10 September 2018
In Indonesia, Indonesian tends to buy a product in credit. But since the people of Indonesia still has low use in a credit card. Therefore, e-commerce companies in Indonesia create an installment feature for every product. Long story short, you can submit a credit by using this installment feature and pay the product monthly. Even for a small product like clothes and toothpaste could be credited.
According to Wikipedia, installment is a sum of money paid in small parts in a fixed period of time. The maximum limit to pay your installment is 2 years with a specific bill for each month. While the cash method gives a direct hit to make the customer pay the price, installment feature let the customer think first and make a commitment. Since the credit method is risky and needs a lot of security method and insurance to get your profit back.
You need to decide whether you are giving all your products with credit payment method or just several products. I think it would be something weird if you make a credit for one toothpaste. Therefore, you need a minimum price for a product that could be credited by your customer. Like handphone, computer, and TV that take more than one million IDR to be purchased, you don’t need to credit a toothpaste that only needs twenty thousand IDR.
Definitely, you will increase your conversion rate by using installment feature. An easier way to purchase something instead of waiting for all the money. However, there will be some people who still want to go with a full payment. It’s still worth a try though.
The more your customer buys on an e-commerce website, the more you will get a benefit. Your customer will visit your store more if you provide a better and easier payment method. It’s an online store anyway. The faster the better.
In Indonesia itself, there are two options for installment. First, using a credit card from the conventional bank and second, using credit platform like that doesn’t need a credit card. I think we all know how the first method works. So, let’s jump to the second one instead.
The second method gives you an opportunity to purchase your product with installment payment. The platform will lend you the money and paying it right away. Obviously, there will be some forms to fill. It makes sure that you can pay your debt later. But you will not get any credit card like a conventional bank. Long story short, it’s a single payment and you don’t have to pay administration fee like using a credit card.
It’s a perfect match with installment feature since Indonesian people rarely have a credit card. Only urban people who wealthy enough use the credit card for their daily life. But for some people (I think most people), still think they don’t need a credit card and could just submit a credit form to a bank instead. This method is the difference between credit payment in Indonesia and another country.
In fact, we will never know how things will turn out. Is it good? Is it bad? The only thing we should do is try and try harder. Creating an installment feature need much effort since you have to create an extension that connected to all popular banks in your country. And if you want to create your own method, perhaps you can contact LimeCommerce and find out what we should do for your e-commerce website.
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