It would be a stretch to pretend that I am delivering you a scoop This morning, the news was announced in a press release issued in the middle of summer: within a few weeks, Desjardins customers will be able to pay for their purchases at certain merchants by paying in installments, using their Visa.
“Payment by installments, isn’t that what we’ve been offered for ages in appliance stores? You will ask.
Yes, but it’s about something else here, the cutting edge of retail trends: the ability to pay in four installments for a trinket at 100 piastres, without interest. Shoes, jeans, bike, cellphones, computers … from the most insignificant to the most painful bill, they can all be broken up into small pieces spread out over time.
This is the big thing now. According to the magazine Forbes, Americans will have consumed $ 100 billion in goods of all kinds with the help of this new payment method. We would only be at the beginning of the wave.
And she squirts so far. Quebecers are gradually adopting the system, and the trend will accelerate with Desjardins taking a plunge.
But how does it work ?
The concept is called ” Buy Now, Pay Later (BNPL – buy now pay later). It was popularized by fintechs, these emerging companies at the crossroads of technology and finance: Afterpay, Klarna, Affirm, Quadplay …
The latter form partnerships with retail chains, and these pay in return to be able to offer this mode of financing. The merchants know the song, they already have to headphone to use the credit card system.
Amazon has teamed up with Affirm, an alliance that will soon allow the online merchant’s customers to spread a bill for … $ 50. At Apple, instead of spending $ 1400 all at once for an iPhone, it has been possible for some time to buy it directly from the manufacturer for $ 59 per month for two years, again thanks to PayBright, from the company Affirm.
PayPal also offers this possibility on its platform, just like Square, which bought AfterPay.
Desjardins and Visa
These initiatives are encroaching on the ground of credit card issuers and banks, so it is no surprise that Visa fights back. The company has partnered with Global Payments to offer a similar solution to Visa card holders, and it will be Desjardins clients who will be the first to be able to test this method of financing within a few weeks.
According to the cooperative, installment payment will be possible with purchases of $ 200 and more from merchants who join the system (it’s Visa’s job to recruit merchants). When a customer pays their bill with their credit card, the terminal will automatically offer them the option of paying in installments, which will later be charged to the card, without interest. Once a payment appears on the statement, it will be added to the credit card balance.
A passing wave?
I’m going to confess to you, I don’t have the knack for sniffing out the innovations that are going to be imposed. When I first saw this proposal in a clothing store two years ago, I thought it was a hoax. “Who will pay for their laundry on an installment basis?” It is therefore ben cave! I told myself the same thing when the Car2go carsharing network and Spotify, the subscription music service arrived.
Now I could put on my priest’s cassock and give you a sermon. However, I myself will probably be tempted to use it for the purchase of my next phone or a bicycle, as I have converted to subscription music and carsharing.
As with traditional credit, payment by installments calls for more consumption, which is confirmed in the turnover of traders. However, and time will tell, it seems less toxic than credit cards that accumulate debt until the explosion. As there is no interest and few late fees, the offender is quickly locked out of the system.
This is not for all that wonderful, on the contrary, consumers will burn themselves. Above all, what will complicate the management of our finances! Now to our multitude of subscriptions will be added monthly payments, there will be enough to lose the ball.
The next trend: another paid subscription service to track all of our cash flows.
OK, this is not a scoop no more. It already exists.
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