More than one third or 35% of shoppers said they’re more likely to produce a purchase if a company offers monthly installment payments. This based on a survey carried out by Splitit, a payment solution which provides retailers the capability to provide a payment plan for purchases.
When shoppers are considering an installment plan, close to half or 47% revealed zero interest is the main consideration. So it is not enough to just provide a payment plan, you also need 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 regular 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 need certainly to be concerned about managing the purchases.
The CEO and Co-Founder of Splitit, Gil Don, explained the advantages of providing installment plans in the press release.
Don said, “An interest-free, monthly installment plan offers consumers the very best option in alleviating their financial woes and allowing them to shop without burdensome restraints. Offering a powerful payment solution is really a win-win for both consumers, who are able 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. Significantly 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 a significant factor for consumers. Seventeen percent of them said these fees are an obstruction when they’re in the act of picking a payment option.
For 20% of millennials, the issues of late fees carried more weight. They said it had been the main consideration when they signed up for a payment solution.
When creating purchases online, 83% said they’re afraid of losing control of the cash flow or overspending. This has translated into shoppers making fewer expensive purchases online.
However, 25% of online shoppers said the possibility of an interest-free monthly installment payment plan would cause them to become purchase the high-ticket items.
While on the subject of purchases, millennials are far more focused on the likelihood of damaging their credit score. This is true for 25% of the millennial respondents.
The Splitit Solution
Splitit has generated a workaround for businesses for them to provide monthly payment plans without any interest rates and late fees. And on top of that customers don’t have to join up or apply like traditional installment payment plans or services.
The company uses the Visa and MasterCard bank cards along with the debit cards your visitors 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 happens to be being utilized in 25 countries around the globe by 800 Internet and traditional merchants.