It is expected that the installment payment market reach a value of around 230,000 million euros, worldwide, in 2025. But what are the expectations of European consumers? What characteristics does the Spanish installment payment market have? Younited, Europe’s instant credit provider, answers these questions in a pan-European study dedicated to challenges of installment payments.
The survey, carried out together with the independent research institute MixFactory, in Italy, Spain, Germany, France and Portugal, identifies two main trends: the growing interest of consumers in payments spread over a greater number of monthly installments and the need to reconcile immediacy and consumer protection.
41% of consumers in the Spanish market who have made purchases between 200 and 3,000 euros have made use of deferred payment, a percentage that is above the European average (33%). Likewise, 35% are open to considering this service; and barely one in four (24%) does not contemplate this payment alternative.
In Spain, 51% of consumers who use this payment method do so especially in physical stores, the second highest percentage in Europe behind Portugal (59%). Iberia is an exception, since in the rest of the European markets analyzed, the respondents split their payments mainly for online commerce. In this sense, the main motivation of Spanish users to use deferred payment is the free service (47%). This is, without a doubt, one of the main levers for promoting this form of payment.
According to data provided by Younited, a large majority of Spaniards (70%) choose to defer payments between €500 and €3,000. the category of home appliances, chosen by 28%, is the favorite of the Spanish. Mainly, we chose to defer these purchases from 5 to 12 installments (53%). At European level, our neighbors also prefer longer periods: 54% of Germans and Italians and 40% of the Portuguese. The only exception is France, where only 22% of users choose a plan with 7 or more installments, although this may be due to the limitation of supply with those plans available.
Confidence in the entity and instantaneity
39% of Spanish consumers say that the trust inspired by the seller is essential when opting for this type of service. This factor is also a priority for the French (53%) and the Italians (42%). Being less decisive for 27% of the Portuguese and 22% of the Germans. Likewise, in Spain, 43% consider prior knowledge of the entity to be important, a key factor for contracting this service, and 14% affirm that they decided to make use of deferred payment because they knew the business. From these data it is concluded that trust is the main element, since six out of ten Spaniards are guided by trust in the business or in the entity that offers it.
In the short term, considering the large number of fintechs that are entering this niche market, the ability of these companies to offer a safer experience for customers because it is regulated, more homogeneous because it is international, and unique because it is innovative will be verified. These factors are decisive in generating this relationship of trust.
On the other hand, instantaneity is now the norm in the installment payment market. In Spain, 34% of consumers of this modality assure that the whole process lasted between 1 and 3 minutes. However, this immediacy is not appropriate for most payments with long maturities, where more extensive verification is often required. The customer experience affects the transformation, since the more steps and time it takes to complete the request, the more consumers are discouraged during the process.
At European level, in most cases, two documents are required to make an installment payment. This effort to provide a seamless customer journey and quick turnaround should be accompanied by a credit check, but this is only required for long-term installments (90+ days).
In this area, PSD2 allows a more exhaustive and rapid analysis of solvency, whatever the amount, to avoid over-indebtedness and protect the consumer. Unfortunately, it is not yet systematically available in the purchase process. In France, it was only offered to 26% of people who opted for installment payments, compared to 31% in Spain, 32% in Portugal, 35% in Germany and 38% in Italy.