The “installment” payment method is a like a credit without going through a traditional bank, because its amount and duration allows it.
In practice: the consumer makes an initial payment, then the financial service provider pays the outstanding balance to the merchant.
The merchant also pre-determines the payment terms (2x, 3x, 4x).
It is therefore a type of short-term loan that splits your payments.
In Europe, this method is regulated: if the customer pays in less than 90 days, it is not considered as credit (with some local specificities: for example, in Belgium, providers of this payment service cannot offer more than 3x).
The main different with a consumer credit is its integration into the customer journey: Installment is seamlessly integrated into e-commerce as a payment option (next to cards or e-wallets) Basically, this makes things really easy.
Those financial institutions often charge no interest and sometimes no late fees.
Currently, “installment” and “BNPL” methods (URL direct) tend to be confusing.
The major installment players offer BNPL, and the new BNPL players offer installment, sometimes with hybrid model (e.g. first payment in 2 weeks and then a tight payment schedule).
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