Interestingly, in Japan, at least until recently, the way credit cards worked is, when you buy something you'd have to say how many payments you were going to pay it off in and your bank would automatically take money from your bank account at that level.
In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up.
I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments.
I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.
Possibly not all credit cards. We have the same in Romania - a lot of credit cards come with the option to pay in interest free (few installments) or sometimes interest bearing (more installments) installments. Sometimes at participating retailers, sometimes you just click on something in the bank's site.
Your spending limit is reduced by the whole amount but those interest free installments can be useful. Esp when you get 12-24 for stuff like TVs or furniture.
Other than that option, they act like normal credit cards. Pay next month, minimum payment, huge interest if you don't pay them in full, can contest any transaction, yadda yadda.
In other words, you'd go to some electronics store and by a $2000 TV and they'd ask "how many payments". You'd say 10 and you'd end up paying $200 a month. I don't know the origin of why they did it that way. To be clear, this was bank credit cards, not store cards. I imagined it was something to do with the commitment and knowing you couldn't just pay off some minimum. Purchases under a certain amount and/or by store you were not allowed to divide up.
I've had Japanese friends come to America and want to buy something for $500 and ask if they can have ask for 4 payments and have to explain that system doesn't exist here. If you want to make 4 payments you make 4 payments.
I've never looked into if the bank is giving all the money to the merchant and then charging the customer per month or if they're sending to the merchant per month. Nor did I ever look into interest fees. I just know it is (was?) common.