Imagine a service that allows shoppers to buy big-ticket items by paying a fraction of the cost upfront, while receiving their order right away, and being able to make easy extended payments through installment payment plans they can opt into upon checkout – all without having to contact their bank! This is no longer an unattainable dream, but has become an everyday reality in e-commerce.
In a world where the credit industry is swiftly transforming due to strong growth in e-commerce and innovations in fintech, Installment services have become increasingly popular in enabling customers to purchase everything they want and need online.
What sets installment facilities apart is the irresistible convenience of online shopping combined with enhanced purchasing power and affordability. This has proven to be a winning proposition not only for shoppers, but also for retailers – Amazon Payment Services found that our credit card Installments offering helps in increasing the average online shopping basket size by up to $300 and growing overall sales by nearly 12%
Unlike other consumer lending options, where customers often end up having to negotiate a payment plan with their banks, installments allow the payment service provider to do all the heavy lifting for both retailers and shoppers.
Automatic conversion into flexible tranches
Staying ahead of market trends, Amazon Payment Services rolled out its own Installments service years ago as a flagship program. When shoppers select this option, their purchases are automatically converted into installments with select banks, dispensing with the need for customers to call their banks. Instead, they can directly tap into the service by using approved cards issued by local and international banks, thereby unlocking a powerful new tool to spread out payments. Merchants collect payments directly from the bank, while shoppers enjoy 100% of the purchase value upfront.
For legions of happy shoppers, this translates into making purchases, both large and small, more affordable through flexible payment plans, giving customers more spending power, and building implicit trust with the merchant throughout the process. It’s a win-win for consumers and merchants alike.
Strategic shift in consumer spending
Changing consumer habits have created an opportune environment for installments. The lingering consequences of the pandemic have meant that shoppers today are less inclined to make lump sum payments in a single transaction. Although consumers continue to spend – and data by the World Economic Forum in 2021 showed that, in many cases, they are spending more compared to pre-pandemic levels – their priorities seem to have changed significantly.
While a typical customer’s digital basket pre-pandemic would mostly feature big-ticket purchases, it now ranges broadly from apparel and fitness gear to household essentials and daily groceries. Moreover, as consumers become increasingly financially sophisticated, they are re-evaluating their credit burdens and high interest rates on credit cards, and opting for alternative solutions.
This is the critical market gap that Installments has filled, reshaping customer priorities by empowering them, simplifying the checkout process and making their spending power truly work for them.
Making the most of a customer’s shopping cart
This strategic shift in consumer spending has led many e-commerce providers to rebuild the customer experience by offering ways to restore their purchasing power – a key reason why an increasing number of merchants are adopting Installments as their preferred payment mode.
At the same time, with a huge list of items in their inventory, increasing the average order volume and reducing cart abandonment has become a key priority for retailers. Installments offer a superior value proposition for them compared to other modes of payment, as they benefit from an improvement in conversion rates, an increase in basket sizes and enhanced repeat purchases.
According to Worldpay's Global Payments report, instant consumer financing options such as Installments were the fastest growing e-commerce payment method globally, projected to account for at least 10 percent of payments by 2023 in the EMEA region.
Moreover, studies and real-world data show that helping customers pay for expensive purchases based on installments is a great way to build trust and secure ongoing revenue.
As a result, Amazon Payment Services found that merchants using our Installments service reported a 10% reduction in cart abandonment and 12% increase in payment success rate.
Comprehensive network of banks
This is further backed up by the superior infrastructure and partnerships that payment service leaders have invested in. Amazon Payment Services offers its Installments in partnership with more than 25 banks across four countries in the MENA region: the UAE, Saudi Arabia, Egypt, and Jordan. By building these partnerships on behalf of merchants, Amazon Payment Services ensures that merchants spend less in terms of bank tie-ups and reconciliation, and receive the full payment upfront.
All this, wrapped in the convenience of offering a bespoke checkout experience for customers through a simple iFrame, a hosted API or redirection checkouts – an advantage that is reflected in the rising transaction volumes in this category.
As flexible payments become the preferred flavor of shopping around the region, it’s time for customers to harness the power of Installments to expand their spending power, and for merchants to convert every customer’s wish into a reassuring sale.