In Spain, the prevalence of instalment payment methods has been growing steadily in recent years. Around 50% of consumers in Spain in 2024 expressed interest in financing their purchases through instalment payments, and "buy now, pay later" (BNPL) options are already used for 5% of online purchases in Spain.

Similarly, in a recent report from Stripe—which analysed 150,000 transactions in which an instalment payment option was available alongside at least one traditional payment method, businesses saw a 14% increase in revenue, thanks to the availability of BNPL-type methods. Providing more flexible payment options not only boosted businesses’ conversion rates at checkout but also led to an increase in their average order values.

Let’s look at the key factors to consider when offering instalment payment options in your business.

What's in this article?

• What are instalment payments?
  
• How do instalment payments work?
  
• What options are available for instalment payments in Spain?
  
• Advantages and disadvantages of instalment payments
  
• FAQs about instalment payments in Spain
  

What are instalment payments?

Instalment payments, also known as partial payments, let customers divide the total cost of a purchase into smaller payments scheduled over an extended duration of time. A common example of this payment method is buy now, pay later. When customers select this option, they pay the full purchase amount in two or more instalments over a period of time.

How do instalment payments work?

Typically, instalment payments operate in a similar manner, no matter the method used to divide the payment:

• The customer selects the product to purchase.
  
• The business then offers the customer one or more instalment payment options.
  
• The customer reads and accepts the instalment terms and conditions. The business must clearly state any upfront costs and whether any fees are included in the instalment payments.
  
• In some cases, the financial institution with which the business or payment method provider works might need to review and approve the instalment plan. If the purchase amount is relatively small, the approval process is usually immediate.
  
• The customer makes the first payment. In most cases – like with BNPL – the business receives the full purchase amount immediately.
  
• The customer makes regular instalment payments until the debt is paid in full, according to the payment schedule outlined in the contract.
  

How many instalments can a payment be divided into?

The number of instalments a customer’s payment is divided into will depend on the payment method. With BNPL, most options allow customers to defer purchases with no interest over 3, 6, 9, or 12 instalments.

For instance, the European payment method Scalapay divides payments into three or four interest-free instalments, which can be paid every two or four weeks.

Other instalment payment systems, like Klarna, provide financing options for larger purchases, allowing them to be split into up to 36 monthly instalments (with interest applied to the amount the customer needs to repay).

What options are there for instalment payments in Spain?

Let's look at the different instalment payment options your business can offer customers.

Buy now, pay later

An increasing number of businesses in Spain have begun to accept BNPL payment methods, as customers appreciate the ability to defer payments without incurring interest. In Spain, fees are typically only charged with these methods if the customer misses a payment deadline. It's therefore no surprise that BNPL has become one of the preferred payment methods for customers in Spain. With Stripe Payments, your business can accept more than 100 payment methods, including BNPL options. Here are some of the BNPL methods that businesses in Spain can use:

Klarna

Like most BNPL methods, Klarna ensures that businesses receive the full purchase amount right away, so they don't have to wait for customers to complete all instalment payments. One of Klarna's most popular options is paying in three or four instalments. This flexibility has contributed to significant success in Spain: just a year after launching in the country, Klarna had already gained one million Spanish users by 2021.

seQura

Another BNPL option in Spain is seQura, which lets customers split their purchases into 3, 6, 9, or 12 instalments. Like Klarna, seQura provides businesses with the full purchase amount as soon as the transaction is confirmed.

Aplazame

Aplazame is a BNPL method developed from WiZink, a bank in Spain. Interest begins at 0%, but businesses can raise this rate, setting their own commission. With Aplazame, the maximum number of instalments is 36, allowing customers to pay for goods in more manageable instalments. Aplazame is available from Stripe as an external payment method.

Credit cards with instalment payments

Some banks, like Santander and CaixaBank, allow customers to pay for credit card purchases in instalments as well. The terms can vary greatly between banks; for instance, Santander only allows a customer to apply for instalment payments after they’ve completed a purchase with their Santander credit card.

Consumer credit with multiple instalments

Many banks in Spain offer consumer loans for the purchase of large, expensive items. In most cases, this type of instalment payment comes with higher interest rates compared to other options.

Private agreements

Some businesses in Spain enter into agreements with suppliers, distributors, and even customers to divide payments for goods into a certain number of instalments. Sometimes promissory notes are issued before the instalment payments are completed.

Personalised options from large retailers

Large retailers in Spain often provide customers with personalised options depending on the financial institution they have an agreement with. Some retailers have their own instalment payment methods, like Amazon with its monthly payments option.

Advantages and disadvantages of instalment payments

While instalment payments offer many benefits, it's important not to overlook their potential drawbacks. Let's examine the pros and cons that affect both businesses and customers.

Advantages of instalment payments for businesses

• Increased conversion rates.
  
• Increased average order value.
  
• Better fraud and insolvency protection.
  
• Improved cash flow management with methods that deliver the full amount to the store as soon as the purchase is confirmed.
  

Disadvantages of instalment payments for businesses

• Higher fees compared to card payments or digital wallets.
  
• Risk of late payment or non-payment.
  
• If the amount is not received until the customer pays their instalments, the business will have reduced liquidity.
  

Advantages of instalment payments for customers

• They can purchase a high-value item that in some cases they couldn't afford in a single payment.
  
• They have more flexibility in managing their finances by being able to choose an instalment payment plan.
  

Disadvantages of instalment payments for customers

• Some instalment plans include interest or setup fees.
  
• Increased risk of accumulating debt that can be difficult to repay.
  

FAQs about instalment payments in Spain

Are instalment payments the same thing as loans?

No, instalment payments and loans are not the same. Although both involve dividing an amount into instalments to be paid, loans are provided by banks or credit companies and include interest charges. Instalment payments come in various forms, such as payment agreements with suppliers or BNPL-type methods, and in many cases don't involve customer fees or interest if payments are made on time.

What types of products are usually paid for in instalments in Spain?

Instalment payments are more commonly used for large purchases, such as electronics, furniture, or educational courses. Some BNPL methods also offer financing for smaller purchases: in Spain, for example, Klarna allows customers to finance purchases of €35 or more in three interest-free instalments.

Does paying in instalments involve paying interest?

Whether interest is involved depends on the type of instalment payment. While banks typically charge interest on their credit options, many BNPL payment methods do not charge customers extra if they make their payments on time. For more flexible financing options, some methods charge small fixed fees; for example, seQura charges a fixed fee per instalment that varies based on the total purchase amount (e.g. €3 for each of the 12 instalments for a €200 item).

What are the requirements for paying for goods in instalments in Spain?

The basic requirements for using the instalment payment method are that the customer is over 18 years of age and has an identification document such as a National Identity Document (DNI), but each payment provider or bank can have additional requirements.

What types of businesses should implement instalment payments?

E-commerce platforms and businesses selling high-value products gain the most from offering instalment payments. However, according to a Stripe study on the impact of BNPL payment methods, even transactions between $25 and $50 USD experienced a roughly 10% increase in conversion rates after offering this payment option.

Can instalment payments be paid down early?

Whether instalment payments can be paid down ahead of time depends on the contract terms, although this is generally allowed in Spain. For instance, seQura's Split into 3 option lets customers pay down their remaining balance using a credit or debit card, or via bank transfer. In many cases, this advance payment doesn't come with any penalties, but it's advisable to check the terms to ensure that the instalment payments don't carry additional fees.