Visa InstallmentsVisa Breaks Into BNPL...But is it Good for Business?

August 19, 2022 | 9 min read

visa installments

In a Nutshell

Visa has officially thrown its hat into the ring to keep pace with rival brands in the BNPL landscape. This article will discuss the merits of the Visa Installments platform, from its basic functions to its potential upsides and pitfalls.

Visa Installments: What is it? What Should Merchants Know About the Technology?

It’s no secret that installment-based payment schemes — commonly known as “buy now pay later” or “BNPL” payments — are quickly gaining popularity in modern commerce.

According to Visa, global installment payment options represented $1.6 trillion in market value  in 2020; a 5% year-over-year increase. Conversely, credit card expenditure declined by 4% during the same period. So it’s only natural that Visa would see the benefits of this swiftly growing market and want a piece of the action.

The recently-launched Visa Installments platform is Visa’s first foray into the BNPL space. Will it catch on, though? Let’s take a closer look at the platform to find out if it should.

What is Visa Installments?

Visa Installments

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Visa Installments is a payment platform created by Visa to provide consumers with additional payment options at checkout. Using Visa Installments, cardholders can select and agree to an installment plan at checkout using an existing Visa account.

Visa Installments aims to make it easier for cardholders to select how they want to pay for a purchase. Through the new system, participating banks and merchants can offer customers an installment payment plan at checkout with Visa cards they already use. Although Visa Installments is still in the beta stage, several pilot programs have been launched to get the platform off the ground.

Essentially, the platform is Visa’s answer to popular buy-now-pay-later payment options. This space is currently dominated by third-party providers like Klarna and Afterpay, but Visa and other brands are moving in, too. BNPL is so popular, in fact, that nearly 60% of online shoppers have used the option to make purchases they might otherwise have avoided.

Currently, only Commerce Bank offers Visa Installment payments as an option for active account holders. That’s expected to change as the program gains traction among consumers seeking uniformity across the BNPL landscape, though.

How Do Visa Installments Work?

Using a Visa-specific application programming interface (or API), Visa Installments allow consumers to select and set up their preferred payment method. They can do this before a purchase or during the purchase. They can even convert a previously selected payment option post-purchase.

Visa Installments


Consumer opts-in for installments pre-purchase

Visa Installments

During purchase

Consumer prompted at merchant checkout to pay with installments

Visa Installments


Consumer converts a recent card transaction into installments

The following example shows how a Visa Installments payment plan could work for a large ticket purchase of $800 paid for over 4 months at 0% APR:

1st Month 2nd Month 3rd Month 4th Month
$200 Installment $200 Installment $200 Installment $200 Installment

With the above basic repayment structure in mind, Visa offers three payment installment models at each stage of the transaction process. These models differ according to the stage at which the consumer is provided an option, who is presenting the installment plan, and who is covering the initial credit.


Every financial institution that opts to participate in Visa Installments will be responsible for managing its own installment program.

Once participating merchants have the framework in place to offer Visa Installments, they can access and customize their payment experience through the following steps:

Step #1 | Create a Plan

Visa provides an API for issuers to create and define installment plan attributes such as:

  • Duration of installment loan
  • Participating merchant and cards
  • Interest and fees

The API will guide users through how to create the right plan for their needs.

Step #2 | Check Eligibility

Acquirers, technology platforms, and merchants use an API to look up eligible installment plan(s) for a transaction. The merchant can display eligible installment plans and costs to the cardholder during purchases.

Step #3 | Select Plan

Merchant confirms that the cardholder has selected an installment plan for a given transaction.

Step #4 | Convert Plan

The API enables issuers to convert the original transaction into an installment plan.

Step #5 | Schedule Plan

Issuer uses API to schedule payments for installment transactions. The service will look up cardholder status and calculate monthly installment payments due. This way, issuers can manage the general ledger and post to cardholder statements correctly.

The Benefits of Visa Installments

The data is clear: diverse payment options lead to more sales for merchants. In fact, up to 50% of customers said they would cancel a purchase if their preferred payment method is not available.

While many consumers like the idea of making payments for items they want, factors such as credit score, fees, and lack of flexibility may encourage them to seek alternative financing methods. No doubt realizing they were losing money to third-party upstarts, Visa decided to get into the BNPL game.

New technologies can mean new threats. When it comes to fraud prevention, make sure you’re covering your bases.


With Visa Installments, there’s something in it for everyone involved in the installment payment process:

Visa Installments


Increases payment options on existing cards in mobile wallet

Visa Installments


Helps increase sales volume and conversion rates

Visa Installments

Financial institutions

Help increase cardholder engagement and loyalty with a new revenue stream

Visa Installments


Help protect against volume erosion; new value-added service for merchant offerings

Visa intends to release capabilities on Visa Developer and allow clients to develop and pilot installment experiences to offer to their customers. This is pending participation with acquirers, issuers, and merchants. Regardless, as the platform gains steam in the near future, consumers can expect to see Visa Installment options become more widely available.

Risks Associated With Visa Installments

As Visa Installments are new and not currently offered to the general public through multiple sources, there isn’t much information available on its actual workings yet. However, we can examine Visa Installments by using Mastercard Installments (Visa’s primary peer) as a point of comparison.

Much like Visa, a large portion of Mastercard users have expressed a desire for more businesses to offer installment payment options. To satisfy that demand, Mastercard reinstituted and updated their payment installment platform to accommodate the modern BNPL surge. Since Visa and Mastercard tend to mirror each other’s policies and practices, it was only a matter of time before Visa instituted its own installment plan.

There are relatively few drawbacks to report about Visa or Mastercard’s payment installment platforms so far. That said, there are a few potential downsides that merchants and lenders should be aware of:

Costly System Integration

Whenever merchants make adjustments to existing payment portals, there is an expectation of increased cost. This may be due to staffing, OS or payment terminal alterations, or other unforeseen costs. There is still a bit of uncertainty about what the Visa Installments platform will cost to integrate. However, this might be a factor that merchants find prohibitive.

Liability Exposure

Parsing out payments in increments can lead to a few issues. There’s the threat of elevated liability for fraud and delinquent payments, for example. Also, what if the customer doesn’t honor the terms of the purchase? Even with built-in fraud protections and other measures negotiated between lenders and cardholders, trouble can arise.

Potential Fees & Risk Exposure

While BNPL chargebacks aren’t really a thing, there is still a lot of uncertainty surrounding any new payment option. Merchants are urged to take risk into consideration for Visa Installments, and always have a plan to defend against fraud.

Payment installments are extremely popular and profitable for all the reasons we’ve listed in this article. However, merchants shouldn’t take BNPL purchases for granted. Preparedness and planning are prerequisites for success when adopting new technology.

Are Visa Installments Good For Business?

Visa Installments could help merchants and lenders meet consumer demand for increased payment diversity while keeping overhead comparatively low. That isn’t to say, however, that participation will be easy or immediately successful.

Merchants and lenders are encouraged to have a solid strategy in place for chargeback and fraud management before they implement any new payment options.

Visa Installments is a forward-thinking addition to working payment systems. But, to achieve success, merchants must always plan for the eventualities few can fully avoid.

Chargebacks911® is perfectly placed to help you navigate the payments landscape. If you think payment industry changes might negatively impact your business, contact us today for a free chargeback analysis. We can help you examine your risk profile and offer solutions to keep your business safe.


What is Visa Installments?

Visa Installments is a payment installment platform created by Visa to provide consumers with additional payment options at checkout. Using Visa Installments, cardholders can select and agree to available installment plans at checkout, through existing Visa accounts.

What is "buy now, pay later"?

Buy now, pay later, commonly abbreviated to BNPL, is a payment installment platform that allows consumers to break up larger purchases into smaller increments. BNPL is typically offered through third-party service providers, and requires either no payment up front, or just a partial payment. Usually, BNPL payments are interest-free, but this is not exclusively the case.

Does Visa offer buy now, pay later options?

Up until now, no. Visa Installments is the network’s first foray into the BNPL and payment installment ecosystem. It seeks to provide a broader range of payment options for consumers.

How do Visa Installments payments work?

Utilizing a Visa-specific application programming interface (or API), Visa Installments allow consumers to select and set up their preferred repayment method in advance of a purchase, during the purchase, or even convert a previously selected payment option post-purchase.

Are installment payments a good idea?

Payment installments are certainly profitable and popular, but merchants shouldn’t take BNPL purchases for granted. As with any new payment option or technology, there’s still a degree of risk involved. Preparedness and planning are prerequisites for success when adopting new technology.

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