If you run a business in Italy – whether e-commerce or a physical store – you might have noticed that customers appreciate flexible payment solutions. Installment payments for stores – known as buy now, pay later (Buy now pay later) – have become a key competitive method, especially for midrange to high-end products.

This article explores instalment payments, including their increasing use online and in-store and how businesses can integrate them in a practical way. We also examine in-store instalment payment management from an accounting perspective, partial payments, and invoices that comply with Italian tax regulations.

What's in this article?

• What are instalment payments?
  
• Statistics on instalment payments in Italy
  
• How online instalment payments work
  
• How instalment payments work in stores: Four available options
  
• How to integrate instalment payments into online stores
  
• How to integrate instalment payments into physical stores
  
• Accounting management for instalment payments
  
• How to issue invoices for instalment payments
  

What are instalment payments?

Instalment payments allow customers to obtain a product or service immediately and pay for it over time via recurring payments. For those who manage businesses in Italy, this solution can become a strong competitive advantage. Offering instalment payments can help make high-value items accessible, increase conversion, and reduce abandonment during the purchase phase.

The instalment payment process is the same whether the customer makes payments online or in-store. The customer receives their purchase immediately, and the payment provider manages future charges automatically. This can simplify administrative work. Therefore, instalment payments can be an advantage for the customer and a tool to increase sales and overall satisfaction with the purchasing experience.

Instalment payments: What are they?

Instalment payments allow customers to obtain a product or service immediately and pay for it in several instalments over time. It can be used for online and in-store purchases. The amount is divided into regular instalments and automatically charged to the payment method the customer selects.

Statistics on instalment payments in Italy

In Italy, there has been steady growth in the use of instalment payments – both for online and in-store purchases. This trend is confirmed by market analyses that indicate continuous expansion in the total value of transactions managed through Buy now pay later solutions. This is known as gross merchandise value (GMV).

According to the Italy Buy Now Pay Later Business and Investment Opportunities Databook 2024, the GMV of instalment payments in Italy reached over US$6 billion in 2023. Projections show that it could exceed US$12 billion by 2029, nearly doubling in six years.

For those who run in-store or e-commerce businesses, these figures suggest that offering instalment payments is an increasingly decisive competitive factor. Italian customers show growing interest in flexible payment options – such as instalment payments – especially with midrange to high-end purchases. Integrating these solutions means responding to a real demand and preparing for a market that continues to rapidly change.

How online instalment payments work

Instalment payments for online purchases can be fully integrated into checkout. After the customer adds the product to the cart, the following steps occur:

• The customer selects the instalment payment plan directly at checkout on the e-commerce site.
  
• The provider verifies the customer's eligibility in a few seconds.
  
• The customer receives a clear and transparent instalment plan, such as payments in 3, 6 or 12 instalments.
  
• The customer confirms the purchase, typically paying a deposit and receiving the item immediately.
  
• The instalments are automatically charged to the selected payment method without any further action.
  

Buy now pay later's ease of use is one of the reasons why instalment payments for digital stores are gaining popularity. They can reduce the financial burden perceived by the customer, improve conversion, and increase the average order value. In addition, the system allows businesses to offer flexible payment terms without assuming the risk of nonpayment. Payment management is entrusted to the provider.

How instalment payments work in stores: Four available options

In traditional retail outlets, instalment payments work via advanced point-of-sale (POS) terminals, payment links, or payment apps that support instalment plans. The customer can choose to defer payment at checkout. This is a quick and easy process that does not require the business to complete complex steps. Below, we describe the four main instalment payment options for stores.

Instalment payments via POS terminals

With many modern POS terminals, businesses can activate instalment payment plans directly from the terminal. Here is the typical flow:

• The employee enters the amount on the POS terminal.
  
• The customer selects the instalment payment option.
  
• The customer confirms on the terminal and accepts the plan.
  
• The provider handles the initial charge and subsequent instalments.
  

This method is ideal for electronics, optical and furniture stores, as well as for all businesses that want to offer modern solutions without introducing organisational complexity.

Instalment payments via payment links

Many businesses choose an even simpler procedure that includes generating instalment payment links. The business sends the link to the customer via text message, WhatsApp or email. The customer opens the link on their smartphone, selects the instalment plan, approves it, and completes the first instalment.

Instalment payments via Satispay

Satispay has introduced a feature called "Pay in 3," which allows customers to split their purchases into three monthly instalments directly from the app. Here are the steps:

• The business activates the Pay in 3 feature within their Satispay business profile.
  
• At the time of payment, the customer selects Pay in 3 instead of immediate payment.
  
• The customer receives the product immediately, and the business receives the full purchase amount.
  
• Satispay charges the customer for the three monthly instalments and fully manages the repayment plan.
  

This solution allows stores to offer instalment payments without the risk of nonpayment. This method also maintains the same ease of use as traditional transactions made through Satispay.

Instalment payments via Pay-Oh

Pay-Oh is an Italian fintech solution that allows businesses to offer in-store instalment payments in a simple and immediate way. Its operation is based on a Buy now pay later model designed for the in-store experience.

For the customer, the typical process is quick. At the time of payment, the customer opens the Pay-Oh app, selects the amount to be paid, and chooses an available instalment plan. This is generally from 3 – 36 months, depending on the service activated. After confirmation, the customer receives the product, and the business receives the full amount. Pay-Oh directly manages the financial process.

For stores, Pay-Oh is an innovative solution that is similar to online instalment payment features but applied directly to physical points of sale. It is most useful for businesses targeting young customers or for midrange priced items. Instalment plans can improve conversion rates at the time of purchase in these cases.

Comparison table of instalment payment methods available for stores

How to integrate instalment payments into online stores

Businesses can easily integrate instalment payments into e-commerce stores. For example, Stripe Payments makes it a simple process because the platform provides immediate tools to activate Buy now pay later solutions.

The fastest option is to activate instalment payments directly from the Dashboard. You can enable instalment payment methods without writing code. In this case, integration is particularly intuitive: a single activation allows eligible companies to accept various instalment payment options without additional requests, checks or technical configurations. This is thanks to dynamic payment methods that automatically display the most relevant options for each customer.

If you prefer a ready-made, optimised payment flow, you can use Stripe Checkout. It is a pre-integrated payment module that natively supports instalment methods and automatically displays them when available. Alternatively, you can use Stripe Payment Links. This solution creates payment links containing instalment payment options that you can insert into e-commerce sites or send directly to customers.

What are the best instalment payment systems for e-commerce?

The best instalment payment systems for e-commerce are those that offer fast approval procedures, transparent costs, and easy integration with the online platform. Among the most widely used are Buy now pay later providers such as Klarna, Afterpay, Clearpay, Scalapay and PayPal Pay Later. The choice depends on the industry, average order value, and desired checkout experience for customers.

How to integrate instalment payments into physical stores

Even traditional retail outlets can offer instalment payments swiftly and securely. There are two main methods:

• POS terminals with built-in instalment plans
  Some advanced POS terminals allow customers to select instalment payment plans directly at checkout. Customers use their cards or digital devices, accept the proposed plans, and complete purchases in seconds.
  
• Payment links
  Businesses generate links that activate instalment payments. Customers open links from their smartphones and complete the instalment payments.
  

Here are the main advantages of instalment payments for businesses with physical points of sale:

• They offer the same flexibility as instalment payments for online stores.
  
• They can increase the likelihood that customers complete purchases.
  
• Automated payment management by providers reduces the risk of nonpayment.
  
• Customers receive a modern and professional customer experience.
  

Accounting management for instalment payments

The accounting management of instalment payments can seem complex, but it is actually based on clear tax principles. When a customer purchases a product or service and chooses to pay for it in instalments, the transaction remains a single sale from an accounting perspective. The time of the transaction – and value-added tax (VAT) liability – is determined at the time of delivery of the goods or completion of the service. This is not affected by payments being received in several instalments.

Revenue recognition

In Italy, instalment payments do not change the timing of the transaction, which occurs when the goods are delivered or the service is completed. Therefore, even with instalment payments, the revenue must be recognised immediately.

Management of partial payments

The instalments are recorded as partial payments linked to the same original invoice. Each collection must be recorded on the date of actual payment. It is important to use reconciliation systems that neatly associate each instalment with the invoice issued. This helps businesses keep accounts clear and easily manage large volumes.

Risk management

For online stores with Buy now pay later options, the risk of nonpayment is often transferred to the provider. This makes financial management easier and avoids complications in the event of outstanding payments.

Fees

Provider fees should be recorded as operating costs. It is good practice to keep a monthly statement to compare direct sales and instalment sales for stores.

Taxes

VAT and taxation are not affected by instalment plans because purchases remain single transactions. This greatly simplifies management.

How to issue invoices for instalment payments

When a customer chooses to pay in instalments, billing is managed according to specific rules. Even if customers make payments in several instalments, businesses must issue invoices as single transactions. This is because the sales remain single transactions from a tax perspective.

The invoice must show the total amount of the goods or services sold, regardless of the number of agreed upon instalments. In the description or notes section, indicate the instalment plan (e.g. "Payment in three monthly instalments").

What to include on the invoice

The invoice should include the following:

• Total price
  
• Instalment payment terms
  
• Additional costs charged to the customer (if provided for in the contract and permitted by law)
  
• Method of payment used
  

Providing this information gives the customer a transparent view of the entire transaction, and the business maintains accurate documentation for accounting and tax purposes.

Instalment receipts and collections

Subsequent instalments do not require the issuance of new invoices. If useful for internal management or communicating with the customer, it is possible to issue simple receipts or acknowledgments referring to the collection of individual instalments. Each collection must still be correctly recorded in the accounting system and linked to the original invoice.

VAT

VAT is applied to the entire amount at the time the invoice is issued, as the tax is levied when the goods are delivered or the service is completed. The fact that the customer pays in several instalments does not change how VAT is handled.

Organisational advantages

This system simplifies the management of instalment payments because it separates the fiscal phase (e.g. single invoice) from the financial phase (e.g. split payments). This makes it possible to maintain orderly accounting even when instalment sales volumes increase.