Some of the seven new product and feature announcements Visa announced at its May 15 user conference are starting to gain traction. Case in point: Flexible Credentials and installments.
When it was first announced, Mark Nelsen, senior vice president and global head of consumer payments at Visa, told PYMNTS’ CEO Karen Webster that one of the use cases for the ability to use one card for several different payment options would be buy now, pay later (BNPL).
Although it’s not the first example of the technology hitting the ground, Visa Canada on Thursday (June 27) announced a major new partnership that will make use of that flexibility by integrating installment plans at the point of sale.
The collaboration is with Amazon, and when shopping on Amazon.ca or the Amazon app, cardholders will have the option to select “installments by Visa” as their payment method. Amazon joins about 100 other merchants in Canada offering installments enabled by Visa. The issuing banks on Amazon — for now anyway — will be limited to RBC and Scotiabank.
Dan Iwachiw, head of product for Visa Canada, told PYMNTS that the new payment options fit into a broader strategy of offering payment choice to Canadian consumers.
“There’s no better partner to drive for us the adoption and scalability of Visa’s installment solution than working with someone like Amazon,” Iwachiw said. “We’re thrilled to build on our partnership with them and have Canada to be a first stop of this new journey. It’s a natural extension of our overall relationship and one that we’re looking to further build on and grow.”
Iwachiw noted that more issuers and merchants will be partnering with Visa Installments in Canada and those announcements will be forthcoming. The announcement follows Visa’s pattern set back in May of keeping issuers at the center of new payment options. And like Synchrony’s announcement expanding installment options with Atlanticus Holdings’ Fortiva brand for “second look” customers, Visa’s move addresses three elements in its core ecosystem: Issuers, consumers and merchants.
“We don’t think this is just good news for consumers,” Iwachiw said. “This provides consumers more choice and flexibility, but this is good news for issuers as well. It’s good news for processors, it’s good news for merchants. It’s all about providing a secure payment mechanism of transacting, just like any other traditional card purchase. But we’re just providing more choices for everyone in the ecosystem as a way to fulfill the desires of the consumer.”
Just as they are across the globe, installment plans are gaining momentum in Canada. Visa research shows 58% of Canadian consumers are interested in using installments, and it projects that by 2026, it will account for nearly 25% of all global eCommerce transactions.
That’s the top-level take. Drilling down deeper, a recent report from PYMNTS Intelligence showed that consumers are using BNPL/installments primarily for two reasons: managing cash flow and accessing credit. For the group of consumers the report calls “necessity users,” who often have lower incomes and limited access to traditional credit, BNPL offers a way to make essential purchases like clothing and groceries on a limited budget. “Choice users” have higher incomes and use BNPL as a strategic tool to optimize cash flow and manage payment for larger purchases. Additionally, choice users tend to spend more on average using BNPL ($777) than necessity users ($576).
Iwachiw said Visa’s take on the market is similar, and that the use cases for the method are growing, and the typical BNPL user is expanding from the lower-income, younger consumers that are most associated with its use.
Visa’s solution, Iwachiw noted, is incorporated into consumers’ existing credit cards, provided by their financial institutions, using the current credit limit without requiring additional credit checks. At the point of sale, it is presented as an additional payment option, offering consumers greater flexibility. For merchants, the solution maintains the standard transaction process, ensuring no disruption at the point of sale. This approach retains the security and trust associated with Visa’s established transaction methods.
“Providing consumers more choice is definitely the way we want to go,” he said. “We’ve recently made a lot of announcements at our user conference in terms of other ways that we’re looking to provide consumers more choice and more flexibility. So, this is just the start.”
