As research from our white paper What’s Next for Digital Payments in the Middle East reveals, the installments and BNPL market is one of the fastest growing segments in the digital payment landscape, especially among younger consumers and Gen Z.

While both these methods depart from the traditional practice of upfront payments for goods and services, there are key differences in how they work. Read on as we outline these differences, and explore the benefits they each offer to both consumers and merchants.

The Basics

  • Installments allow customers to break down the total cost of a purchase into smaller fixed payments that are spread out over a set time period. A credit card is required to process this form of online payment.
  • Buy-Now, Pay-Later (BNPL) is a payment option that allows customers to delay payment for a specific period after the purchase is made. Customers have the flexibility to pay with either debit card or credit card.

Installments Explained

Installments refer to a financial arrangement where the total cost of a purchase is divided into a series of equal or fixed payments, which are paid at scheduled intervals. This could range from a few weeks to 48 months.

This method of payment allows credit card holders to acquire products or services without approval or having to pay the entire amount upfront. Instead, they make regular payments until the entire purchase price is paid off.

How Do Installments Work?

The very nature of installment payments relies on the division of the total cost into manageable portions for customers. For instance, if a customer wants to purchase a high value item such as a home appliance, TV or smartphone, they can select the installment option during checkout to pay for this item in smaller chunks, rather than all at once. 

Our own Installments service at Amazon Payment Services is designed to create a seamless experience for customers, allowing them to get the things they love without waiting, while ensuring merchants receive 100% of the payment upfront.

However, it is important to note that Installments are only available with credit cards and not debit cards. In addition to this, a charge of 0.5% to 3% will apply to the transaction depending on the card issuer and the length of the installment agreement.

Buy-Now, Pay-Later (BNPL) Explained

Buy-Now, Pay-Later (BNPL) is a financial service that allows consumers to make a purchase immediately and delay the payment for a specified period of time.

It is a form of flexible payment where customers can acquire products or services without paying for the item upfront—even if they do not own a credit card.

Instead, once customers have received approval, they can spread the cost over a predetermined time frame, typically without incurring interest or fees, if the payment is made within the agreed-upon period. Approval rates may vary from merchant to merchant.

How Do BNPL Payments Work?

Once the BNPL option is selected at checkout and the purchase is completed, customers enter a "Pay Later" phase, also referred to as a grace period. During this period, which generally ranges from a few weeks to several months, no payments are due, and no interest or fees are incurred.

As the grace period nears its end, customers receive reminders from the BNPL provider about the upcoming payment due date. They then have the choice to either pay off the entire remaining balance in one go or opt for installment payments.

These installment plans can range from 4 months to 60 months, depending on the options offered by the specific payment solutions provider, such as Tabby or ValU. This will also determine the specific merchant discount rate that will apply to the transaction, which will range from 4-6% of the purchase amount.

Finally, if the balance is paid within the grace period, no additional charges are usually applied. However, if the customer chooses to extend payments beyond the grace period, interest charges or fees might come into play.

Should Merchants Offer Installments and BNPL in MENA?

The growth of online installment payments in key regions of the Middle East such as Saudi Arabia, Egypt and the United Arab Emirates can be attributed to several factors that are shaping consumer behaviour and the ecommerce landscape in the region as we speak.

For instance, many consumers are attracted by a much lower barrier to entry and absence of interest rates that come with these payments, compared to other forms of short-term finance such as credit cards.

Further to this, the impact on sales for merchants can be considerable. Our own data proves that Installments and BNPL can:

  • Increase sales by 10-15%
  • Increase basket size by 20-25%
  • Increase customer repeat purchase by 20-30%

As consumers seek convenience, affordability, and financial flexibility, Installments and BNPL payments are becoming a requirement for online merchants in MENA and no longer a nice-to-have.

Benefits of Installments and Buy Now Pay Later

Merchants that offer online installment and BNPL payment options can enjoy several benefits that positively impact their business operations, customer base, and revenue streams.


  • Customers who might have been hesitant due to upfront costs may be more likely to complete their purchases when they have the option to pay in installments—leading to higher conversion rates.
  • Installments make high-value purchases, such as electronics, appliances, furniture, or even educational courses, accessible to a wider range of consumers who might not be able to afford the entire cost upfront.
  • Customers tend to spend more when they can spread the cost over installments, potentially increasing the average order value of transactions.
  • Offering installment payments can give a competitive edge to merchants in crowded markets. It attracts customers looking for flexible payment options and can differentiate the business from competitors.
  • A positive experience with installment payments can lead to increased customer loyalty and repeat business, as customers may return for more purchases or recommend the merchant to others.

Buy Now Pay Later (BNPL)

  • BNPL can lead to higher sales and conversion rates. Some customers are more likely to complete purchases when they can postpone payment and spread the cost over time.
  • BNPL enhances the shopping experience by giving customers the freedom to choose a flexible payment method that does not require immediate use of their funds.
  • BNPL attracts consumers who might otherwise have hesitated due to the immediate full payment requirement, expanding the customer base of merchants.
  • Merchants receive full payment from the BNPL provider upfront, ensuring a consistent cash flow regardless of when customers complete their installment payments.
  • Offering BNPL options can build customer loyalty, as many customers in MENA appreciate flexible payment choices that cater to their financial preferences

What Are the Requirements for Using Installments and Buy Now Pay Later?

Offering installment payments and BNPL services is easier than ever before. While the exact requirements can vary based on your provider and region, below are some typical prerequisites for merchants who want to integrate Installments and BNPL services from Amazon Payment Services.

  • You must first have an active merchant account with Amazon Payment Services.
  • Merchants must integrate the chosen alternative payment option with their online payments system before they can offer them to customers.
  • It is important to clearly communicate the terms and conditions of Installment plans or BNPL options to your customers.
  • We advise all merchants to offer customer support for inquiries related to installment plans and BNPL options.

FAQs for Installments and Buy Now Pay Later with Amazon Payment Services

Your customers can enjoy installment payments and BNPL thanks to partnerships between Amazon Payment Services and several issuing banks, credit card providers, and local payment options.

When does the merchant receive payment with Installments and BNPL?

Merchants still receive the full purchase price upfront from the payment provider with both Installments and BNPL, even if the customer pays in installments.

As the merchant, you are always paid the full transaction amount immediately and it is the responsibility of the customer's bank to collect the installments that are due from your customer's credit card.

Do Customers Need to Coordinate with their Banks?

No, your customers are not required to communicate directly with their bank to convert the transaction into installments. Amazon Payment Services will process the transaction automatically, in partnership with your customer's bank.

How Do Merchants Process Installments and BNPL?

You can use your existing payment processing configuration via our standard or custom merchant page integration to process Installments. To facilitate these payments, you must send the required parameters alongside your payment request—including the number of installments, the total amount charged, and the payment currency.

Embrace the Future of Online Payments

Alternative payment options such as installments and BNPL are rapidly gaining popularity in the MENA region where they are expected to expand across all major consumer-driven industries.

Businesses can integrate these alternative payment options to enhance customer engagement and boost sales by removing financial barriers, allowing customers to make purchases they might otherwise postpone or abandon.

This strategy can not only increase average order values and conversion rates, but also strengthen customer loyalty, ultimately driving revenue growth and positioning businesses as forward-thinking and customer-centric in the competitive online retail landscape.