What is Credit Card Installment? The tool that makes buying and selling easier.
Credit card installment is using a credit card to purchase goods or services and dividing the payment into installments instead of paying the full amount. There are both 0% interest options and interest-bearing options subject to the conditions of each card.
In an era where the market is highly competitive and the business world is shifting towards fully cashless transactions, accepting credit card installments as a sales channel is more than just an option. It is a crucial tool for driving sales, expanding business opportunities, and increasing sales efficiency for entrepreneurs in the current market.
This article will take a deep dive into what Credit Card Installment is, and why it is a key helper in making daily buying and selling processes more flexible and agile.
Key Takeaways
- Credit card installment is a key tool that helps merchants reduce price barriers for high-priced items by dividing the customer's large lump-sum payment into monthly installments.
- Credit card installment services help increase customer purchasing power, stimulate faster purchasing decisions, reduce cart abandonment rates, and make it easier to close sales on high-priced items.
- Choosing a stable and PCI DSS-secured Payment Gateway is the heart of building maximum confidence for customers and protecting your business's financial data.
- For online stores, accepting credit card installments increases sales opportunities because you can run 0% installment promotions with leading credit cards to attract customers during major campaigns.
Article Contents
- What is Credit Card Installment?
- Pros and Cons of Credit Card Installments
- How to Start Offering Product Installments
- Benefits for Online Stores Accepting Credit Card Installments
- Cautions When Accepting Credit Card Installments
- Advantages of Choosing KGP for Installments: Increasing Flexibility for Easier Decisions
- Frequently Asked Questions (FAQs)
- Credit Card Installments: A Useful Financial Tool for Every Lifestyle
What is Credit Card Installment?
Credit Card Installment is when a merchant accepts payment for goods or services and chooses to receive payments in periods or monthly installments instead of an immediate full payment from the customer. This allows customers to avoid using a large lump sum at once, while the merchant receives money from the installment payments via a Payment Gateway according to the conditions agreed upon with the service provider.
- 0% Interest Type: When the merchant joins a promotion to absorb the transaction fee (MDR) on behalf of the customer. This is considered a highly effective strategy to create purchasing incentives.
- With Interest Type: Subject to the conditions of each card.
To ensure merchants receive the maximum return from promotions and manage costs efficiently, they should check promotion and installment conditions, as well as calculate the Merchant Discount Rate (MDR) thoroughly before presenting offers to customers.
*Use as necessary and pay back in full on time to avoid interest of 9% - 16% per year.
Pros and Cons of Credit Card Installments
Accepting credit card installments is a financial option that has both pros and cons for business operations. Understanding both sides will help merchants plan their marketing and finances carefully.
Pros of Credit Card Installments
Credit card installments help increase customer purchasing power, allowing your business to break down price barriers for high-priced items more easily. This directly affects the stimulation of purchasing decisions and helps merchants close sales on high-margin products more effectively.
Cons and Precautions
Despite the advantages, merchants must be aware of long-term burdens, such as bearing the Merchant Discount Rate (MDR) for 0% installment transactions or managing account reconciliation if the Payment Gateway system does not have comprehensive management tools.
How to Start Offering Product Installments
Accepting payments via credit card installments is just the beginning, but generating sales requires precise planning and strategy.
Survey the Market and Competitors
Offering installment promotions requires comparison with competitors to make your offer attractive and competitive. Check competitors' 0% promotions and find the right time to launch your campaign, such as during annual sale festivals or bonus issuance periods.
Determine Appropriate Installment Periods
- Short Term (3-6 months): Suitable for products where you want to close sales quickly and manage cost risks regarding installment fees (MDR).
- Long Term (10 months or more): Suitable for High-value or premium-priced products. Use as a special promotion to attract customers who are hesitant about paying the full price.
*Use as necessary and pay back in full on time to avoid interest of 9% - 16% per year.
Benefits for Online Stores Accepting Credit Card Installments
The heart of business is making the buying and selling process smooth. Whether it is an offline or online store, managing the point of sale so customers can pay conveniently is crucial in this era. Therefore, having an online installment system or an online credit card payment acceptance channel is a key tool that increases convenience and enhances the chance of closing sales for merchants in the digital age.
Increase Marketing Opportunities and Sales
Having a credit card installment service opens opportunities for businesses to reach new customer groups who find it convenient to spend via card immediately. This service supports all business models, expanding payment acceptance boundaries beyond just cash or transfers, making it easier and faster for customers to decide to buy.
Increase Flexibility for Customers
When merchants can support split payments or credit card installments under flexible conditions, it stimulates customers' purchasing decisions more easily, especially for high-priced items, directly resulting in merchants closing sales faster and easier than before.
Close Sales Easier
Having diverse payment channels and online payment acceptance services, specifically credit card installments, helps provide an easy, convenient, and secure payment experience, which is a key factor in building confidence and a good impression for the store.
Cautions When Accepting Credit Card Installments
Successfully accepting credit card installments requires good planning. To ensure smooth and credible business operations, several key factors must be considered:
- Choose a reliable service provider with high-security systems.
- Check integration with the store's platform.
- Study and compare fees in detail.
- Design a payment process that is simple and uncomplicated.
- Publicize the new payment channel to customers.
Advantages of Choosing KGP for Installments: Increasing Flexibility for Easier Decisions
KGP offers a comprehensive online payment system service that supports credit card installments via easy-to-use Payment Links. This is a crucial tool for supporting business growth and increasing sales efficiency for entrepreneurs.
Deliver a More Convenient Payment Experience
To increase convenience for customers, the payment system allows customers to choose to securely save their card information in the system. When customers return for repeat purchases, they can pay immediately in just a few clicks, which saves time and greatly reduces the hassle in the repeat purchase process.
Safe and Worry-Free
Merchants can be confident in every transaction with international security standards like 3D Secure and PCI DSS (Payment Card Industry Data Security Standard) that help protect customer payment data at every step, making transactions safe, credible, and building confidence for both buyers and sellers.
Frequently Asked Questions (FAQs)
What is BNPL? Is it different from credit card installments?
BNPL is "Buy Now, Pay Later" which does not use a credit card for installment payments. However, credit card installment is a service that requires a bank/financial institution credit card and usually has a minimum purchase condition for 0% installments.
What is a Payment Gateway?
A Payment Gateway is an intermediary system that acts to connect and securely transmit customer credit card data to the bank for approval, including installment transactions. This system helps online stores accept payments and set up credit card installments quickly and in accordance with security standards.
How much do I need to spend to be able to pay in installments?
The minimum spending amount eligible for credit card installments depends on the conditions of each bank and promotion. Generally, spending of 500 Baht or more per sales slip is required for 0% installment promotions, or spending of 1,000 Baht or more for converting to installment payments later.
Credit Card Installments: A Useful Financial Tool for Every Lifestyle
Credit card installments are a key that helps increase market opportunities by reaching new customer groups, while reducing limitations in customers' decisions to buy high-priced items, leading to faster sales closures.
For entrepreneurs looking for online payment services that meet the needs of both customers and businesses, KGP is ready to connect every sales opportunity with diverse channels, including Credit/Debit Cards, Meta Pay, PromptPay QR, Mobile Banking, Payment Links+, P2P Transfer, E-Wallet (TrueMoney Wallet), and ODD (Online Direct Debit). These services cover every business need in terms of security, speed, and reliability in every transaction.
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Reference
- Bank of Thailand. (2025, February 8). https://www.bot.or.th/content/dam/bot/fipcs/documents/FPG/2568/ThaiPDF/25680030.pdf
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