To facilitate its push into the U.S. market, Splitit (formerly PayItSimple) recently added its cloud-based interest-free installment payment technology as a free plugin for e-commerce merchants using the WooCommerce platform.

Splitit hopes the move will help spread the word to both merchants and consumers about offering interest-free payments from credit card purchases. The startup made its initial launch into the U.S. in late 2014, opening the New York office. Splitit's development and research base remains in Herzliya, Israel.

Splitit allows brick-and-mortar and e-commerce merchants to offer customers monthly installment payments through their Visa or MasterCard credit cards, without paying the interest on those payments.

Some larger merchants in the U.S. have tried various plans to offer consumers an easy way to make use of the credit line on their cards without paying interest, said Splitit CEO Alon Feit.

"You always see deferred payments or layaway or other programs," Feit said. "So it is not uncommon to see financing options available at the point of sale or on websites."

Splitit provides the partnerships and technology connections with issuing banks and payment gateway providers, in addition to being compliant with Payment Card Industry security standards, Feit said.

While essentially covering the interest for their customers, merchants benefit from Splitit with increased sales from consumers making purchases they might otherwise find too pricey, Feit said. Consumers register their card number and choose the number of installments they want to make on the interest-free amount of the purchase through a buy button online or at the point of sale.

Merchants using Splitit as a financing option pay processing fees that start at 1.5% of the purchase price, plus $1.50 per installment. Fees can increase to as much as 7.5% plus $1 per installment, depending on the program the merchant chooses. Splitit charges more if the merchants opt to receive the entire purchase amount up front instead of waiting on customer monthly payments.

Splitit schedules installment payments on the consumer's credit card to be paid to the merchant, plus the merchant service and funding fees so Splitit can pay the bank and get its portion of the fees. Splitit sends an e-mail message to the consumer as a reminder about payments, which show up on the monthly credit card bill as they normally would.

Consumers who stop making payments would deal with the credit card issuer, just like any other credit card payment, so the merchant does not assume a greater risk than any other credit card transaction.

"We use the consumer's existing credit line [as a deciding factor], so there is no registration process or loan approval process," Feit added.

The math adds up for merchants to try Splitit because, as the Federal Reserve recently noted, 70% of credit cardholders do not use their full credit line, which amounts to $2.7 trillion in unused credit, Feit said.

"They don't want to pay the interest on that credit," he added.

Splitit has signed up 20 independent sales organizations to sell the product in the U.S., including North American Bancard, CardConnect and PayTech. Technology partners include First Data, TSYS and Authorize.net.

The interest-free payment option resonates with consumers, many of whom haven't fully recovered from the recent U.S. recession, said Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management-consulting firm.

"Consumers have gotten very creative in ways to manage and get access to funds," Arminio said. "If this provides another option, it is a real benefit to consumers."

Another major selling point for consumers using Splitit through a merchant is keeping their card rewards in place, Arminio added.

"The ability to hold onto the rewards points is big because that is currency to people who use them for travel and other things," Arminio said. "Those things are very real, and Splitit is carving out a good niche for themselves if they establish the appropriate business model to make this work for merchants."

That hasn't been a problem so far, Feit said. Splitit has more than 150 merchants using the service, and the company will be announcing some big partners in the near future. All merchant verticals and their customers benefit, from travel to health care, Feit said.

"Merchants in many parts of the world have been operating in this manner for their customers for many years," Feit said. "They know the benefits and they know how this works."

The company's name change, done to more accurately reflect the splitting of a payment into installments and how merchants opt to cover the interest payments for their customers, came in October of 2015, about three months after PayItSimple USA began offering services in the U.K.

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