A new transaction tool for one of the country’s largest e-commerce platform providers will enable more online merchants to accept installment payments from shoppers with credit cards. Splitit this week said WooCommerce, whose e-commerce technology is used by nearly 30 percent of U.S. online merchants, will offer a free plugin to those retailers willing to accept partial payments over time.
Splitit’s technology acts as a middleman between a merchant and its processor and the credit card companies, a Splitit spokeswoman says. At checkout with participating retailers, consumers can choose to split their payments into monthly interest-free installments for no charge. Merchants pay processing fees that start at 1.5 percent of the purchase price plus $1.50 per installment. Fees can increase to as much as 7.5 percent plus $1 per installment. Splitit charges more if merchants opt to receive the entire purchase amount up front from the company instead of monthly payments. Splitit schedules installment payments on the shopper’s credit card.
There is no need for a credit check because Splitit, via its technology and agreements with credit card networks, knows how much credit the shopper has at the time of purchase, eliminating a potential hassle as that consumer prepares to buy. “The merchant does not assume any greater risk than with regular credit card transactions, and the consumer can easily charge any purchase and pay it back in monthly installments,” the spokeswoman says.
This marks the second e-commerce platform integration for the Splitit tool, which until late this year was called PayItSimple. Magento signed up six months ago, the spokeswoman says. About six percent of U.S. e-retailers use that platform, according to December statistics from BuiltWith, a Web data collection firm. (Magento, though, tends to serve e-retailers with more annual revenue than does WooCommerce.) Splitit says at least 150 retailers in the U.S. and U.K. use its service.
E-commerce installment plans have gained popularity in Latin America, thanks in part to low spending limits on credit cards, according to CyberSource, an online payment services company. In the U.S., such companies as Affirm Inc. and PayPal Inc. offer similar services, though not all defer interest or charge for installments.
Service providers and participating retailers often target their installment programs at younger consumers and those with lower incomes than other consumers. Installment programs also can appeal to consumers buying relatively high-priced items, says Thad Peterson, senior analyst at payments consultancy Aite Group. That said, installments represent a fledgling way to pay for online purchases. “I’m not sure that it’s a trend yet, but there’s clearly a lot more energy behind private finance with online purchases for both consumers and businesses,” he says. “The online space is currently the domain of cards, and the infrastructure that’s in place to support them is extensive.”
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