Visa introduces APIs for installment payment solutions

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Visa introduces application programming interfaces (APIs) that allow issuers and merchants to offer in-store and online payout solutions for purchases made with existing Visa cards, such as Press release.

US Consumer Sentiments About Installment Loans and Alternative Financing

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The company is partnering with clients around the world such as CyberSource, Kotak Mahindra Bank and PayU to drive its APIs and plans to make them available to its clients and partners in January 2020 as part of Visa Next, its new platform for digital payment solutions.

Here’s what it means: Visa is responding to the popularity of point-of-sale (POS) financing and its threat to business operations.

Knowledge of POS financing options hasresurrectedin recent years, and consumers are interested in using them for all types of purchases. Half of U.S. consumers would prefer to use an installment loan over other payment options for purchases under $ 250, meaning these offers are gaining traction for more than wholesale ticket purchases.

And they should have a big effect: Business Insider Intelligence forecastsOnline credit e-commerce payment volume will grow from $ 27 billion in 2019 to $ 76 billion in 2024.

As alternative financing grows in popularity, especially among young people customers who do not have credit cards but are looking for more flexible means of payment, point-of-sale financing platforms could steal shares from credit cards in particular, which in turn would pose a threat to networks like Visa and their issuing partners, who take note and react.

The overview: Launching these APIs for in-store and online point-of-sale financing allows Visa to compete with both startups in the space and traditional competitors who are already chasing the market.

  • These offers can help prevent Visa from disintermediating itself, especially because it brings its solutions in-store. As an established company with pre-existing business relationships, Visa may be able to convince merchants to offer its POS financing solutions in place of, or at least in addition to, those of startups like Klarna, Afterpay and Affirm who have largely focused on e-commerce payments. What can make Visa’s offers the most attractive is that they can be used in-store so that there is no gap in their availability, which could bring partnerships and in turn , from the volume to the platform; this is particularly important given that Klarna and others brought their solutions to the store.
  • Visa also follows competitors like MasterCard and Amex who have already made fundraising games. Incumbents have responded to the increase in alternative financing options by dipping their toes into point-of-sale financing themselves: Mastercard recently bought Vyze and Amex has its own flexible financing initiatives. So it is important that Visa also presents its own solution to keep pace. For consumers, access to Visa’s solution could make a particular card more attractive, which could encourage top-of-wallet status and encourage ongoing spending. These advantages could ultimately strengthen Visa’s attractiveness as a partner for issuers looking for ways to differentiate themselves as point-of-sale financing takes off.

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Elaine R. Knight

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