Installment payment options initiated at the cash register or till, with a payment card, may finally be coming to not only to a bank near you, but also globally. After 17 years of experimentation by the Visa and Mastercard networks, the concept of using one payment card with a credit, debit and installment option will likely become a reality in 2020.
In 2002, Mastercard launched the patented “Mastercard Installment Card” to help cardholders pay for larger purchases. The installment program was offered as an option by MasterCard issuers in the USA. Under the program, MasterCard issuers set the overall credit limit, installment terms and interest rate, and had the ability to offer cardholders two card options: “The Stand-Alone Installment Card Option” and the “Add-On Installment Card Option.”
Visa Installment Option
In June of 2019 Visa announced a suite of installment solutions APIs. Through a pilot program, issuers and merchants will be able to offer their customers an installment payment experience at checkout using a Visa card they already have in their wallet. Visa is currently testing the program in India, Romania, Russia and the United Arab Emirates.
Sam Shrauger, SVP and global head of Visa’s issuer and consumer solutions says “Visa’s installment capabilities are changing the game by allowing issuers to leverage an existing payment account consumers already have and are familiar with, instead of asking them to submit to a credit check, download an app or open another line of credit.”
CyberSource will be a leading payment management platform to support Visa’s installments capabilities for its participating merchant clients and acquirer partners that utilize CyberSource for global payments enablement.
Mastercard Installment Option
In April of 2019 Mastercard acquired Vyze, a technology platform offering a wide array of point-of-sale payment options. Vyze connects merchants with multiple lenders, to offer financing options providing online and in-store shoppers with additional payment flexibility at the exact moment of purchase. Vyze says financing approval rates run up to 90%, well above the industry average.
Blake Rosenthal, EVP of global acceptance at Mastercard, explains the end-to-end Vyze platform allows lenders and merchants to “integrate once and innovate forever” through the simple use of APIs. Previously, managing and maintaining a range of consumer payment and financing options would require significant time and investment.
Mastercard says it is currently working with a number of top U.S. retailers.
Robert McKinley, Senior Analyst of CardTrak, CardFlash and CardData, says the evolution of global payment networks to full blown technology companies is quickly accelerating, offering multiple technologies for cardholders from “Swipe, Dip or Tap” to “Credit, Debit or Installment” and to “Infinity and Beyond.”
“Swipe” is sliding a card’s magnetic stripe through the terminal, while “Dipping” is inserting the card’s smart chip into the payment terminal. With “Tap” cardholders access the short-range wireless technology feature of the card, making payments near the payment terminals.
“Credit” is a revolving line of credit, usually interest-free for 25 days, and typically subjected to an on-going adjustable interest rate requiring minimum payments. “Debit” is an immediate payment from a linked bank account or prepaid account. “Installment” is a fixed principal loan amount with fixed interest charges, divided into equal payments over a specified period of time.
Recently, Mastercard and the nation’s fourth largest credit card issuer, Citibank launched the “Pay With Points” feature for Citi ThankYou cardholders.
Through Citi.com or the Citi Mobile App, cardholders set up push or email notifications to find out when purchases are eligible for coverage with ThankYou Points. When the notification asks if you want to cover the purchase with ThankYou Points, simply click on the notification. Citi ThankYou cardmembers will also be able to redeem their ThankYou Points for eligible purchases online, including pending transactions in addition to posted transactions in the current billing period.