In Spain, the prevalence of installment payment methods has been growing steadily in recent years. Around 50% of consumers in Spain in 2024 expressed interest in financing their purchases through installment 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 analyzed 150,000 transactions in which an installment 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 installment payment options in your business.

What's in this article?

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

What are installment payments?

Installment 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 installments over a period of time.

How do installment payments work?

Typically, installment 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 installment payment options.
  
• The customer reads and accepts the installment terms and conditions. The business must clearly state any upfront costs and whether any fees are included in the installment payments.
  
• In some cases, the financial institution with which the business or payment method provider works might need to review and approve the installment 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 installment payments until the debt is paid in full, according to the payment schedule outlined in the contract.
  

How many installments can a payment be divided into?

The number of installments 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 installments.

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

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

What options are there for installment payments in Spain?

Let's look at the different installment 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 installment payments. One of Klarna's most popular options is paying in three or four installments. 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 installments. 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 installments is 36, allowing customers to pay for goods in more manageable installments. Aplazame is available from Stripe as an external payment method.

Credit cards with installment payments

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

Consumer credit with multiple installments

Many banks in Spain offer consumer loans for the purchase of large, expensive items. In most cases, this type of installment 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 installments. Sometimes promissory notes are issued before the installment payments are completed.

Personalized options from large retailers

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

Advantages and disadvantages of installment payments

While installment 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 installment 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 installment 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 installments, the business will have reduced liquidity.
  

Advantages of installment 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 installment payment plan.
  

Disadvantages of installment payments for customers

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

FAQs about installment payments in Spain

Are installment payments the same thing as loans?

No, installment payments and loans are not the same. Although both involve dividing an amount into installments to be paid, loans are provided by banks or credit companies and include interest charges. Installment 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 installments in Spain?

Installment 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 installments.

Does paying in installments involve paying interest?

Whether interest is involved depends on the type of installment 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 installment that varies based on the total purchase amount (e.g., $3 for each of the 12 installments for a $200 item).

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

The basic requirements for using the installment 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 installment payments?

Ecommerce platforms and businesses selling high-value products gain the most from offering installment 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 installment payments be paid down early?

Whether installment 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 installment payments don't carry additional fees.