Alternative payment solutions are on the rise, giving consumers more purchasing power by allowing them to buy-now-pay-later. As new providers of payment solutions pop up, retailers are given more opportunities to offer their shoppers pay-later schemes. Global payment technology solution company SplitIt just announced a new partnership with Stripe to facilitate payments in an easier manner.
SplitIt says that it is the only installment solution with global reach, as it works differently from competitors such as Klarna or Afterpay in that it uses a customer’s existing credit to enable pay-later options. Its technology allows customers to pay with a credit card and still opt to pay in installments, yet with extra benefits such as no application time, no late fees, 0 percent interest and the chance to use their own credit card rewards.
SplitIt’s new partnership with Stripe will help the growing alternative payment provider extend its reach to new retailers. Stripe’s technology automates SplitIt’s on-boarding process for merchants to accept Splitit, therefore making it easier for the company to sign new merchant deals.
FashionUnited spoke with SplitIt’s vice president of global marketing, Gil Levy, to learn more about the growth of alternative payment solutions.
FashionUnited: Which generations or demographics of consumers are most likely to use a payment solution? What is the average purchase cost for orders that pay with Splitit?
Gil Levy: SplitIt is geared towards a slightly older demographic, compared to other payment solutions providers. Our customers are on average around 35-years-old and over, working individuals, home-owners and prime credit card users, usually with two or three credit cards. These are consumers who are on the more established.
We see these consumers making transactions of all different sizes on SplitIt - we see transactional fees of 200 dollars and we see fees up to 40 or 50 thousand dollars. This is because people are using SplitIt across numerous retail categories - jewelry, fashion, furniture and home goods, sporting goods and even medical equipment. It’s all over the map for our particular solution, though across all of our merchants, the average order value is above 800 US dollars.
We see SplitIt’s service almost like an investment tool - it allows customers to purchase higher quality items than they would without the option to pay in installments. They are still purchasing the same types of items that they were already in the market for, but a higher quality that might last them longer. In this way, SplitIt serves as a budgeting and investment tool.
What benefits do retailers experience from payment solutions?
Merchants to see about an 80 percent increase in average order value, decrease in cart abandonment and a decrease in order returns. SplitIt offers payment installments, yet with a quick checkout that can work globally. It has the highest approval is because there's no need to do credit checks as we use the customer’s existing line of credit.
Why is Splitit able to offer installment plans on credit cards when other payment solution providers do not offer this? What is this advantage? Where does profit to Splitit come from?
SplitIt activates installments from the customer's existing credit card. The system acts the same as regular checkout; the only differentiator is that the customer can choose the number of installments he or she wishes to pay in. The system then charges the first payment and puts a hold on the card for the entire remaining amount. At the end of that month, SplitIt will charges the next payment and put a new hold on the new remaining balance of the purchase. There will always be a collateral held, yet this is done using the customer's available credit to secure the transaction. The available credit must already exist in the customer’s account.
This system allows SplitIt to be the only payment solution provider with no credit footprint. We are a technology company rather than a financial institution, so we will never show a user’s credit. This gives us more flexibility than competitors because we don’t have as many regulatory issues as financial institutions have. It also enables us to be global, and operate in more countries than others.
Using credit card payments also allows us to have the quickest checkout, which is a really big advantage. This is because we don't ask for any information aside from a credit card. This is really important because we know the longer the checkout is, the more likely a cart is is to get abandoned.