ticket items.
While on the subject of purchases, millennials are more concerned with the possibility of damaging their credit score. This was true for 25% of the millennial respondents.
The Splitit Solution
Splitit has created a workaround for businesses so they can provide monthly payment plans with no interest rates and late fees. And best of all customers don’t have to register or apply like traditional installment payment plans or services.
The company uses the Visa and MasterCard credit cards as well as the debit cards your customers already use and offers monthly payment plans.
Splitit authorizes the full amount of the purchase on the shopper’s existing credit and debit card and holds their credit line for the entire amount.
The service is currently being used in 25 countries around the world by 800 Internet and traditional merchants.