Visa to make money from installment purchases of home appliances - Information portal

Visa to make money from installment purchases of home appliances

15 Июля 2019, 14:48
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Visa to make money from installment purchases of home appliances

54b64f7204768881dd58693adfdc9e7a.jpgVisa, a major global payment system, decides to grasp for a piece of the POS-financing market demonstrating annual growth of 15%, Forbes reports. 

According to the publication, the POS-financing market reached $1.2 trillion in transaction volume globally in 2017. The consumers’ interest to financial products allowing them to buy home appliances, bicycles and clothing in installments has been growing in the last decade. 

For example Affirm, a fintech start-up led by PayPal cofounder Max Levchin, processed more than $2 billion in installment payments in 2018. The service is available at Walmart stores and has a $3 billion valuation, according to PitchBook. 

Swedish Klarna and Afterpay serve 60m and 3.5m customers, respectively. JPMorgan announced a POS-financing feature to be added to the Chase mobile app. Mastercard informed about acquiring Vyse in April to enter the same market. 

However, the POS-financing market is still fragmented. Most American retailers do not offer installment plans, and besides, there is no single fintech company that would dominate the market. 

Visa wants to change the situation on this market. They use APIs to let merchants access their technology and add features to their card readers to allow consumers pay for purchases in installments either before, during or after the purchase. 

Visa refused to comment on a probable revenue growth when consumers choose to pay in installments. One option may be to charge merchants additional fees. Thus, Visa received about $25 billion in revenue from transaction processing in 2018.  

Another option would be to make the installment feature free for merchants. This would boost consumers’ interest in using their Visa cards, and as a result, transaction volume growth for Visa. 

It was reported earlier that QR code payments would be free for retailers.


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