An Israeli company is hoping to make installment plans a routine part of credit card transactions in the U.S., relying on retailers, banks and other partners to promote its technology.
PayItSimple Ltd.'s U.S. unit, PayItSimple USA Inc., unveiled its service in late September and has already signed up retailers, according to Stacy Fassberg, vice president of marketing for the company, which has offices in Herziliya, Israel, and New York City.
PayItSimple's service, available only in the U.S., allows consumers to create installment plans on charges made to their existing credit cards. The option has proven popular in other countries, but in the U.S., "consumers might be a bit skeptical at first," Fassberg said.
The e-commerce sites and brick-and-mortar stores working with PayItSimple will help overcome any concerns, she said. "Our merchant partners are really going to help spread the word about PayItSimple, as they are the ones looking to add real value to their customer's shopping experience."
Fassberg would not identify PayItSimple's clients, though she said the brick-and-mortar stores are primarily in the New York area.
The installment plans take effect at the point of sale, with cashiers asking customers if they'd like to split up their payments. If they say "yes," PayItSimple takes it from there, managing and authorizing payments using technology patented in 2012, Fassberg said.
"The whole transaction is fully secured at all times, meaning the merchant has no greater risk of doing this than he or she has with a regular credit card transaction," Fassberg said. Retailers can take payments over time, or collect them all at once at a discount.
More than 95 percent of PayItSimple transactions are approved, she added. Denials mainly come when consumers try to exceed their credit limits.
Retailers are not the only distribution channel PayItSimple is eyeing. The company also hopes to work with banks, independent sales organizations and companies that build e-commerce sites.
Banks may fear loss of interest income from consumers who choose installment plans, Fassberg said. But they may see an uptick in card usage, which brings in fee income. PayItSimple also could displace other deferred-payment methods, such as PayPal Credit (formerly Bill Me Later), that don't rely on bank-issued cards.
Customers can use PayItSimple whenever they purchase big-ticket items. There's no minimum, Fassberg said, but the service will make the most sense for items costing at least $100. Installment periods likely will range from three to12 months.
Many consumers are tapping only 30 percent to 40 percent of their available credit, leaving room for the kinds of payments that PayItSimple envisions them making, Fassberg added, noting that the company's intention isn't to max out people's credit cards.
In addition to avoiding yet another credit application, consumers using PayItSimple will benefit from being able to earn rewards from their existing cards, Fassberg said.