NEW YORK, Oct. 16, 2018 /PRNewswire/ -- Thirty-five percent (35%) of consumers will be more likely to make a purchase online if offered the ability to pay in interest-free monthly installment payments, according to a survey by payment solution Splitit. Even more notable, 47% of online shoppers surveyed claimed that a payment solution offering zero interest is the most important consideration when choosing an installment plan.
The findings come as financial uncertainty raises concerns for consumers, as the average American consumer holds over $5,000 in credit card debt and one in three Americans have saved $0 for their own retirement. According to Splitit's findings, 83% of online shoppers claim that the fear of overspending or losing control of their cash flow would deter them from making an expensive online purchase. Among millennials specifically, 25% were most concerned with the possibility of damaging credit scores when shopping online.
According to Splitit's survey, installment payments can mitigate these uncertainties and lead to higher AOV for retailers. Nearly 25% of online shoppers even stated that the option of interest-free monthly installment payments would encourage them to increase the size of their purchase. This is compared to a mere 4% of shoppers who would be encouraged by consumer financing options to increase their cart size.
"An interest-free, monthly installment plan offers consumers the best option in alleviating their financial woes and allowing them to shop without burdensome restraints," said Gil Don, CEO and Co-Founder of Splitit. "Offering an effective payment solution is a win-win for both consumers, who can afford more expensive purchases, and for merchants, who can increase revenue and decrease cart abandonment rates."
The survey also revealed which installment plan features are most likely to keep customers satisfied and on board:
- Nearly half (47%) of consumers surveyed said that zero percent interest is the most important consideration when deciding on a payment solution.
- No late fees polled as the second most important factor, with 17% of consumers saying that such fees would deter them from selecting a payment option.
- 20% of millennials specifically stated that no late fees are the most important consideration when signing up for a payment solution.
"It is no surprise that late fees would deter online consumers from agreeing to the terms of a payment solution, especially as reports arise that other payment service companies have profited off consumers not making their payments on time," continued Gil Don, CEO and Co-Founder of Splitit. "Splitit is proud to offer consumers absolutely no late fees and zero interest when using our payment solution."
The survey, conducted in July 2018, was jointly carried out with Google Consumer Surveys based on a representative sample of more than 1,000 respondents from the United States, aged 18-65+.
Splitit is a payment method solution enabling customers to pay for purchases with an existing debit or credit card by splitting the cost into interest-free monthly payments, without the need for additional registrations or applications. Splitit enables online retailers to offer their customers an easy way to pay for purchases in monthly installments with instant approval, decreasing cart abandonment rates and increasing revenue. Serving many of Internet Retailer's top 500 merchants, Splitit's global footprint expands to 800 merchants in 25 countries and has been patent protected in the United States since 2012. Headquartered in New York, Splitit has an R&D center in Israel and an office in London.