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Trends in Mobile Credit Card Processing for Fall 2021 and 2022

Over the last 12 months, almost every retailer felt the need to shift from the in-store traditional payment methods to the new-age digital methods. Businesses have also understood that this shift has a vast scope – it is not just a momentary reaction to the prevailing coronavirus pandemic, but a long-term trend. IBM’s U.S Retail Index study revealed that the transition to digital payment was speedy due to the pandemic, which otherwise would have taken five years. E-commerce purchases are predicted to grow by 20% this year.

Even in these uncertain economic times, retailers can be confident that online and hybrid shopping will continue to grow. Today, the customers have become more aware and want more flexibility and security in mobile solutions from these brands. And therefore, brands cannot just sit quietly.

We know that even if the pandemic ends, the e-commerce growth and related customer needs are here to stay. For businesses to keep up with the competition, they must shift to modern payment methods. This article will discuss six trends in mobile credit card processing for fall 2021 and 2022 that will make their way into the future.

#1 E-Wallets

With the increasing number of smartphones, e-wallets have become the most convenient mode of payment for consumers. A mobile wallet syncs your bank accounts and credit cards and turns your smartphone into a contactless payment device. According to some statistics, the global estimate of smartphone users in 2021 was 3.8 billion, compared to 2.6 billion in 2016. A smartphone has become a necessity as it gives you apps for every need from banking to driving, social to nutrition tracking related to all aspects of your life.

55% of Americans use their smartphones when shopping, all due to the increasing use of e-wallets like Google Pay and Amazon Pay. With mobile wallets becoming popular and the growing use of peer-to-peer transfers, the security of these apps has also increased. E-wallets are going to change the way how we pay now. It is one of the most significant trends in mobile credit card processing that cannot go unnoticed.

#2 Social Shopping

A retailer’s most remarkable ability is being able to use personal relationships to his advantage and engage their customers in their business. More than 78% of customers trust the recommendation of their friends and family for shopping, so brands can count on social media sharing and engagement as a better proof of purchase than a direct message to the consumer.

Retailers can hire social media influencers for promotion and make use of social media tools to get to know their customers better. They can further promote positive reviews, give better customer service and sell directly on the platform where their customers spend substantial time.

#3 Contactless Payments

During the pandemic time and earlier, we would hesitate to touch cash as we did not know how many hands the bill was exposed to. With credit cards, handing them over to the cashier for a swipe and typing your card pin is avoided to minimize the touch. Things have changed much over the past months, and Mastercard’s survey suggests the same. The survey says that more than 51% of people use cashless payment in some form. Contactless payments are now more secure than the traditional swipe method with scanning technology to complete the transactions. All this is possible because of the encrypted microchips and mobile apps.

#4 Mobile POS Devices

As more and more consumers use contactless payments, retailers align their shopping experience with POS technology. With the help of mobile POS, retailers can accept payments anywhere as these are wireless devices and not connected to checkout locations. This gives even the smallest brick and mortar storse the flexibility to offer customers multiple checkout locations. With various payment solutions, customers can safely pay in line with social distancing norms. More than 73% of customers want more checkout options with advanced technology. Having said this, mobile point-of-sale devices are fast becoming a necessity for retailers large and small.

#5 Biometric Authentication

If someone had talked about authenticating a process using biometrics five years ago, it would seem like a scene from a futuristic movie. Now this process is everywhere and most of use this technology daily to unlock our phones. Biometric authentication consists of fingerprints, face, and voice recognition that we use today to unlock e-wallets. Biometric authentication gives more security as it is unique to each customer, and due to this trust, the technology attracted huge investments. According to a study by Mobile Payment Authentication & Data Security, by the year 2024, the use of biometric authentication is expected to grow more than 1000%, with a transaction value of more than $2.5 trillion. By the end of 2019, transactions valued at $228 billion were already authenticated by biometric technology.

#6 Flexible Payments

With consumers demanding more convenience and security while using mobile wallets for payments, the pandemic has also forced them to maintain and stick to a budget. Retailers now offer options like installments or Buy Now Pay Later to their customers. With enhanced security, convenience, and accountable spending, consumers have accepted these offers enthusiastically. Consumers get maximum flexibility with the zero-interest installment schemes which the retailers offer at the point of sale. It helps the customers to make large purchases easily without worrying about the having the full payment up front. The popularity of e-commerce and online shopping is growing drastically. The mobile payment strategy of the retailer will play a significant role in the purchase pattern of their customers. This strategy is almost 80% responsible for the rise or fall in sales. If the customer is getting complete flexibility in payments, multiple payment choices, and a streamlined checkout process, nothing can stop him from completing the decisive step of the final purchase.

Bottomline

As the digital world is changing fast, all kinds of e-commerce stores and other retailers need to adapt to the latest payment trends as soon as possible. With contactless payments and e-wallets offering complete convenience to consumers, they are becoming popular at an unimaginable speed. If your customers get absolute security along with seamless checkout, they will keep coming back to shop at your store. Therefore it is important for all fintech companies to keep a watch on. One thing is certain – that even if the pandemic ends, the e-commerce growth and the related customer needs are here to stay. For businesses to keep in the competition, they must shift to modern payment methods.

Current Changes To Interchange Rates For 2021

Visa and MasterCard were both planning on changing their interchange rates in 2021. But pandemic-related issues and concerns have prompted them to delay their increases. They will change their interchange rates in April 2022.

These rate changes reflect various ways how Visa and MasterCard operate. Your business will experience a significant impact, as the higher rates will cut from your profit margins and cash flow. You can keep these changes from being a problem if you plan ahead.

Changes Through Visa

Visa was planning on putting in a few changes to its interchange rates and fees in April 2020, but they were delayed by a year due to the pandemic. They have been delayed another year due to worries about how businesses can recover from the pandemic.

Visa’s first change will entail how it will handle card-not-present or CNP transactions. The fee for a traditional Visa card on transactions of $100 or more will rise from $1.90 to $1.99. For premium cards, the fee will go from $2.50 to $2.60.

Visa also has plans to increase the interchange rates for supermarkets and grocers. But it has not been open about how much of an increase will occur here. Visa has since announced it will delay the increase to 2022.

The highest rates for Visa cards are around 2.95%. The company will likely go past the 3% mark in 2022, although how high the network will go remains unclear.

Visa did make one other move, as the Electronic Interchange Reimbursement Fee or EIRF has been eliminated. The EIRF entails proper reimbursement for some losses in downgraded transactions.

What MasterCard Is Planning

MasterCard has announced it will be increasing the interchange rates for various industries. These include supermarkets, convenience stores, and some physical retailers. These increases will help MasterCard manage its network and handle its reward programs.

MasterCard has not been forthcoming on what it will specifically do with its increases. MasterCard will likely add a few tenths of a percentage point to each rate it offers for these businesses. The company will not go forward with these increases until 2022.

MasterCard offers various protective features for cardholders and offers support for anti-fraud measures. MasterCard often charges slightly higher rates than Visa offers, so you can expect MasterCard’s rates to continue to remain high. But the rates MasterCard charges are nowhere near as significant as what American Express charges to businesses that accept their cards.

What Everything Means

The plans for Visa and MasterCard to increase their rates in 2022 means that businesses may struggle to keep their cash flows under control. The problem with interchange rates is that they have been rising, which is problematic in industries where credit transactions have become more common.

All businesses that accept credit cards will require an analysis of their efforts in how they accept these payments. They must look at how much they are collecting from customers versus what they are losing in interchange charges. Businesses can recognize how their customers are spending money to see what changes they need to consider for their operations.

What Can Your Business Do To Offset These Increases?

The potential increases that Visa and MasterCard will impose will be substantial concerns for businesses to watch. You can offset these increases by using a few measures to help you keep these changes from being as significant:

Use a sensible pricing model for your industry.

Merchant account providers can help you find different pricing models that fit your business. These include providers that will offer an interchange-plus or tiered pricing platform. A tiered program may work if you accept specific card payment types versus others. An interchange-plus platform is best if you accept a variety of cards.

Look at a possible cash discount system.

You can use a cash discount program where you can promote that people will spend less on their orders when they pay with cash. You can adjust the prices at your store to cover the increase in the interchange rate, and then offer a percentage discount for people who pay for something with cash. The effort is useful as it doesn’t entail an additional surcharge that might not be legal in some places. But the cash discount should be promoted well, and any prices you list should be reflective of what people will spend if they pay in cash.

Enter a Level 2 or 3 tier for how you collect credit card payments.

You will qualify for a lower interchange rate if you provide more information on your business. Card networks will assign a specific tier level to your business based on how much information you provide. A Level 1 business will pay the highest rates and only submit its name, the purchase amount, the date, and the billing zip code in each transaction.

A Level 2 business will include these features plus a tax indicator, a customer code, a merchant tax ID, an invoice and order numbers. A Level 3 business will add a product or SKU description, details on each unit price and the quantities available, discount amounts, and any shipping totals and duty charges.

You will pay less in interchange totals if you gather more data on each card payment. The increased info will help a network identify your business transaction and will produce a lower rate. You could save a few tenths of a percentage point on interchange fees if you use the right measures.

Use anti-fraud measures to prevent chargebacks.

Sometimes a high interchange rate may be due to your business being at risk of chargebacks and fraud. You can use a few anti-fraud measures to keep these in check, thus reducing your average rate:

Conduct transactions by phone or mail when possible.
Use an address verification service to confirm one’s address when processing an order.
Settle the purchase authorization within two days of shipping a product.
Provide as many details on a product or service to the customer as possible. The customer will be less likely to require a chargeback when one knows what is happening at a time.

Visa Looks to Streamline B2B Payments

The best way to win your customers’ hearts is to provide them with a more flexible payment system and allowing them to choose how they conduct transactions. We live in a world where faster payment modes are given more preference. In this regard, Visa’s recent efforts to transform the B2B payments space need special attention.

Visa B2B Connect

Visa B2B Connect is an innovative non-card based payment network designed to streamline all cross-border, business-to-business payments. The technology enables the participating banks or other financial institutions together with their business customers to make secure, predictable, and streamlined global business payments.

Visa B2B Connect comes with a multilateral payment system that allows one to make bank-to-bank cross-border transactions between different businesses. In this network, one can make payments between any banks that are connected to one’s specific platform, thus having a more improved, streamlined, and consistent payment experience.

Difference Between Bilateral Network and Visa B2B Connect Multilateral Network

Legacy Bilateral Network

Payments via bilateral networks occur only between two parties or financial institutions at a time. Hence, they require multiple handshakes between disparate systems and banks present across different locations before finally reaching the beneficiary. This process, therefore, can create greater delays in payments while increasing the costs unpredictably and producing inconsistencies in the payment data.

For example, the transaction flow of a bilateral network looks something like this:

The Originator Business starts the transaction process via its Originating Bank.
The bank then sends the transaction information to a Domestic Correspondent Bank.
Next, the Domestic Correspondent Bank sends passes over those payment institutions and information to an Intermediary Bank and then to a Foreign Correspondent Bank.
After this, the amount gets deposited to the Beneficiary Bank, which belongs to the Beneficiary Business.

Therefore, it is quite a long-winding process.

Visa B2B Connect Multilateral Network

The Visa B2B Connect multilateral network, on the other hand, enables a system of one-to-many global payments that are transacted between any participating bank. It helps to streamline the payments with higher predictability, efficiency, and transparency.

In other words, with Visa B2B Connect multilateral network, there would be no multiple intermediary banks involved in the transaction made between the Originator Bank and the Participating Bank that is connected to the network. The funds will straightaway be transferred from Bank A of Company A to Bank B of Company B by passing via the Visa B2B Connect platform.

Benefits of Visa B2B Connect

Visa B2B Connect is designed to address all the limitations present in the existing bilateral wire transfer processes, thus enhancing transacting experiences. Some of the key benefits of Visa B2B Connect include:

● Real-time Visibility and Predictability

You can gain improved real-time visibility into your transaction status as Visa B2B Connect reduces multiple handoffs or handshakes in the payment chain. It further helps to enhance the predictability of each of your transactions and have better insights into when and how your funds would land on the beneficiary’s bank account.

● Payment Transparency and Finality

With Visa B2B Connect’s payment network, one can make seamless bank-to-bank transactions using the streamlined and robust data for easier reconciliation and enhanced transaction accuracy. The system offers clear and transparent transaction payment schedules and costs that reduce all payment uncertainties.

● Digital Identity

All your sensitive business and payment data will be secure and protected as Visa B2B Connect uses unique digital identities to tokenize your data. This further reduced any cybersecurity attacks or fraudulent activities.

● Consistency of Transaction Data

Visa B2B Connect’s consistent data makes way for a stable and seamless transaction experience for all businesses and financial institutions. Besides, the network allows a much more simplified and smooth reconciliation process.

● Multilateral Network

Using Visa B2B Connect’s multilateral network, you can transform and streamline the payment path as it offers one-to-many global access. Besides, it boosts the peer-to-peer exchange of essential values and interconnects large-value payments in a multilateral ecosystem.

● Interoperability

Visa B2B Connect has the ability to work alongside and together with legacy systems, which facilitates the bank’s transition to advanced future payments. Interoperability used in payment systems helps to reduce costs associated while establishing an acceptance network. Additionally, it also improved your value proposition by expanding the type and number of acceptance points for your customers/clients.

● Reduced Complexity

Using Visa B2B Connect’s centralized network, you can reduce the number of connections and relationships a particular bank needs to manage, which in turn, reduces complexities in the entire payment environment.

● Advanced Security and Fraud Protection

Visa B2B Connect’s network is strengthened by Visa’s security and advanced distributed ledger technology. In fact, Visa B2B Connect is built with a closed and permissioned network wherein all the members are trustworthy and known. Further, all your account data will be tokenized using a unique digital identity, which helps to prevent fraudulent attempts and opportunities.

● Flexible and Compatible

Visa B2B Connect provides a wide array of implementation and application options, which caters to the unique requirements of the business. You can also shift to a modern and more improved payments experience, compatible with all your existing business solutions.

● Global Connectivity and Easy Growth

This cross-border B2B payments network by Visa is developed using the brand’s unparalleled capabilities and core assets. Using Visa B2B Connect, you can enjoy a seamless same-day or next-day access to multiple currencies across the world via a single integration. The best part is the system is highly scalable, so that you can grow your brand and revenue.

Final Words

Visa, therefore, has tremendous abilities to offer a global and more flexible payment solution to all cross-border business transactions. The card brand has proven capabilities to achieve a unique and unsurpassed global network scale. Moreover, VisaNet has happily connected more than 15,500 banks and other financial institutions across the globe.

Visa, being a financial technology innovator, has successfully built thousands of strong relationships with several banks spread across multiple countries, creating a powerful network for the new Visa B2B Connect technology. Coming to the question of trust, Visa is a brand proudly carrying a decade-long track record of top-notch security, safety, and speed.

The Best Credit Card Offers for 2020 and 2021

If you have a New Year’s resolution to get your finances in order, that may include finding the right credit card. If you have a high-interest card that doesn’t provide you with any rewards or benefits, you could be missing out.

The Top Credit Card Offers for 2020 and 2021.

Discover-It Cash Back

If you want a simple credit card that pays you for your purchases, Discover-It is it. You earn 5% back on your purchases up to $1,500 each quarter. The reward categories change, but you always have options, and they are typically categories everyone spends in or specific stores everyone shops at (such as Amazon).

Discover also doubles the cashback you earn after your first year. In other words, you earn ‘free money’ if you keep your card in good standing for the year.

Citi Double Cash Card

Earn 1% back on all purchases and an additional 1% when you pay your bill. Even if you pay your balance over a few months, you still earn 1% of what you pay. So it totals out to 2% cashback as long as you don’t let interest charges take over your rewards.

The Citi Double Cash card doesn’t have a reward bonus like most cards, but it comes with a 0% balance transfer APR for 18 months. That’s a nice long period to pay off your balance before interest accrues.

Chase Freedom Unlimited

If you like tiered rewards, check out the Chase Freedom Unlimited card. There’s no annual fee, and you earn cashback year-round in a tiered manner.

It’s best for people who travel as you get the largest reward on travel purchases (5%). It also pays 3% back on restaurant purchases, 3% back at drugstores like CVS, and 1.5% back on all other purchases. So, no matter where you spend money, you’ll earn cashback.

Bank of America Cash Rewards Credit Card for Students

Students sometimes have a hard time finding a credit card that provides them any benefits besides a small credit line. The Bank of America card is a great place to start and it offers students rewards.

Students earn 3% cashback on a category that you choose, whether it’s groceries, dining out, or gas. Students can also earn 2% cashback on groceries, including Sam’s Club and Costco, and 1% back on everything else.

The 3% bonus category and 2% rewards can be used up to $2,500 per quarter, and then it falls to 1%, which is the perfect amount for students.

Look at the Credit Card Rewards you Need

Before you take just any credit card, determine your needs. What rewards will you use and what categories do you spend money in the most? Why not take advantage of what credit cards have to offer by finding the card that pays you back in ways you’ll use it and for purchases you already make?

If you aren’t sure which one is right for you, pull out your bank and credit card statements for the last year and total up your spending in each category to make the right choice.

Visa Looks to Make Plastic Cards Sustainable

Visa has an ambition to improve the world and minimize its environmental impact. Thus, they are collaborating with the CPI Card Group to produce ‘Earthwise High Content Card’ for Visa cardholders. The credit card, made of 98% upcycled plastic, would enable both contactless and contact payments. Besides this, the aim is to make cards EMV compliant with dual-interface capability.

A closer look at the credit card’s composition details shows that it comprises a post-industrial upcycled plastic, rPETG. This step makes eliminating plastic waste possible. The material does not come from scrapped plastic. The upcycled approach involves using plastic derived from existing materials or used packaging. An example could be that of the industrial products detracted from the landfills.

Moreover, the company understands the negative impact of issuing more credit cards. Despite the fact that they want more customers, they are taking this step to reduce the damage to the environment. Hence, they took it as their responsibility to make efforts for a sustainable future.

Due to recent guidelines, the use of plastic is under great scrutiny. The rampant disposal of plastics cast a significant impact on the oceans and landfills. This issue requires an immediate solution.

Douglas Sabo, a leading figure at Visa, said that the company does not produce credit cards. However, they realize their responsibility and are collaborating with companies that make cards.

It marks a significant milestone in our pursuit of minimizing the negative impact on the environment. Additionally, he pointed out that the offering will protect the environment and prove beneficial to the payment industry.

The announcement about the introduction of the Earthwise High Content credit card came with a CPI survey. The survey showed that 73% of the participants want financial institutions to operate sustainably. On the other hand, 57% of them said that they are interested in and looking forward to new cards made of recycled materials.

The Other Side of the Coin: Issuers’ Take on the Collaboration

The card’s “life cycle” is the fulcrum of the collaboration between Visa and CPI Card Group as they make it available to numerous FI issuers. The company aims to produce a card with EMV technology while being sustainable. The process will impact the material used as well as distribution of the cards.

The initial feedback has been positive and encouraging from the issuers’ side, and consumers are more than willing to embrace the development owing to its environmental-friendliness.

Kroger Will Begin Taking Visa Payments Again

In a not at all surprising turn of events, Kroger has decided to cease their ban on Visa payments across all of their 130 Smith’s Food & Drug stores.

Why the Ban?

Earlier this year, after slamming Visa’s transaction fees, Kroger decided to take action against Visa. Saying that they’ll “drive up food prices for all customers” and calling them “excessive,” they subsequently banned all Visa payments at all of their California stores, before bringing in a total ban across all 130 of their Smith’s Food & Drug stores located around the country.

Kroger CFO Mike Schlotman said when asked to comment earlier this year, “Visa has been misusing its position and charging retailers excessive fees for a long time. They conceal from customers what Visa and its banks charge retailers to accept Visa credit cards. At Smith’s, Visa’s credit card fees are higher than any other credit card brand that we accept,” and then went on to instigate the ban.

According to Visa, when asked to comment on the situation, “It is unfair and disappointing that Kroger is putting shoppers in the middle of a business dispute.”

Kroger Remains Quiet About the Reversal

Now, in spite of their reasoning for the ban on accepting Visa payments, Kroger has decided to reverse the ban, and will be accepting Visa credit cards at all of their locations across the country according to a Kroger spokeswoman. This includes chains such as Kroger, Fry’s, Dillon’s, Ralphs, Harris Teeter, and all other Kroger owned chains.

There has been no comment by Kroger or their spokespeople as to the reasons behind the ban’s reversal, nor has there been any response from Visa.

Earlier this year, shortly following the introduction of the Visa ban, Kroger went on to launch its mobile payment app Kroger Pay. Kroger Pay is a smartphone-based payment system that combines both a customer’s payment information with the company’s loyalty card with an aim to speeding up checkout times.

The company also launched a Kroger Rewards debit card, with Kroger Personal Finance CEO and corporate strategy integration lead Gary Millerchip saying “Kroger is redefining the customer experience by creating innovative ways to pay at our stores and online.”

Visa Continues To Support Mobile Gun Purchases

As the debate in the United States rages on over gun laws, some companies have been taking sides by choosing to take action. Visa, however, is one company that has refused to wade into the political fray. Instead, it has opted to continue along doing business as it has been in regards to mobile payments.

An announcement from the company came in early August that it would not block mobile payments for gun purchases. Visa Chairman and CEO Alfred Kelly made the announcement after back-to-back mass shootings in Texas and Ohio thrust issues surrounding guns back into the news. It is not a change of course for the company; instead, it was merely a confirmation that things will not be changing in regards to gun purchases.

The company’s stance regarding mobile payments for gun purchases is a different one than some of its competition has taken. PayPal and Square have opted to not allow their services to be used for such purchases.

The rationale expressed by Visa CEO Alfred Kelly as to why the company will continue to support mobile gun purchases essentially comes down to it being simply a matter of not dictating morality to the company’s customers. It is legal for people to buy guns in the United States; therefore, the company will continue to process those purchases- just as it does other things that are legal but may be considered controversial by some.

That is not to say, however, that Alfred Kelly does not hold views regarding gun legislation in the United States. In an interview with CNBC, he expressed an interest in seeing lawmakers do more in regards to gun laws. However, no matter his personal views, he is not currently interested in applying them to the company that he heads up.

The company is not alone in this view, either, in regards to not dictating morality to its customers. Mastercard has also taken a similar stance. Its CEO Ajay Banga expressed similar sentiments as those of Alfred Kelly- refusing to determine what is right or wrong. As far as he is concerned, if it is legal to own an item his company will help customers purchase it.

Meanwhile, CEOs at other companies have taken a less neutral stance regarding guns. Apple CEO Tim Cook is one notable example of this. After the shootings in El Paso and Dayton, he took to Twitter demanding action.

Visa Pushes for Mobile Payments at 2020 Olympics

The Japanese government and Visa have teamed up in an effort to bring mobile payments to the 2020 Olympics in Tokyo.

The payment giant is preparing new payment experiences for visitors, athletes, and citizens attending the 2020 Olympics, an effort that will support the “Cashless Japan” campaign that is designed to boost mobile payments to 40% by 2045 from today’s 20%.

Visa is currently working to increase acceptance of digital payments with merchants ahead of the Summer Games, especially in quick-service restaurants and convenience stores, while connecting athletes with the concept. Mobile payments technology will be featured at the Olympic Village, Olympic venues, and throughout Japan in an effort to improve the experience for fans.

In a press release, the payment network stated that Japan is a unique opportunity with “the world’s third-largest economy” with commerce that “remains predominantly cash-based.”

About one-fifth of payments in Japan are digital compared with 60% in the United States, 70% in China, and 90% in South Korea, which has one of the highest adoption rates in the world.

The payment technology sponsor for the Olympics is also planning unique innovations for the Summer Games, including wearable technology, new mobile applications that use digital cards, and biometric payment authentication.This isn’t the first time the payment giant has worked to improve digital payment acceptance for the Olympics. In 2016 at the Rio Olympic Games, payment-enabled rings were provided to athletes. These rings used NFC technology and microchips made by Gemalto. The rings were water-resistant and did not need batteries or charging. Nearly 4,000 NFC-enabled point-of-sale terminals were implemented for the wearables and also to boost mobile payment acceptance at important Olympic venues in the city.

The Japanese government and payment network hope that improving access to digital payment technology will give the typical Japanese person more reason to use digital payments in the future.

Japan has been slowly moving toward the global cashless trend for the last few years. Japan has made the “Cashless Japan” effort such a priority to reduce the need for manpower at retail stores as the country faces a declining and aging population and labor shortage.

The government has another incentive for boosting digital payment technology: shifting away from cash improves transaction transparency and makes it easier and more efficient to collect taxes. In 1997 after a financial crisis, South Korea was able to successfully push forward cashless transactions to boost its economy and control taxes by offering a tax deduction for credit card purchases, among other incentives.

In Japan, however, cash has remained king thanks to a low crime rate that allows citizens to feel safe carrying even large amounts of cash, readily available ATMs, and high trust in cash.

Visa Introduces APIs for Merchants to Facilitate Installment Payment Plans

Installment payments are currently being used with great success in other countries but it has yet to become prevalent in the U.S. Based on some recent news from Visa, that might soon be changing.

The latest from Visa

In June, Visa revealed its intention to enter the POS installment payment business. By using APIs, this would allow businesses that accept Visa credit card payments through merchant services to offer installment plans to their customers.

An installment plan is set for a certain duration, during which customers make payments in equal amounts on a schedule, until the payment total equals the purchase price. For example, the classic as seen on tv ads used to say “three easy payments of $19.99” – that was an installment payment structure.

These installment options will be offered by Visa Next, a new website that is expected to become a source of innovative and exciting payment solutions. This particular product will be available in January 2020.

What this means for merchants and consumers

Businesses that use merchant services to facilitate credit card payments will be able to take advantage of this new opportunity. But how will this benefit them? Good question.

Giving consumers payment options is always good for business. These installment payment plans are likely to accomplish that because they make it easy and quick to set up the plan. However, this isn’t the case right now. Our standard method, right now, for offering consumers a payment plan involves the consumer getting a loan for the amount of the purchase through a third party lender, and paying it off through them.

Here’s how it normally goes:

Consumers are given installment options.
They must sign up with a certain provider.
Consumers must complete the application process.
They may or may not get accepted.
If accepted, they can apply their funds to the purchase.
This must be repeated for each different merchant.

With Visa using APIs for installment payments, none of that will be necessary. Customers will simply be given the opportunity to choose a payment plan using an account they already have.

This will be more convenient for customers, making it easier for them to set up a payment plan, which could increase sales for businesses that offer these plans.

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