• Installments: Consumers can buy now and pay later

    Introducing installment payment APIs

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Visa is developing installment solutions

In the near future, Visa will be releasing capabilities on Visa Developer to allow clients to develop and pilot installment experiences to offer to their customers.*

*Availability is subject to factors outside of Visa’s control, including participation by issuers, acquirers and merchants. 

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 media 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% APR:

Donut chart showing 1 out of 4 payments.

Paid $200

1st installment

Donut chart showing 2 out of 4 payments.

Paid $200

2nd installment

Donut chart showing 3 out of 4 payments.

Paid $200

3rd installment

Donut chart showing 4 out of 4 payments.

Paid $200

4th installment

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 promoted at merchant checkout to pay with installments

Post-purchase

Consumer converts a recent card transaction into installments

Illustration of a paper and a pencil.

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.

Example: 6 month installment plan for all Visa Signature cards from Bank A at home appliance stores

Select plan

API for merchant to confirm the cardholder selected installment plan for a given transaction.

Visa card circled with reverse arrows.

Convert plan

API for issuers to convert the original transaction into an installment plan.

Illustration of calendar with check mark.

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.

Consumer

Increase payment options on existing cards in wallet
Illustration of a store front and a person.

Merchant

Help increase sales volume and conversion rates
Illustration of a issuer bank building front.

Financial institution

Help increase cardholder engagement and loyalty with new revenue stream
Illustration of a blue and yellow hands shaking each other.

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 $1.2T in market value in 2017. And it’s growing quickly–up 8% over last year. That’s faster than all other lending products (e.g. mortgages, auto). And twice as fast as credit cards.

Donut chart showing 45 percent credit cards, 13 percent Traceable personal loans, 9 percent Fintech loans, 27 percent Durable lending and 6 percent store cards.

Global 2017 installments market segment size

Note: 2017 global installments market size ($1.2T) excludes $1.5T 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 2017 vs. 2016.

Source: Euromonitor International 2018

 

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