What does ‘Split Payments’ refer to in consumer finance?

Split payments, in the context of consumer financing, allow a customer to divide the total cost of a purchase into a series of smaller, often interest-free, installment payments. This arrangement makes purchases more manageable by spreading the cost over a predetermined period, with the lender or a technology provider facilitating the transaction for the merchant at the point of sale.

This payment method is important for the lending industry as it helps increase customer purchasing power, boosts sales conversions for merchants, and opens new revenue channels for lenders.

What are the benefits of split payments for consumers?

For consumers, the primary benefit of split payments is enhanced affordability and financial flexibility. This payment method allows them to purchase higher-ticket items without paying the full cost upfront, breaking it down into manageable, interest-free installments. It provides a transparent and predictable repayment schedule, which helps with budgeting. Unlike some traditional credit applications, many split payment options offer instant approval at checkout with minimal data entry, improving the overall customer experience and making desired products and services more immediately accessible.

How do split payments differ from Buy Now, Pay Later (BNPL)?

Split payments are a specific type of Buy Now, Pay Later (BNPL) offering, typically referring to short-term, interest-free installment plans, like paying in four installments over six weeks. The broader BNPL category also includes longer-term financing options that might function more like traditional installment loans with or without interest. While all split payment plans are a form of BNPL, not all BNPL solutions are simple split payment plans; some are designed for larger purchases with longer repayment periods.

What challenges do businesses face when offering split payments?

While beneficial, implementing split payments presents challenges for businesses. A key challenge is technical integration, as it requires systems that can seamlessly support multiple payment methods and manage complex transaction flows at checkout. Another concern is managing multiple vendor relationships and reconciling different accounts if various providers are used. For lenders, the primary challenge involves risk management. Although the risk is different from a traditional loan since it’s often tied to an existing credit line, ensuring a seamless, compliant, and secure process is critical to prevent fraud and maintain a positive customer experience.

How does Jifiti help banks offer split payment solutions?

Jifiti enables banks and lenders to offer their own white-labeled split payment solutions directly to consumers at any point of sale. Instead of being displaced by third-party fintech lenders, banks can use Jifiti’s modular platform to deploy their own branded BNPL and installment loan products. The technology integrates with a bank’s existing systems, allowing them to retain full control over branding, underwriting, and the customer relationship while expanding their lending programs into new channels and acquiring new customers.