Fresh consumer research from Splitit and PYMNTS revealed a shopper prevalence for installment payment plans — especially when the option is tied to a bank card.
“The findings clearly contrast with the prevailing narrative promoted by buy now, pay later, or BNPL, lenders who load up consumers with high fees and high-interest rates while demonizing credit cards,” authors of the report said in a statement, adding that the survey showed that over half of Millennial and Gen Z consumers said intend “to increase their use of installment plans for their holiday shopping.”
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The survey found that 45 percent of consumers polled have used bank card-tied installment plans, which compares to 37 percent for BNPL and store-issued installments. “Furthermore, 42 percent of credit card installment plan users were high-income earners,” the report stated. “In fact, high-earning Millennial shoppers were found to be most likely to use credit card installment plans.”
Of those polled who earn more than $100,000 a year, 64 percent said they favor installment plans, “challenging assumptions about credit usage and income,” the report noted. The poll also showed that close to one-third of all shoppers surveyed “would consider purchasing a higher priced item if they could pay for it using interest-free installments linked to their own existing credit card.”
By category, the researchers said clothing and accessories showed the greatest penetration of installment payment usage at nearly 40 percent. “Yet other high-ticket categories, such as home furnishings and appliances (nearly 30 percent each), auto parts (nearly 21 percent), and building materials and garden supplies (nearly 16 percent), were also popular categories for installment payments,” the report’s authors said.
Nandan Sheth, chief executive officer of Splitit, said as the holiday shopping season approaches, “it’s imperative for retailers to pay as much attention to their checkout experience as they do to their merchandise selection. Interestingly, our study showed that high-earners would utilize installments more if they were attached to their favorite bank-issued credit card without the need to apply for a new loan. Retailers will miss out on sales if they do not capitalize on the evolving consumer behavior to expand their market reach.”
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