Is the era of paying for things in full at once dying? Should collection agencies stop asking consumers to pay the balance of a debt in full? It might be worth considering, thanks in part to the growing popularity of Buy Now, Pay Later plans and increasing usage of split payments.
Nearly 60% of consumers have opted for installments plans when shopping in the past 12 months and just as many chose to split payments. What is perhaps most interesting to companies in the accounts receivable management industry is that the popularity of splitting payments is highest among younger generations, which is likely to be expected, but also among those earning more. Nearly two-thirds of individuals earning more than $100,000 used some form of installment or split-payment plan in the past 12 months, compared with 54% of those earning less than $50,000. That seems counter-intuitive and is worth digging into.
Getting something now, but not having to pay for it later triggers relief in an individual, but also gives them more control over their cashflow.
Perhaps it’s a good thing, then, that Buy Now, Pay Later is the least popular form of splitting payments for just about every demographic of consumer. General purpose credit card installment plans are the most popular choice for most income brackets and age groups, followed by merchant or store card installment plans. One just needs to look at how much the amount of credit card debt we are carrying to see that we as a society are very comfortable with not paying in full for something, even as delinquency rates are trending upwards.
Any industry expert will tell you it’s the job of a collection operation to meet the consumers where they are. To make sure you are offering consumers communication and payment options that align with what they are expecting and with what makes them comfortable. It’s becoming increasingly apparent that consumers are less comfortable paying for things in full anymore.
