MasterCard to let shoppers pay off card transactions in instalments

They have followed this instalment plan idea in Greece for years via the local issuers/acquirers like Alpha Bank. Very popular I believe.

Visa has had this for many years...

Odd how this attributed to the schemes. It is actually a bank/issuer led initiative. Ran a bank in South Africa where this was done more than twenty years ago. Hardly innovation. Actually all about issuers making more money, charging more interest and extending more credit. Scratching for headlines!

Yes you're right it is an "issuer product". But the schemes systems have to be able to regognise it as an instalment payment so they can pass that information on to the issuer.

Nothing new under the sun - this was a feature of the "Long" vouchers (ie punched card size) used by the Airlines & Cruise Lines in the 1970's and 1980's where you coul 'circle' on the voucher whether you wanted to pay in 3 / 6 / 9/ 12 months instalments. Some Country/Issuers allowed it on on non-Airline/Cruise transactions as well.

Am I missing something here? Paying by credit card allows consumers to defer their payments over a lengthy period of time anyway (though at a (mostly) exhorbitant APR! Presumably this will allow the consumer to opt for a defined payment term at a significantly reduced APR? If so that's a good thing isn't it? Though I guess that 'participating retailers' will be incurring an additional cost to enable them to 'offer this service' (and presumably fill in some of the APR profit gap for the card issuer). Will it really 'win new business' for retailers? Time will tell I guess, but in principle I quite like the idea. I just hope it's clear to understand and simple to implement.

@PeterRobinson: Not sure how this thing will work via MC but, in India, issuer banks have been offering this feature for several years. Just that it happens ex-post facto rather than at the POS. Typically, a day or two after the cardholder receives their monthly statement containing a particularly large charge, the bank calls them and offers to convert this charge to equated monthly installments. (More recently, online statements have started featuring a "Convert to EMI" hyperlink, so cardholder can opt for it without any human intervention from the bank.) As far as I know, the switch to EMI happens without any APR. Sometimes, there's a small fee but that's also rare. Apparently, banks do this to ease the burden on the cardholder and thereby boost loyalty - rather than make money via APR. On the contrary, deferred payments attract hefty APR.

While HSBC is busy giving it's consumer's a nudge when their spending is off limits, MasterCard is busy encouraging people to spend more. Kind of hard to separate the good from the bad as both activities create money. However, there should be a focus on the consumer's welfare and I believe HSBC has a better product. Plastic monies would soon be a thing of the past anyway with P2Ps and the elusive blockchain technology.

Installments are/were hugely popular in Turkey and the issuers created a very competetive landscape in the loyalty space by signing partnerships with the retailers. For example, at a Mango store Yapi Kredi's 'World' card holders would get 8 installments as opposed to Garanti's 'Bonus' card, and so on. However, the installment feature has caused the outstandings and the revolvers to sky-rocket and the uncrevored debt increased as a result. Cardholders are now more cautious. So, certainly something to be wary of. A bit like interest free balance transfers at POS! 

A week ago, I went shopping at a leading fashion store chain. I paid with credit card. At the bottom of the chargeslip, I saw an "ad" from a third party company - presumably the PSP for this fashion store - saying "Ask for Instant EMI on Bank Cards anywhere you shop". So, I asked. The cashier had no clue about this EMI "product". He then called the Floor Manager, who didn't seem to know much more than the cashier but he knew enough to chide me for not asking for EMI before handing over my credit card. I replied by asking him how I could do that when I only learned about EMI from the chargeslip - there was no POP material anywhere - which came out after my credit card was processed. He had no answer to that and quietly slipped away. 

I just mused to myself that this is just one more retail payment "innovation" that's likely to bite the dust because of poor marketing by its vendor combined with apathy at the retail shop floor.