Whether as a response to budgetary constraints or as a means of purchasing pleasure, split payments are emerging as the promise of a new consumer experience. But between optimised transformation and consumer protection, the regulator will have to set the rules.
The recent Kantar study carried out for Floa on payment practices in Europe reveals that three out of four Europeans make online purchases and that 35% of them have already paid in instalments or by deferred payment. "Compared to our European neighbours, France appears to be a leading country and in a way, a nominal 'use case'", observes Marc Lanvin, Deputy Managing Director of Floa. The study highlights other realities. Europeans make more use of payment facilities for their purchases of household appliances, high-tech products, furniture/decor and travel.
In France (69%) as in Europe (63%), consumers are considering paying in instalments for purchases of less than 500 euros.
Half of those who use payment facilities do so to balance their budget, while almost one in five Europeans also use BNPL (Buy Now Pay Later) to indulge themselves and 13% to indulge others. If split payments are of interest to both merchants and consumers, it is because of their simplicity. Presented as a payment facility, since it cannot exceed a period of 90 days, it evades the regulation of classic consumer credit. Interest rates considered negligible, no pre-contractual information or right of withdrawal... the framework is much more flexible. Today, fractional payment is a real groundswell in France and Europe," continues Marc Lanvin, "and the presence of a fractional payment offer ranks third among the criteria for the choice of a brand by the consumer, behind price and the brand's reputation.
Split payment: a growth lever to be preserved
A real expectation of consumers, 65% of whom are afraid of being refused a payment facility when making an online purchase, "split payment provides a response to budgetary constraints, but we must beware of illusions. Split payments concern all customer profiles, particularly young people and executives," notes Marc Lanvin. While it fulfils a threefold promise of increasing the average basket, the frequency of purchases and optimising conversion, according to Pierre-Marin Campenon, Director of Partnerships for Younited, split payments should be seen as an alternative payment solution to regulated credit, when it is relevant. "Beyond a hundred euros per month, few consumers are able to really absorb the monthly payment. For e-retailers, the key is to offer as complete a range of payment solutions as possible."
Heading towards more regulation?
Nicolas Pinto, Marketing Director of Skaleet, a banking and technology platform offering a range of financial products, considers that "DSP1 and DSP2 have enabled payment institutions to enter this market and develop new services to address the needs of both customers and e-retailers. Thus, while fractional payments are a natural part of the banks' value chain, they are now competing with a number of fintechs in this fast-growing market.
There is still some vagueness in BNPL's practices," says Yves Eonet, CEO of Skaleet. These are grey areas in which many players slip in and it is very difficult for the regulator to anticipate the arrival of new offers". "The regulator must set the rules to support the customer without breaking the BNPL dynamic, which is also one of the levers of economic recovery," confirmed Marc Lanvin. The regulatory process has already begun, with the aim of protecting the consumer first, then the merchants and the electronic payment ecosystem. This regulation should contribute to transparency and the clarification of practices, while bearing in mind that "the immediacy of the response is crucial in today's consumption patterns. The Scrivener period (Editor's note: The Scrivener Act sets a legal cooling-off period of 10 days for the acceptance of a loan offer) seems to me to be from another era," Marc Lanvin emphasises. This regulation should therefore contribute to the transparency and clarification of practices! The European Commission is currently working on a project to revise the 2008 directive on consumer credit, which aims to unify practices and costs and places transparency and information provided to the consumer at the heart of the issues. This essential regulation should be in place by the end of 2022.
E-merchants between a rock and a hard place?
While split payments are already emerging as the major trend for 2022, it is essential to identify the best solution for merchants and their customers among the many market leaders. Oney, Cofidis, Adyen, Alma, Scalapay, Pledg... competition is fierce between the split payment players. Between historical providers such as Cofidis Retail and Oney, credit specialists, and fintechs that offer fractional payments as a service, the right choices must be made. Too much acceptability would expose the customer to over-consumption. Too low, and the transformation rate could be reduced...
Comments