Advantage of Partnering with a Multi-lender vs. Single Lender

The world of payments has been drastically evolving. There are a variety of consumer point-of-sale financing platforms and services that merchants and consumers can use. A distinct difference between platforms and providers is that a platform such as ChargeAfter connects merchants with various lenders to offer consumers personalized point-of-sale financing options at checkout across every credit type from multiple lender. On the other hand, single lenders tend to service and approve applicants with prime credit and very near-prime credit only. The differentiator between the services is vital as it affects the percentage of consumers approved or declined for financing. It also affects the financing terms available, and it will affect your conversion rates.

Let’s first dive into the realm of single lenders.

These types of lenders typically focus on “prime” credit applicants. This means they’re solely interested in consumers with good credit. The strategy of single lenders involves servicing consumers who are most likely to pay back their loans in the allotted time and those who pose the least risk to the lender. This strategy is excellent but can be limited to merchants and consumers. The problem with single lenders, and how they directly affect your business, is that they only approve prime and super-prime consumers and are declining around 70%~ of applications. Imagine what that would do to your cart abandonment rates. These companies only focus on the top 30% of consumers with pristine credit. As a merchant, whether you have physical store locations, an online presence, or both, only using a prime lender can have a negative impact on your conversion rates, considering only a small percentage of applicants are approved.  

Did you know cart abandonment rates are one of eCommerce merchants’ biggest hurdles? According to Business Insider, 81% of shoppers abandon their carts online. Now imagine a customer who wants to purchase items, goes through the entire checkout process, applies for point-of-sale financing, and then is denied because they do not have perfect credit. Imagine the negative impact that would have on your business.

Let’s now talk about multi-lender platforms.

Multi-lender point-of-sale financing platforms allow consumers to select tailored and personalized loans that fit their unique needs based on their personal financial requirements while allowing the merchant to approve up to 85% of all applications.

At checkout, the consumer fills out the financing application, consisting of only four short fields. The application goes through a “waterfall” of lenders to provide consumers with the best-personalized financing offers. First, the application is checked against prime lenders; if declined, the application moves down to the near-prime lenders. If the applicant is still declined, the application is moved down to the third tier – subprime lenders (“lease to own“) for a final decision. The entire process occurs on the merchant’s website without redirecting to sub-domains or third-party pages. The best part is that the consumer must only fill out one application on the merchant’s checkout page as part of the normal checkout process. Customers may have the option to finance products throughout 6, 12, 18, and even up to 48 months, with equal payments, all while receiving 0% APR as an option. ChargeAfter provides merchants with up to 85% approval rates while enabling merchants to enjoy up to 45% increases in their AOV. This process gives consumers a greater chance of receiving financing offers to purchase their everyday needs or high-value items.

Were you aware that 74% of US cardholders think installment plans are helpful for budgeting, while 70% think they help alleviate the stress of making a large purchase upfront?

As a merchant, providing point-of-sale financing from a multi-lender platform is a powerful tool. It will help your conversion rates and your business grow because you provide your customers with choice and flexibility in payment and return the power of financial choice to the consumers. POS financing is not restricted to eCommerce alone; consumer financing can also be incorporated in-store and for over-the-phone purchases. Point-of-sale financing will maximize the opportunity to grow your business further due to the stopping power you are putting in the hands of your consumers.

Explore how ChargeAfter patient financing is offered with a single application to multiple lenders.