Installment Financing Is Not a Sign of Financial Struggle, but Rational Budgeting
Statistics from jewelry retailers Given and Grenardi show how consumer attitudes have changed in recent years. While installment purchases accounted for up to 5% of Given’s total turnover four or five years ago, that figure has now risen to 10-15%.“Customers’ awareness has changed significantly,” says Natalja Reinoja. “Installment financing is no longer seen as a sign of financial hardship or something to be embarrassed about. More and more people who could easily afford to pay for the product outright are choosing to use it. They simply ask themselves: why should I spend thousands of euros from my account at once when I can spread the cost over six or twelve months conveniently and without additional fees?”Birgit Randma, Head of Merchant Partnerships at Inbank, agrees that consumers increasingly evaluate purchases within the context of their overall household budget.“If financing doesn’t make the purchase more expensive, why would someone deplete their savings or emergency fund? The money remains in their account, and their peace of mind remains intact,” she says.
Fifteen Critical Seconds
When it comes to an emotional purchase in the best sense of the word, speed and convenience are crucial. The longer the purchasing and payment process takes, whether online or in a physical store, the greater the likelihood that the customer will start to hesitate and ultimately abandon the purchase.Inbank’s solution enables a credit decision to be made in just a matter of seconds, which is an important sales advantage for merchants. Reinoja confirms this:“The longer the purchasing process takes, the greater the chance that the sale will fall through, both in physical stores and online.”In recent years, the criteria merchants use when selecting a financing partner have also evolved.“Previously, the focus was primarily on cost, specifically how much the merchant had to compensate the bank for offering an interest-free period,” says Randma. “Today, customer experience, conversion rates, and technical simplicity are the top priorities.”When a financing solution is easy to integrate into an existing business and does not complicate the work of customer service staff, both the merchant and the customer benefit.To address customers’ concerns about sharing personal information in a store environment, convenient digital solutions have been introduced. Sales staff can direct customers to a digital application journey, allowing them to complete the application and sign the agreement privately on their own smart device.
85% of Customers Know Their Payment Preference Before Entering a Store
A consumer behavior study conducted by Kantar Emor at the end of 2025 revealed an interesting insight: as many as 85% of customers have already decided before visiting a store how they intend to pay for their purchase, either in full or in installments, with the latter becoming increasingly popular.This means that offering flexible payment solutions is critical. If a customer plans to spread the cost of a purchase but the store does not offer that option, they may simply choose a competitor.According to Reinoja, paying in installments allows customers to leave the store with the item they truly wanted, rather than settling for a compromise that merely fits their immediate budget.In some cases, it can even help customers save money. If a purchase is postponed for several months while saving up, the price of the item may increase in the meantime. For example, rising global gold prices could make a piece of jewelry significantly more expensive by the time the customer is ready to buy.
A Better Alternative to Costly Discounts
Many merchants worry that offering Buy Now, Pay Later (BNPL) solutions or 0% interest campaigns creates an additional financial burden because they must pay service fees to the financing provider.Birgit Randma challenges this concern with a simple mathematical comparison.“It’s true that the merchant compensates the financing provider for the service, but that compensation is significantly lower than the discount the store would otherwise need to offer to motivate a customer to buy,” she explains.“Consumers are typically persuaded by discounts of 15%, 20%, or even 25%. The fees paid to financing providers are in an entirely different and much lower range.”As a result, interest-free purchase financing becomes a strategic tool for merchants. It helps maintain product pricing and margins while giving customers exactly the financial flexibility they need at the moment of purchase.The discussion also explores the fascinating differences in consumer purchasing behavior across Estonia, Latvia, and Lithuania, and how these differences influence payment preferences and financing solutions.
