What is driving the current demand for installment purchases?

With the relentless covid-19 pandemic limiting households' incomes worldwide, liquidity searches have soared in the last year and are likely to persist throughout 2021.

Người tiêu dùng khó khăn tài chình trong Covid-19

But banks don't always want to provide credit in a challenging economic environment, a popular digital solution called INSTALLMENT PURCHASES that is helping consumers secure their financial resources.

Movi is also a supplier of prepaid products and services (installment purchases) with 0% interest rate and fast advance (quick cash loan) in 24 hours of prestige, improvement and transparency for all workers of the partner company in Vietnam.

By allowing consumers to insize goods and services for an agreed period of time, instead of a one-time uppayer as usual, customers who may be under financial pressure can continue to purchase their regular products, owning those products for immediate use but dividing their payments into smaller portions are billed to the customer's selected account on the following months.

For example, some programs offer customers up to 12 months to make their payment, while others allow a deadline of at least 30 days.

This is proving to be very popular with consumers all over the world. While the volume of installment purchases has undoubtedly been increased in recent times by the COVID-19 crisis and year-end holidays, "the general feeling we get from businesses is that people prefer to buy things with post-pay options."

And on the retailer's side, companies are rapidly turning to installment purchases, allowing this payment option through online shopping platforms and in-store payment services.

Even industry giants like Gap, Macy's and Walmart introduced the facility around last year.

COVID-19 has greatly affected retail sales in many cases, making ins installments that provide retailers with the opportunity to entice customers — usually younger generations — to make quick purchases that they shouldn't have been able to make if they were asked to pay the full price as soon as they bought.

And perhaps the biggest attraction of installment purchases is that customers have the opportunity not to pay any interest on their delayed payments. Many of the largest companies in the sector, including Afterpay, Klarna and Affirm, will not charge a penny in interest as long as consumers pay within the set timeframe, with so will our Movi.

What has driven the recent popularity of installment purchases?

According to research by PYMNTS.com and PayPal, the increase in consumers buying ins installments is by: "Transparency, spending control and convenience are the main motivations for using installment buying solutions"

Điều gì đang thúc đẩy nhu cầu mua hàng trả góp hiện nay?

  • Transparency: 33.1% said they believed their information was secure
  • Spending control: 36.7% of people accepted installment purchases
  • Convenience: 37.2% of reviewer

The questioner also admitted that relatively understandable is also a big attraction for installment purchases, and in some cases this offer has better terms than traditional payment options.

Instead of simply adding other fees to their credit cards or engaging in complex or less attractive loans, the structured short-term payment solution provided by installment purchases, which usually do not charge interest fees, seems to have attracted more attention to customers.

Significant budget when choosing to pay with installment purchase solutions?

Research shows that users are particularly focused on the clarity of fees and interest rates as well as the ability to monitor spending, previously 41.8% of consumers recognized and 39.1% decided to use installments to make online purchases.

"This has demonstrated that consumers tend to buy budget-conscious and fiscally responsible installments – they want to maintain their capabilities and not blindly place fees on credit cards or accept unclear financial terms ," the study acknowledged.

The reason at this point seems to be that the purchase of installments is new, without as much regulatory scrutiny as traditional forms of consumer credit.

With no interest payments and installments usually limited to a maximum of four installments, installment purchases are exempt from consumer credit laws in many countries. But it seems that consumers want a correction of this rapidly growing segment;

Capco's research, for example, found that 54% of consumers surveyed felt that installment products should be managed, while 52% believed that suppliers should review their credit history before financial approval.

For example, research by PYMNTS.com and PayPal shows that among Millennial consumers who have not previously used installment purchases, nearly 40% of people express interest in its use if it is more widely available in e-wallets.

And when considering all demographics, the percentage of potential users who said they would be "very" or "extremely" interested in installments was more than three times more than the 6.4% of consumers currently using installment plans. While it may still not be used as often as other traditional payment options, the potential for market growth in the coming years is expected to be enormous.