Installment for dummies
This #PayDecoding, Installment for dummies helps you to keep up appearances in front of your kids… and push your expertise a little further!
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.
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