It is not always easy to pay several hundred euros cash to replace your washing machine or buy a new television. the installment payment is there to prevent you from delaying your purchase. We take stock of this mode of consumption .
If the slogan “Pay in 3 installments without charge” has long been displayed on the shelves of household appliances and high-tech , the practice was, until recently, limited to large retailers. “The rise of many fintechs such as Alma, Pledg and Scalapay has made it possible to democratize split payment for two years, by competing with credit companies such as Cetelem, Cofidis or Oney”, explains Kevin Ohana, the founder of Joe, application offering staggered payment solutions.
The Federation of e-commerce and distance selling has also estimated that split payment represents approximately 15% of the sector’s turnover since the March containment 2020, while specialists predict that it will reach 28% of the online market globally in the next five years.
Ease of payment
The players in split payment generally work with physical merchants and e-commerce to integrate this solution into their product offerings. Rather than paying 500 euros for your new IT tool, the site or the store will offer you to pay a first part immediately and then spread the rest of the payment over 2 or 3 monthly installments.
This payment facility is often offered “free of charge”. It is the merchant who bears the cost of this service, in return for an increase in his sales of 15 at 30% according to specialists. However, it happens that costs are still billed to the consumer, especially for large amounts. In this case, the cost is often expressed as a percentage of the total purchase amount.
Beware of hidden costs
At first glance, split payment only has advantages, but we must stay on our guard. As Joe’s founder reminds us: “Within the meaning of the law, if all the installments are paid within a period of less than 35 days, that is to say 3 months, it is not a question of a consumer credit but simply of a payment facility. “This nuance makes all the difference, since it implies regulations that are much less protective of buyers.
In fact, your solvency is only rarely checked at the time of the commitment. It is therefore necessary more than ever to be responsible in order to be able to assume future repayments. All the more so since even offers “3 times free of charge” can involve painful penalties in the event of late payment and thus increase situations of financial fragility. Before accepting, take the time to check these famous lines of the general conditions of sale. Faced with the risk of over-indebtedness , the European authorities are also planning to more strictly regulate split payment, for example by requalifying it on loan for more than one day.
The mini-loans controversy
Do you know the mini loan or instant loan? This is an advance not allocated to a purchase (unlike the split payment) and repayable within 3 months, which therefore also escapes the rules of consumer credit. Most recently, UFC-Que Choisir filed complaints against three companies for “deceptive marketing practices” because of the fees imposed. Bling, one of the targeted start-ups, offers for example to pay you up to 100 euros in 3 to 5 days free of charge, but against 7 euros for an instant transfer. Likewise, the Express option of Cashper allows you to receive up to 1. 000 euros in 24 hours… for a fee amounting to 30% of the borrowed amount. As for Floa Bank, the third company targeted, it applies a commission of 2, 30% on the amount which can reach 2. 500 euros. Thanks to this legal action, the consumer association hopes to encourage the legislator to regulate these mini-credits.