shopping in installments with a twist
Mercury Processing Services International delivers a new payment option to Banka Intesa Sanpaolo in Slovenia which offers customers installment options for card payments without the involvement of merchants or payment schemes.
Of banks and men
Installments are nothing new in the payment industry. They have existed since the 1900s in the form of charge coins which evolved into plastic cards in the 1950s when the Bank of America launched its first card that allowed its customers to pay for their purchase in monthly installments with accruing interest.
In order to provide a more flexible shopping experience and to give cardholders greater control of their finances, banks usually offered an option of buying using credit cards, in agreement with merchants and payment schemes. Cardholders would most often repay their debts on a monthly basis with a certain interest fee because they would practically take a small loan from the bank.
What’s the twist then?
Now, the cardholders are given even more flexibility and control over their payments with the superb feature with an upgrade. Namely, cardholders have the opportunity to choose to pay for a certain product in monthly installments and, here’s the twist, without the involvement of merchants or even payment schemes (e.g. Mastercard, Visa). The cardholders don’t even need new cards because splitting in-store transactions across monthly installments can be a feature added to the existing ones.
Let’s explain this process verbally in greater detail. A cardholder goes to a store to buy something. After the payment is authorized, the bank sends an SMS text message to the cardholder with the installment offer for the (eligible) transaction and a unique transaction code. The cardholder then responds to that SMS containing that unique transaction code and the chosen number of installments. The third SMS is a confirmation from the bank.
Banka Intesa Sanpaolo will also have a call center support as a backup option. The number of installments is further determined by the bank. This feature is introduced on a specific card level and existing product so the existing cardholders have the option to accept or decline this useful card benefit.
Installments are a great idea and this is why
Cardholders, as do all of us, consider the financial aspect of their lives to be very significant and having control over it is maybe even more significant.
In 2014 and 2015, Mastercard carried out a study on installments in eight European countries whereas consumers stated they consider the idea of paying in installments "of great appeal".
An additional benefit of this feature our team created is that it’s suitable for all credit cards regardless of the payment scheme. This is significant because it adds further flexibility to payments and gives cardholders more options.
Therefore, retailers will win new business without much hassle, cardholders are satisfied by having accessible funds for easier payments and a transparent repayment, while the banks benefit by having an extra tool in their merchant acquisition armory, additional source of income (through installment handling fees), by using an innovative approach in servicing client`s needs, boosting card volumes, and by building cardholder loyalty.