Embedded Payments: Untapping the Potential

There's a nuance to the greater buy now, pay later (BNPL) landscape that retailers are only just now beginning to grasp. White-label embedded installment options, which allow shoppers to use their own bank-issued credit card to pay over a set period of time with interest-free installments, can be transformative for businesses looking to get an edge. A recent survey cites that two-thirds of merchants recognize the benefits of offering bank-issued credit card installment plans, partly because these offerings enhance the transparency in payment processing. Bank-issued credit cards are also most popular with almost half of the consumers surveyed. So why haven’t we seen wide adoption of embedded proprietary installment payments across every major retailer’s website?

A key reason remains the confusion within the market regarding preference and timing; specifically which installment plans consumers prefer as well as at what point along the customer journey they should be offered. Yet we know that when retailers allow their customers to split their payments over a period of several months, using their existing credit on their bank-issued credit cards, there are several positive outcomes:

• Higher Conversion Rates: Having a solution embedded into the merchant’s own checkout, from Splitit’s data, shows an average conversion rate that's three to four times higher.
• Faster and Easier Approval Rates: Embedded installments using shoppers’ untapped, unused credit means higher approval rates for purchases because the shopper has already been pre-approved for that credit. When shoppers go to legacy BNPL players, they're generating new loans, which often results in declines. Bank-issued installment options yield an 85 percent approval rate, as opposed to 35 percent to 40 percent for legacy BNPL plans.
• Increased AOV: Shoppers who are made aware before checkout that they can split their payments interest-free using their bank-issued credit card tend to spend more than they originally intended. Sixty percent of consumers said they would spend more with a merchant or upgrade their purchase if they could pay over time.
• Enhanced Customer Experience and Retention: Brands that go the extra mile to improve the e-commerce customer journey with embedded bank-issued card installment options are rewarded with higher customer lifetime value, increased shopper loyalty, and, on average a 12 percent to 20 percent increase in repeat visits. With the e-commerce experience becoming increasingly more mobile-driven, ensuring a seamless checkout experience which functions just as well on mobile as it does on desktop will greatly improve conversion.

Incorporating installment plans into your website’s purchase funnel will only grow in prevalence. In multiple industries we’re seeing how personalization, preference, and ease plays a crucial role in e-commerce and it’s important to make sure payment plans empower these aspects instead of hindering them. Allowing consumers to use their own credit cards drives measurable, long-term results that simply cannot be achieved with other options.

Colin Mellon is the chief commercial and growth officer at Splitit, a card-attached installments company that uses a consumer's own existing, untapped credit.