Buy Now Pay Later – Point of Sale Consumer Financing Explained

Sep 10, 2020

Buy Now Pay Later – Point of Sale Consumer Financing Explained

In this ever-changing financial climate, consumer spending habits have shifted from using traditional lines of credit to instantaneous solutions like “Buy Now, Pay Later” Point of Sale financing. While “Buy Now Pay Later” is nothing new, it is becoming an increasingly popular payment option that has put flexible buying power back into the hands of consumers and has proven to be an effective tool in driving more sales when done correctly.

Limited financing options are the leading factor behind removing products from shopping carts or abandoning carts altogether simply because every consumer has different financial needs. With the rise in eCommerce, which is expected to attract more than 2.1 billion shoppers by 2021, there is an increasing demand for merchants to offer more personalized consumer financing solutions that allows them to get what they want right then and there. This is where the importance of Buy Now, Pay Later comes into play.

Let’s take a closer look at how Point of Sale financing works and the positive effects it can have on your business.

What is Point of Sale Financing?

Point of Sale (POS) financing or Buy Now, Pay Later is exactly that. It is a payment option that allows consumers to buy the goods they want without laying out the full amount all at once. With this payment option, consumers will pay a small portion of the total cost at checkout followed by installments until the final balance has been paid.

While it may sound a lot like traditional forms of credit such as credit cards, it differs in the way that it allows consumers to apply for the loan instantly without leaving the website or checkout counter. In addition to the convenient application, consumers are also able to divide the total cost of their purchase over a few months without the stress of a high APR.

Simply put, Buy Now, Pay Later is a short term, 0% APR (when and if available) external line of credit offered by single lenders or multi-lender platforms that can be used by your customers for purchases such as furniture, consumer electronics, jewelry, gadgets, travel, clothing, and more.

How Do Buy Now, Pay Later Financing Options Influence Your Business?

Every decision your consumer makes influences your business. If they make a purchase, you’ve gained a customer, if they leave, something may be amiss. Shopping cart financing can help turn some of these decisions around and here are the reasons why:

It Appeals To The Larger Market

Millennials and Gen Zers have become a crucial part of the lending market, however, many are hesitant about accruing debt, especially in the form of credit cards. According to statistics, more than 50% of Millennials and Gen Zs are more interested in financing options other than traditional lines of credit to finance large ticket items. Buy Now, Pay Later financing options appeal to the convenience and speed that consumers in this bracket want, which has seen a huge drive in sales.

It Offers More Transparency

Unlike traditional credit cards, online financing options like Buy Now, Pay Later have payment obligations and terms that are clearly laid out. Meaning that the total cost and duration of the loan are completely transparent without any hidden surprises or rising fees. Giving your customers clear and trustworthy information upfront and eliminating confusion over APR creates a seamless and enjoyable checkout experience that could very likely gain you a repeat customer.

It Is Instant

Point of Sale financing eliminates the hassle of lengthy credit application processes that could take days or even weeks to be approved. Thanks to advancements in technology and algorithms, credit checks and approvals are done instantaneously without shoppers ever having to leave the cart.

Choosing the Right Consumer Financing Partner for You

ChargeAfter’s multi-lender platform offers merchants personalized and instant consumer financing that is suited to all your customer’s credit needs. By using a unique ‘waterfall’ method that is broken down into prime, near-prime, and sub-prime lenders, shoppers will be offered the best and most personalized financing products and offers for them based on their credit needs and without affecting their credit.

As the merchant, you are immediately connected to our global network of lenders that not only eliminates the admin to source lenders yourself but also broadens the net for shoppers who are looking for all types of credit.

Your customers benefit by receiving instant loans with 0% APR and up to 85% approval rates for applications, which means that your business benefits by reaping the rewards of higher average order values and increased sales!


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About the author
Chris Lloyd
“ChargeAfter is amongst our top rung of partnerships, and they enable us to deliver consistent. The conversion uplifts ChargeAfter creates helps drive strong value for DXL Group and our customers.”