The Retention Challenge Facing Card Issuers

For card issuers, BNPL’s biggest retention threat is bigger than any single lost transaction. It’s the loss of top-of-wallet status and everyday engagement, especially among younger, tech-savvy cardholders who reach for a seamless digital installment option at checkout before they reach for a card. That shows up in a few different ways:

• Lost transactions. BNPL apps, mobile wallets, and other pay-later providers all compete for the same checkout moment, and every purchase that moves elsewhere is a transaction the issuer’s card program never records. Industry research already links BNPL adoption to falling card transaction volume, and issuers lose the transaction entirely when a BNPL purchase is paid directly from a bank account, a check, or another app instead of the card. 
• A habit that sticks. Shoppers who start using BNPL spend around 20% more on average, and that lift persists for nearly six months, while Gen Z cardholders have already begun choosing BNPL over a credit card for the first time on record, often finding it simpler than a traditional card. 

• A decision made upstream. By the time a cardholder reaches checkout, the choice may already be made on the product page or in the retailer’s marketing, well before the card has a chance to compete for it, handing a fintech competitor the data and the relationship along with the sale.

Issuers are responding to this in two different ways. One is post-purchase: letting a cardholder split a transaction into payments after it has already been made, from inside the banking app. That adds predictability, but it doesn’t solve the top-of-wallet problem, since the cardholder still had to choose the card at checkout in the first place. The other is embedded checkout installments which is where banks and credit unions can compete directly with BNPL for the moment that actually decides which payment method wins.

Card-linked installments, the kind Splitit powers inside a card program, let a cardholder split a purchase into payments using the credit line the issuer already extended. The transaction, and everything that follows it, stays inside the program the issuer runs.

This directly solves the retention challenge by ensuring:

• No new underwriting or risk: Approval draws on credit the issuer already priced and approved, so there’s no separate credit decision to build or fund. 
• Interchange stays with the issuer: Because the purchase never leaves the card, the network fee attached to it stays with the issuer’s program too.
• Full visibility into the relationship: Transaction, repayment, and statement history all stay with the issuer instead of a third-party lender, so the data and the customer touchpoint never transfer to a competitor.

Card-linked installments aren’t only an issuer solution. Once installments live on the card itself, cardholders get real advantages too:

• No new credit application: Splitit uses the available credit already approved on the card they’re using, so cardholders avoid hard inquiries, checkout friction, and any impact on their credit score from applying for a separate BNPL loan.

• A seamless experience: There are no new apps to download or separate portals to manage. The installment plan simply appears on the monthly statement they are already used to paying.
• Maintained protections: They keep the built-in purchase protections, extended warranties, and fraud monitoring offered by their premium credit cards, which are often lost when using alternative payment methods.

Card-linked installments layer directly onto the programs issuers already run. Cardholders use the same card at checkout, and the installment plan appears right alongside their usual transactions and rewards. Behind the scenes, this smooth integration is exactly why installment payments for credit card issuers are so powerful. Rather than bolting on a separate system, issuers are simply extending the capabilities of the cards they already have in the market. H3: What card issuers should look for When evaluating a card-linked installment program, card issuers should look for a partner solution that: Works with existing card rails, so there’s no new payment infrastructure to stand up. Doesn’t require a new underwriting or credit decisioning process, since it draws on credit already extended. Leaves existing rewards structures untouched, so points, cash back, and other card benefits continue to accrue as normal.

Get in touch today and discover how card issuers can put card-linked installments to work inside their own programs.