Inflation shortened credit card financing and left the maximum term at 6 installments - Infobae
Source:
www.infobae.com
January 30, 2024
Both in the official Now 12 style plans and in the rest of the options, payment in installments with plastic money is limited to 3 or 6 months. Strong growth in debit card use
In the image, a payment point next to a credit card. EFE/Oskar Burgos/Archive
The effects of inflation on credit ended up having a strong impact on the terms for financing in installments using credit cards. Both in the official plans strongly promoted by the previous Government and in the offer of payment in installments generated by banks and cards of the financial system, the options of 3 or 6 installments appear almost exclusive. Uncertainty leads merchants and consumers to avoid longer terms due to the undoubted difficulty in knowing which interests are appropriate.
Regarding the universe of installment payments designed by the Government, in the fourth quarter of 2023 the use of Now 12 fell from 29% to 16% of financing compared to the same period of the previous year, while Now 6 remained stable and Now 3 grew strongly, from 35% to 53%. In this way, one out of every two credit card installment purchases is made in only 3 months . Outside the official plans, the situation is repeated: 88% of financed purchases are in 6 or fewer installments, with only 2% of payments being made in one year or more. The data comes from the Payway Index, a report on the use of payment methods in Argentina.
“The preference continues to strengthen among users and businesses for short financing alternatives, both in the 'Now' plans and the rest of the options,” commented Payway's Head of Institutional Relations, Julián Ballarino.
The shortening of the deadlines was finally formalized with “Simple Fee”, the plan that will replace Ahora 12 . According to the current Government, it will operate with 3 or 6 fixed installments. Its main advantage will be in the interest rate, since it will be well below inflation. A financing cost of 85% of the interest rate for fixed terms was stipulated, today located at 110% (annual nominal rate). In this way, the rate will be 93.5%.
“Simple fee” will be used for both virtual purchases and physical stores. It will only work with bank credit cards from February 1 to May 31. All types of commercial items will be included in the plan, from supermarkets to appliance or clothing stores, as long as the products to be sold are nationally manufactured.
In this way, the digitalization of money is strengthened, in the sense that the amount of money that is extracted to be used in cash falls, the great enemy to defeat in the world of payment methods. “The common use of electronic and digital payment methods and the increase in their acceptance in businesses continue to drive bankization,” commented Ballarino.
He also provided data on the strong growth of contactless technology, which still has a long way to go for merchants and users to get used to the fact that the card, debit or credit, must be brought close to a terminal instead of being handed over to a seller. This is common in most countries. “Payments with contactless technology grew by 355% compared to the 4th quarter of 2022, this is explained by the simplicity of its use since the client does not hand over their card, making it the most secure system,” said Ballarino.
Finally, the areas in which credit card payments grew the most in the year-on-year measurement were supermarkets with 72%, travel, tourism and airlines with 40% and restaurants with 26%.
Source:
La inflación acortó el financiamiento con tarjeta de crédito y dejó el plazo máximo en 6 cuotas
Tanto en los planes oficiales estilo Ahora 12 como en el resto de las opciones, el pago en cuotas con dinero plástico se limita a 3 o 6 meses. Fuerte crecimiento del uso de la tarjeta de débito
www.infobae.com
January 30, 2024
Both in the official Now 12 style plans and in the rest of the options, payment in installments with plastic money is limited to 3 or 6 months. Strong growth in debit card use
In the image, a payment point next to a credit card. EFE/Oskar Burgos/Archive
The effects of inflation on credit ended up having a strong impact on the terms for financing in installments using credit cards. Both in the official plans strongly promoted by the previous Government and in the offer of payment in installments generated by banks and cards of the financial system, the options of 3 or 6 installments appear almost exclusive. Uncertainty leads merchants and consumers to avoid longer terms due to the undoubted difficulty in knowing which interests are appropriate.
Regarding the universe of installment payments designed by the Government, in the fourth quarter of 2023 the use of Now 12 fell from 29% to 16% of financing compared to the same period of the previous year, while Now 6 remained stable and Now 3 grew strongly, from 35% to 53%. In this way, one out of every two credit card installment purchases is made in only 3 months . Outside the official plans, the situation is repeated: 88% of financed purchases are in 6 or fewer installments, with only 2% of payments being made in one year or more. The data comes from the Payway Index, a report on the use of payment methods in Argentina.
“The preference continues to strengthen among users and businesses for short financing alternatives, both in the 'Now' plans and the rest of the options,” commented Payway's Head of Institutional Relations, Julián Ballarino.
The shortening of the deadlines was finally formalized with “Simple Fee”, the plan that will replace Ahora 12 . According to the current Government, it will operate with 3 or 6 fixed installments. Its main advantage will be in the interest rate, since it will be well below inflation. A financing cost of 85% of the interest rate for fixed terms was stipulated, today located at 110% (annual nominal rate). In this way, the rate will be 93.5%.
“Simple fee” will be used for both virtual purchases and physical stores. It will only work with bank credit cards from February 1 to May 31. All types of commercial items will be included in the plan, from supermarkets to appliance or clothing stores, as long as the products to be sold are nationally manufactured.
Use of the debit card
At the same time, the Payway Index highlights the growth of the debit card as a means of payment and not only as a tool to withdraw cash. A relevant fact in this sense is the use given to the volume operated with a debit card: 65% of these funds were spent to make purchases in stores, while a year ago it was only 53%. As a counterpart, in the last four months of 2023, 30% were withdrawn at ATMs, while a year ago this percentage exceeded 42%.In this way, the digitalization of money is strengthened, in the sense that the amount of money that is extracted to be used in cash falls, the great enemy to defeat in the world of payment methods. “The common use of electronic and digital payment methods and the increase in their acceptance in businesses continue to drive bankization,” commented Ballarino.
He also provided data on the strong growth of contactless technology, which still has a long way to go for merchants and users to get used to the fact that the card, debit or credit, must be brought close to a terminal instead of being handed over to a seller. This is common in most countries. “Payments with contactless technology grew by 355% compared to the 4th quarter of 2022, this is explained by the simplicity of its use since the client does not hand over their card, making it the most secure system,” said Ballarino.
Finally, the areas in which credit card payments grew the most in the year-on-year measurement were supermarkets with 72%, travel, tourism and airlines with 40% and restaurants with 26%.
