Younited points out the evolution of fractional payments in Europe

The European instant credit specialist, Younited, has just published the results of a study on fractional payments in Europe. The study highlights the expectations of European consumers, whether in terms of immediacy or longer repayment periods. In this respect, however, France is a special case in this market.

Facts

Younited conducted a pan-European study across 5 countries: France, Germany, Spain, Portugal and Italy. 2,500 people evenly distributed in the 5 countries were asked about split payments.

The study shows that consumer interest is growing, especially for staggered payments and instantaneous services, provided that protection rules are strengthened.

Overall, more than 70% of Europeans are aware of split payments and 1 in 3 consumers use them. In detail, the rates vary from one country to another:

26% in Italy,
34% in France and Germany,
41% in Spain,
48% in Portugal.

Users cite three factors of interest for this payment method:

staggering over time,
the possibility of balancing your budget
and to make ends meet.

As far as the destination of the fractional payment is concerned, it is mostly used for the purchase of household appliances, high-tech devices and smartphones, furniture or travel.

In France, 61% of users use it to make online purchases for small amounts and short repayment periods. 35% use it for purchases over 800 euros; and 63% opt for repayment spread over 2 to 4 monthly payments.

Another particularity of the French market lies in the level of trust: 53% of users adopted it from a brand or site they already knew and which provided them with a reputational guarantee, evoking a need for reassurance that is well known in the French market.

Issues

Long-term growth: According to the Xerfi research institute, the fractional payment market should represent 25 billion euros in France and 250 billion dollars worldwide by 2025.

The challenge of extending repayment periods: depending on the legislation in force in each country (in France, fractional payments without fees, which are not considered as credit, are limited to a period of 3 months), usage varies. For example, only 22% of split payment users in France spread their repayments over more than 7 monthly installments; this proportion rises to 54% in Germany and Italy, 49% in Spain and 40% in Portugal, where offers with longer repayments are available. Nevertheless, the extension of repayment periods is a strong expectation, particularly in France where the average amount of purchases concerned is also expected to increase in the coming months.

Prespectives

The democratization of fractional payments continues apace, despite the risks and a still unclear regulatory environment. The revision of the European directive is expected in September 2022. It should address the following key points: the obligation to display a clear schedule of payments before taking out a loan, prior checking of customer accounts, credit checks and limits on real interest rates.