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Splitit instalment credit model proven in many countries
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Splitit instalment credit model proven in many countries

News Desk
News Desk
January 31st, 2023
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Alon Feit
“It was a unique phenomenon,” Mr. Feit recalled. “People needing to make expensive purchases but not wanting high APRs split them into instalment payments using their existing MasterCard or Visa.”

Had that option not existed, customers were limited to applying for retail credit cards and hoping they were approved, Mr. Feit explained.

Many were not. For those that were, if they missed one payment, they were hit with huge fines and high interest rates.

The process is simple, Mr. Feit added. When the customer swipes their card at a participating retailer, they choose the number of instalments. As long as they make the monthly payment, there are no interest charges.

“Fewer credit checks, it’s all good for the consumer,” Mr. Feit said. “It is free and easy.”

Merchants pay for the service, and they do not mind, Mr. Feit explained, because they enjoy higher customer conversion rates, purchase averages, and ultimately more sales.

“People say ‘where is the catch’,” Mr. Feit said. “There is no catch. Retailers want to facilitate the purchase for the customer.”

Card issuers are Splitit fans too, because it keeps more purchases with them and away from other payment options, Mr. Feit added.

“We were one of the first three companies to be invited to Visa’s fin-tech lab in London.”

While the instalment range tends to be between two and 12, it can be extended, Mr. Feit said. In Argentina people can have as many as 36 months.

Splitit simply uses existing unused credit space, Mr. Feit said. According to the latest Federal Reserve report available at the time of our interview in October at the Money20/20 conference, 73 percent of available credit lines go unused at any one time. That equates to $2.7 trillion in available credit space.

“It is a huge capacity,” Mr. Feit said.

Mr. Feit stressed he is not advocating for everyone to max out their credit card, but if someone has a clear need for a large purchase they may otherwise forgo and the pay off their card each month, Splitit enables them to safely make that buy.

Because it is an existing card, the cardholder has already been approved by the issuer and all needed underwriting has been completed, Mr. Feit said.

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