Financial institutions that process credit and debit card transactions on behalf of merchants are largely failing to meet the demand for card-linked installment options. Despite claims of support, recent research indicates a stark contrast between perceived and actual capabilities. This disparity highlights a significant opportunity for growth in the pay later payments market, particularly for acquirers willing to innovate and integrate these payment solutions.
When previously examined, the gap between reported and actual support for installment plans was similarly substantial. A prior analysis revealed that while 56% of acquirers claimed to offer such services, the actual figure was closer to 8.3%. This consistency in overreporting suggests a systemic issue in how acquirers define and implement their capabilities. Larger acquirers, especially those with revenue exceeding $1 billion, showed higher prevalence of offering these plans, yet even these figures have seen a decline in more recent surveys.
The distribution of installment options is uneven across different sectors. Industries with frequent transactions, like retail and restaurants, show higher implementation rates of general-purpose credit card-linked plans. Conversely, sectors such as healthcare and education lag behind, indicating a need for more tailored payment solutions to meet their unique transactional demands.
Consumer Demand and Market Potential
The research underscores that consumer demand for pay later options is high, with six in ten consumers expressing interest. This demand represents a substantial market opportunity for acquirers. Those who can successfully integrate both general-purpose card-linked installment plans and buy-now, pay-later (BNPL) plans could capture a larger share of this burgeoning market. Acquirers are gradually recognizing this potential, with 45% indicating plans to support these options in the future, a notable increase from previous figures.
Barriers and Integration Challenges
Despite the opportunities, several barriers prevent wider adoption of installment plans. Notably, 22% of acquirers point to third-party integration constraints as a significant hurdle. These technical and logistical challenges highlight the need for more robust and seamless integration solutions. The gap between acquirers’ enthusiasm for offering such plans and their actual implementation capability remains a critical issue that needs addressing.
– Enhanced direct integrations are crucial for closing the gap between perceived and actual capabilities.
– Sectors with varied transaction types, like retail, show higher implementation rates for installment plans.
– Custom-tailored solutions are necessary for sectors like healthcare and education to adopt installment options effectively.
A consistent finding across both recent and past research is the misalignment between acquirers’ reported capabilities and actual implementation. This gap is indicative of broader systemic issues in how these financial institutions manage and report their services. Addressing these issues through better integration and more accurate reporting could significantly improve consumer and merchant experiences. Furthermore, targeting sectors with less frequent but larger transactions with tailored solutions could help expand the market for installment payment options.
