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How to boost your business in Latin America with zero-interest installments

How to boost your business
in Latin America with zero-interest installments



Which single change is almost guaranteed to give your Latin American e-commerce sales a substantial boost? Offering local shoppers the option to pay their purchases in multiple installments. Zero-interest financing plans are essential to the Latin American shopping and payment experience.

The culture of paying for any type of goods via affordable financing plans was born in the 1980s. With rampant inflation in Brazil, local merchants began to offer payment plans to consumers at the point of sale, with lower interest rates than those offered by credit cards.

These efforts were extremely successful, and paying in installments became firmly ingrained in Latin American shopping habits. When online shopping entered the scene, the habit had stuck.


Installments in e-commerce

In e-commerce setups, installments are offered to merchants by the local acquiring banks for a fee. Merchants usually have lots of flexibility to customize the offer: they decide which products to make the option available for, for which ticket amounts, and so on.

Merchants, in turn, make the option available to their customers at the point of sale. In most cases, the total purchase amount remains the same whether the consumer opts to pay in installments or not: merchants simply incorporate the financial cost into the prices of their products, and installments are perceived as ‘interest-free’.

In either case, the issuing bank of the credit card assumes the risk for installment plans; merchants are guaranteed to receive full funds. Merchants may also opt to receive the full purchase amount up front for an additional fee.


Local variations

The popularity of installments varies somewhat from country to country, but across Latin America, they are a must-have if you want to be competitive.

In Brazil, the largest Latin American market, shoppers are still very much in the habit of paying in installments, both on- and offline. In 2016, an estimated 60% of online purchases were made using an installment plan.

Argentine attitudes mimic those of Brazil; installments are extremely commonplace. According to the most recent e-commerce survey conducted by the local industry association, 70% of shoppers opted to use an installment plan in their last e-commerce purchase.

In Mexico and Chile, an estimated 30-50% of e-commerce purchases are made using installment plans, but partial payment is typically reserved for large-ticket purchases such as consumer technology, home furnishings and travel.

In Colombia, on the other hand, consumers may opt to pay in installments for purchases as low as $10. This is also true for e-commerce where installments are used for an estimated 40% of total spend.

The outlier is Peru, where banks and acquirers have not made installments widely available. BBVA attempted a pilot in 2016, but the product did not gain notable traction. Peruvians either access their revolving credit on credit cards, or make the payment in full at the time of purchase.


Enabling zero-interest installments… profitably!

While offering installment options does come at an added cost, the return on this investment is likely to be high. In Latin America, your sales volume can increase gloriously when installments are enabled.

But here is the challenge: in order to let your local shoppers pay in installments, you need a local acquirer. If you are trading cross-border, the option will not be available to you.

Worldline has the expertise to help you in that regard. With two decades of Latin American online payment experience, Worldline has created a solution that enables you to connect to all the relevant local acquirers via one single, integrated interface. You can easily process payments — including installments —across the continent, without needing to set up local entities or even have a local bank account.

To learn more about enabling installments and optimizing your payment strategy for successful e-commerce expansion in Latin America, contact one of our friendly experts today.