Installment payments: what merchants think about this must-have for online stores

The world of ecommerce has been talking about it for a while; Buy Now Pay Later is now a must for online stores. This payment method has been democratized and is not limited to specific sectors. It covers a much wider age range than you might think. In 2021, payment in installments and deferred payment already represented 8.1% of European ecommerce transactions[1], and this figure is set to increase across all activities related to online sales. Once a popular choice for companies engaged in distance selling via catalogs and printed materials, payment by installments is now an essential part of the growth of online stores.

Although we know how Internet users use this payment method, it is normal for e-merchants to ask themselves questions. Often, these questions revolve around the actual benefits, operation and potential risks of adopting payment in installments. That's why we went to meet two merchants who have adopted BNPL in their ecommerce best practices, and who share their feedback on this popular payment method. 

How does a payment-by-installments solution work for merchants?

For the beginner, the important thing is to pay attention to the commission percentages that will be applied per transaction depending on the payment solution and the monthly payments (from 2x to 10x) that will be proposed on the online sales site within the limit of a fixed payment ceiling.

The commission on a sale varies between 1.2% and 3.5%, including €0.35 of transaction fees (for France), depending on your contract with the bank selected for the payment method and the organization that will insure the credit. 

However, the advantage is on the merchant's side because the merchant can see their average basket increase without assuming the credit risk on the part of the customer, since they get the full amount of the product sold directly and allow the third-party organization to collect the monthly payments and manage the contracts.

Feedback from two merchants regarding payment in installments

Maison de l’Astronomie is a store specialized in telescopes and other essential tools for observation of the night-time sky. The first store opened in 1900 and the brand went online in 2004, positioning itself as the first online store in the industry. Didier Favre, president of the company since 2013, has been working on the implementation of the guaranteed payment in installments and has seen results far beyond his expectations.

The 3- or 4-installment payment solution (PayPlug) has enabled the company to align itself with the competition, which already offered payment in installments at checkout. In just one year, the online store has grown from 870,000 to 1.3 million euros in ecommerce turnover.

Paying in installments allows us to close sales that we might not have been able to otherwise, and to regain market share. Payment in installments is increasingly used by our customers: Today, it represents 20% of our transactions." Didier Favre, CEO, Maison de l'Astronomie

Initially, the popularity of this payment method alone was not enough to convince Didier and his team to make the move. One of Didier's main concerns was having to deal with customer non-payment issues. With PayPlug, partner of the latest PrestaShop Essentials Suite PayLater, Maison de l'Astronomie does not have to deal with non-payments, since Oney, the partner company, manages fraudulent payments and unpaid bills on their behalf. That's why it's called a guaranteed payment in installments. 

Didier Favre's advice: dare to add this payment method; the system is flexible and depriving yourself of it would be a mistake!

Increase your market share and turnover with a payment-in-installments solution

Topbiz is the ecommerce division of Actuelburo, regional leader of IT solutions in Aquitaine. Founded in 2005, the ecommerce division represents a rapidly growing share of the brand's turnover. 

As Traffic Manager, Antony Maurice shared with us his experience with the guaranteed payment-in-installments solution offered by PayPlug. Like Didier Favre from Maison de l'Astronomie, the handling of unpaid invoices (failed payment, empty bank account at the time of payment) and the administrative management on the part of the partner, is what won over Topbiz to offer payment in installments.

I'm pragmatic, the payment stage is critical: you have to offer a cash payment method, one in installments, and another method. In other words, you have to offer what people want. Since PayPlug offers a payment-in-installments solution that is as easy to manage as a traditional payment solution, we didn't hesitate.

 Antony Maurice, Traffic Manager, Topbiz.fr

Thanks to the promotion of this payment method, Topbiz has seen its average purchase basket increase by 48%, from €320 to €477! For the store, payment by bank card in several installments has paid off, from the increase in average baskets to customer loyalty. 

Antony Maurice's advice: Whatever you do, offering payment by bank card in 2, 3 or 4 installments can only be positive for your online business and will not harm your brand. If your average shopping cart is over €300, it is even more important.

How to set up a payment-in-installments solution on your ecommerce site 

Payment-in-installments solutions depend on your CMS in the first instance but also on the current payment solution that you use for the online payments of your customers. For example, at PrestaShop, we have developed the Checkout module for our merchants, allowing them to validate orders in one click with a fully secured payment in 4x via Paypal. Of course, many payment-in-installment partners are available with our solution, including Oney and Alma.

Online payment in several installments: what do I need to remember?

Increasingly popular, payment-in-installments methods generate higher sales volumes and remove the payment barrier for visitors. Payments in installments have great advantages: increase of the average shopping cart and the results of upselling actions, and consequently of the turnover achieved via the online store, a better rate of loyalty and re-purchase. 

• In order to avoid having to manage your customers' contracts, unpaid bills, and risk losses, it is preferable to opt for a guaranteed payment-in-installments solution, avoiding the risk of any transaction not being completed.
• Payment-in-installments solutions allow you to receive the total amount of the visitor's shopping cart. This is the solution that takes care of 2X 3X 4X payments and the installment plan selected by the customer beforehand on your ecommerce site
• Payment-in-installments solutions tend to be very easy to implement and use for the merchant.
• As long as your payment-in-installments solution is guaranteed, the risks disappear, and the effects can only be positive for your brand and your bottom line!