The growing impact of installments on the global consumer buying journey

The growing impact of installments on the global consumer buying journey

Brazil out front with installments

Installment payments are rapidly becoming a common payment option. With internet retail behemoth Amazon’s recent focus on flexible payments for bigger ticket items, installments have entered the mainstream.

One of the most interesting things about installment payments is how popular they are in Brazil. Much of the online economy centers around installment payments.

Consumers have grown so used to paying for things over time that it’s exceedingly rare for someone to pay for the full price of a purchase upfront.

The Brazilian Association of Credit Card and Services Companies says that 62% of credit card users in Brazil pay with interest-free installments. This is quite the figure, especially when considering that a recent report found that installment payments made up 80% of e-commerce purchases in Brazil!

Brazilian E-commerce Data 2015 graph
How e-commerce plays out in Brazil compared to other countries.

Local brands, as well as those brands that do business in Brazil, have to adjust to these consumer preferences. The ability to pay in installments has become part of the decision making process during the consumer buying journey.

Case study: Festivals

The lesson from Brazil is the forward-looking brands can increase conversion through offering installments. In the United States, this option has gradually become visible.

The industry that seems to be engaging the most with installments is live entertainment. Most festivals now offer a payment plan. Generally, this payment plan is limited to those who purchase far enough in advance. It offers an incentive to book and encourages consumers to lock in the lower rate far in advance of the actual event. For festivals, this early lock-in allows them to meet attendance targets more consistently.

Installment plan marketing image
Festivals leverage installment plans to reach millennials.

Of course, the appeal of installments is that it makes larger purchases more affordable over time. Credit cards offer this type of benefit, but consumers pay for it through added interest – and that’s if their credit limit can cover the total amount.

With installments, payments are broken up over time so that it’s easier for consumers to afford them. And without the added interest payments, consumers are more inclined to convert.

Installment payments remove one of the biggest hurdles to purchase a big-ticket item: affordability. Especially for consumers without credit cards, or those who prefer to pay with debit cards, installments makes it much easier to make large purchases such as festival tickets.

The offer has also become a marketing tool, and encouraging potential attendees to purchase tickets much further in advance then they would previously.

Coachella festival advanced sale with installments marketing image
Coachella only offers installments in the early advance sale, centering its early marketing campaign on its EZ Pay option.

By transforming payments into a feature, festivals are generating interest earlier in the ticketing lifecycle while attracting more of its core audience: millennials.

In the United States, this is a demographic that doesn’t necessarily carry a credit card. Only 37% of this group carries a credit card, according to the Princeton Survey Research Associates International. The availability of installments paid through a debit card is an essential selling point for millennials.

Case study: Affirm

Outside of festivals as an industry, consider Affirm, a brand making it easier for companies to offer interest-free installment payments for consumer products. Affirm is a payments company that breaks payments into smaller digestible chunks when buying consumer products.

The company found a sweet spot in mid-priced items, such as mattresses and higher-end appliances like the Molekule air purifier. These items are expensive enough to be difficult to pay upfront, without the larger risk of non-payment that comes with larger loans.

Affirm extends credit to consumers through a combination of artificial intelligence and soft credit pulls to confirm that a consumer is likely to pay.

And since these amounts are small, and directly debited each month, it’s less likely a consumer will default. This use of technology makes it possible for the company to help brands offer installment payments on smaller purchases than has traditionally been feasible.

Affirm conversion stats for mattress brand Leesa
Conversion stats for mattress company Leesa after implementing Affirm, per the Affirm company blog (

Increasing conversions through installments for your brand

Our team loves installment payments. We use them regularly for our own lives as consumers. We know how installment payments make it easier to say “yes!” to purchase because we see it in our own behavior!

“Enabling installment payments at the online store favors visitors’ conversions immensely, as it eases consumers’ decisions and reduces the impact of the purchase on their budget. According to data from Abecs, 70% of the buyers who financed their purchases with credit card affirm that they would not have made the purchase if they didn’t have the option to pay in installments..”

- PagBrasil

Since greater conversions means more revenue, we invested in building this feature for our own product. According to our Chief Product Officer, Frank Langston:

“We are constantly searching for new ways to make buying online easier. First, we solved the commitment barrier for users. Then we looked at the fact many of our users are buying goods and services that are not delivered for months, or even a year, out. If I’m booking something a year out, why do I have to fork over all the cash today? No one wants to pay more than they have to any earlier than they have to, and we saw that many of our merchant clients recognized this already. They offer deposit options, pay-over-time, or minimal-rate financing. However, they wouldn’t do this for groups, only for single payers. Seeing a gap in the market, we built this feature for groups as well.”

Installment payments with Pay By Group
Paying in installments with Pay By Group.

If you’d like to learn about converting more customers through installment payments for your product, please reach out. Combining group payments with installment plans is a knockout strategy for amplifying revenue and enhancing your user experience.

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