For decades, paying in installments has been woven into the fabric of Latin American daily life. It is a cultural practice that allows consumers to purchase goods, from televisions to travel tickets, that might otherwise be unaffordable if paid largely upfront. In a region where consumers often prioritize whether a monthly payment fits into their budget over the total price tag, installments act as a vital purchasing enabler.

According to EBANX internal data, paying in installments can double the average order value (AOV) in Brazil and lead to a 20% uplift in revenue. Mexico sees an even higher revenue lift of 41%.

While this payment option is standard for verticals such as retail and travel, a new trend is emerging among digital service providers. Subscription merchants are rethinking their revenue models by expanding from "true recurrence" to installment-based subscriptions.

Traditionally, a streaming service or a SaaS provider, for example, charges a user fee every month. While flexible, this model can be affected by involuntary churn. Every month presents a new opportunity for a transaction to fail due to expired cards, temporary blocks, insufficient funds, or issuers’ security policies.

EBANX's analysis of merchant-initiated transactions (MIT) for subscription businesses reveals that up to 26% of credit card volume in recurring transactions can be lost due to denials caused by issues like expired or invalid cards.

To combat this, companies like Canva, Amazon Prime, Allura, and monday.com are increasingly offering annual plans paid in monthly installments. While this is more common in Brazil, it is also expanding to Mexico and Argentina. 

The difference is subtle for the user but massive for the merchant. Instead of twelve separate approval requests sent to the bank over a year, there is only one initial approval for the total annual value. The merchant secures the revenue (or the receivable) upfront, and the risk of the user canceling or their card failing in any given month vanishes.

"Installments tend to lift acquisition significantly, especially among first-time subscribers. They also stabilize churn, because customers are effectively on an annual cycle with a monthly cash-flow rhythm," explains Junia Ooi, Head of Latin America at Canva, a pioneer company in offering this model in Brazil. "Predictability improves as more users shift from monthly plans to annual commitments."

For global merchants operating in Latin America, this model solves two headaches: cash flow unpredictability and the region's complex payment processing landscape.

Leandro Carmo, Country Growth Director for Brazil at EBANX, notes that for large companies, the primary driver is financial efficiency. "The entrepreneur wants to anticipate everything. They might prefer to pay a higher fee for the installment processing, but they have already received the funds and can invest energy into the business rather than managing monthly collections."

Data from monday.com, which processes payments with EBANX in Brazil, illustrates the power of this shift in the B2B space. With a high AOV of USD 9,000, installment payments quickly grew to represent 37% of their volume processed by EBANX. This flexibility enables them to secure higher ticket sales, which can further increase with installment plans.

Another SaaS merchant revealed that an experiment to remove installments resulted in a significant drop in acquisition. The company found that without implementing installments, their conversion rate to trials would have been 4% lower, representing a multi-million dollar loss. In the past year, installments were 44% of their volume in Brazil.

While this model guarantees the merchant an annual contract while maintaining the user experience of a monthly payment, it also introduces operational friction particularly regarding credit limits and refunds.

Unlike a recurring subscription that only pings the card for USD 10 every month, an installment plan for USD 120 blocks the full USD 120 from the user's credit line immediately. As the user pays the monthly bill, the limit is released.

This can create a barrier, since credit limits can be low. In Brazil, for instance, the average credit limit for individuals with accounts in digital-only banks — used by nearly half the population — is approximately BRL 2,600 (USD ~500), according to Brazil's Central Bank data. In Mexico, 57% of credit cards have an average limit of MEX 38,228 (USD ~2,100). This means that a high-ticket annual plan could consume a significant percentage of a customer's available credit, leading to declined transactions that wouldn't happen under a monthly recurring model.

"I don't see this working for everyone," cautions Carmo. "You have to look at the average ticket and the consumer profile. Perhaps that specific consumer cannot afford to lock up their limit for the annual plan."

Ooi, from Canva, highlights managing credit limits and handling refunds as some of the main watch-outs of this model. “But when partnered with the right local payment provider, one that deeply understands consumer behaviour and credit patterns, these challenges become manageable", Ooi says.

Transitioning to installments also complicates cancellations. If a user cancels in month three of an annual installment plan, it’s imperative that the merchant have a clear policy in place. Do they refund the remaining installments, or is the contract binding?

Merchants who process with EBANX have found that clarity is key. By building specific help pages to spell out exactly how refunds are handled with installments, one merchant reported reducing their support tickets from 700 a month down to less than 20.

Despite the challenges, the model is particularly relevant for Latin America due to macroeconomic factors. In Argentina, for example, where inflation is high, installments offer a way to "fix" the price.

"In Argentina, fixing the price is important for the consumer," notes Javier Kaniewicz, Country Growth Senior Manager for South LatAm at EBANX. "People are comfortable paying in advance if it is with installments. It keeps the monthly value low, and the company secures the planning."

As subscription services fight for share of wallet in an increasingly competitive digital market, the installment model offers a compelling path: it respects the local culture of splitting payments while providing global merchants with the stability of annual revenue.

“The more time we spend in markets like Brazil, Mexico, and others in Latin America, the clearer it becomes: one of the main factors people consider when adopting new products is how they pay —does it feel natural, trusted, and already part of their daily lives? That belief has fundamentally reshaped our payment strategy", says Ooi, from Canva.