Splitit requests authorization from the shopper’s card company, reserving the total purchase amount from the shopper’s available line of credit. Then, each month, according to the shopper’s payment plan, the installment amount is collected and Splitit requests authorization for the remaining balance.
Here is an example of how the service works for a customer buying a TV totaling $1,000 in 5 installments of $200 each:
- Splitit obtains authorization from the credit card company for the full purchase amount of $1,000. This is not a charge on the card; it is simply reserving $1,000 from the shopper’s line of credit.
- The credit card company then charges the shopper $200 for the first payment.
- During the second month, Splitit requests authorization for the outstanding purchase amount of $800 and charges the shopper the second installment of $200.
- This authorization and charge process continues until the full $1000 is collected–in this case, for 5 months.