Visa collaborated with BMO to provide BMO credit card customers with access to Visa’s Installments service.
The payment option, which is expected to start next year, will allow customers at the Canadian financial institution to convert qualifying purchases into smaller, equal payments paid over a predetermined period, according to a news release issued Monday (Oct. 30).
“As the need for flexible payment options continues to grow globally, we’re committed to advancing a banking and payment experience for Canadians and merchants to meet their evolving needs,” said Visa Canada Vice President and Head of Product Dan Iwachiw in the release.
According to the statement, the launch extends on BMO PaySmart, the company’s post-purchase credit card-based installment plan service.
This month, PYMNTS spoke with Splitit CEO Nandan Sheth about the popularity of credit card installments.
Sheth believes that the widespread use of debit and credit cards creates a natural trend toward embracing installment arrangements for both ordinary purchases and large-ticket items.
“Installments are here to stay,” said Sheth, who added that no matter whether the installments have a 0% APR and low fees, or if they carry interest rates, “attaching installments to your credit or debit card has become a very real category.”
There is enough uncertainty on the horizon with holiday shopping, he added, and merchants may be hesitant to give BNPL to their end consumers due to concerns about delinquency rates and performance of the more common buy now, pay later (BNPL) loans.
“The merchants that are thoughtful understand that approval rates have been sinking, and they’re going to sink even further,” he said.
The discussion followed the publication of the article “Installment Plans Becoming a Key Part of Shoppers’ Toolkit,” a partnership between PYMNTS Intelligence and Splitit.
According to the survey, 60% of customers used installment plans in the previous year, with 45% utilizing credit card installment plans, rates that are higher than those seen with buy now, pay later (BNPL) and merchant-driven installment programs.
While there will always be a market for consumers with less-than-perfect FICO scores to embrace BNPL, card-carrying consumers, according to Sheth, “like their rewards, they like the safety and the protections that credit cards provide.” These buyers account for 75% of the US population and have roughly 90% of the purchasing power that drives the economy.