German neobank N26 has launched a flexible instalment payment solution which allows customers to retroactively split past purchases and pay them back over time.

The N26 Installments solution, which has been launched to customers in Germany, is intended as an alternative traditional loans or buy-now-pay-later products by focusing on past purchases already paid for in full.

The bank said that eligible N26 customers in Germany will be able to pay for purchases between €50 to €500 in value made up to 4 weeks before in 3 to 6 installments, with zero late payment fees, instantly giving them access to up to 82.71 per cent of the original purchase price. The repayment schedule can be split over 3 to 6 months.

Customers will be immediately reimbursed the original cost of the chosen purchase, minus the first installment. Payments will be deducted automatically from their account every month, and reminders will be sent the day before a payment is due.

The move is intended to give customers the power to manage their spending retroactively in the N26 app and access funds straight away if needed.

According to a research carried out by N26, 45 per cent of customers in Europe would consider splitting payments for a large purchase into installments, while 16 per cent would consider taking a loan, and 12 per cent would pay with a credit card.

Gilles BianRosa, chief product officer at N26 said: “We know that consumers tend to approach lending and credit products with care, especially because of concerns that these may encourage them to spend more than they can afford to, building up large debts that they may struggle to pay off.

“We see N26 Installments as a responsible alternative to traditional loans or buy-now-pay-later products as it focuses on past purchases already paid for in full. N26 Installments helps customers go back in time and split the payment retrospectively to unlock financial flexibility immediately as it is needed,” he added.

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