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

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 are available for merchants and consumers to use. A distinct difference between platforms and providers is that a platform such as ChargeAfter connects merchants with a variety of lenders to offer consumers personalized point of sale financing options at checkout across every credit type from multiple lenders. 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 key as it has an effect on the percentage of consumers who are 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 great to very 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 that pose the least risk to the lender. This strategy is great but can be limiting to merchants and consumers. The problem with single lenders, and how they directly affect your business, is that they’re only approving prime and super-prime consumers and they 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 the biggest hurdles that eCommerce merchants face? 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 he or she did 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 offers consumers the opportunity to select tailored and personalized loans that fit their individual 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 which only consists of four short fields. The application goes through a “waterfall” of lenders to provide consumers with the best-personalized financing offers for them. 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 then moved down to the third tier – subprime lenders (“lease to own”) for a final decision. The entire process takes place on the merchant’s website without any redirects to sub-domains, or third party pages. The best part is, the consumer only has to fill out one single application on the merchant’s checkout page and as part of the normal checkout process. Customers may have the option to finance products over a period of 6, 12, 18 and even up to 48 months, with equal payments all while receiving 0% APR as an option. ChargeAfter provides merchants up to 85% approval rates while also enabling merchants to enjoy up to 45% increases in their AOV. This process allows consumers to have a greater chance of receiving financing offers to purchase their everyday needs or high-value items.

Were you aware that 74% percent of US cardholders think installment plans are helpful for budgeting, while 70% think it helps 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 are providing your customers with choice and flexibility in payment and returning the power of financial choice back to the consumers. POS financing is not restricted to eCommerce alone, rather consumer financing can also be incorporated in-store and for over the phone purchases. Point of sale financing will maximize the opportunity to further grow your business due to the shopping power you are putting in the hands of your consumers. 

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