Buy Now Pay Later – Point of Sale Consumer Financing Explained

ChargeAfter

Sep 10, 2020

Buy now, pay later: Point of sale consumer financing explained.

Consumer financing has evolved significantly. Consumers increasingly gravitate towards flexible payment options like “buy now, pay later” (BNPL) point-of-sale financing. This innovative solution has shifted consumer behavior, providing more immediate purchasing power and, when implemented correctly, boosting sales for merchants.

A major cause of shopping cart abandonment is more diverse financing options catering to consumer needs. As eCommerce continues to grow, with an estimated 2.1 billion shoppers expected by 2021, there is a growing demand for personalized consumer financing solutions that facilitate instant purchasing. This is where buying now and paying later becomes crucial.

Let’s delve into how point-of-sale financing functions and its potential benefits to your business.

What is point-of-sale financing?

Point of sale (POS) financing, also known as buy now, pay later, allows consumers to purchase goods without paying the total amount upfront. Instead, they make a small initial payment at checkout, followed by a series of installments until the total cost is covered.

Although this may seem similar to traditional credit options like credit cards, it differs in simplicity and immediacy. Consumers can apply for this type of embedded financing instantly without leaving the checkout page, and they can spread the cost over several months without worrying about high annual percentage rates (APR).

In essence, buy now, pay later provides a short-term, potentially 0% APR credit line offered by single or multi-lender platforms. It is suitable for various purchases, including furniture, electronics, jewelry, travel, clothing, etc.

How do buying now and paying later financing options influence your business?

Every consumer decision impacts your business. If they complete a purchase, you’ve gained a customer; something must be addressed if they abandon their cart. Shopping cart financing can help reverse these situations for several reasons:

It appeals to a larger market.

Millennials and Gen Z have become critical demographics in the lending market but often hesitate to take on debt, particularly with credit cards. Statistics show that over 50% of Millennials and Gen Z prefer financing options other than traditional credit for large purchases. Buy now, pay later caters to this preference by offering the speed and convenience these consumers desire, increasing sales.

It offers more transparency.

Unlike traditional credit cards, online financing options such as buy now pay later offer clear payment obligations and terms. Customers know the total cost and loan duration upfront, eliminating hidden fees or surprises. This transparency builds trust and creates a seamless checkout experience, encouraging repeat business.

It is instant

Point-of-sale financing removes the inconvenience of lengthy credit application processes that take days or weeks. Advances in technology now allow for instantaneous credit checks and approvals, enabling shoppers to complete their purchases without delay.

Choosing the right consumer financing partner for you

Selecting the right consumer financing partner is crucial for maximizing the benefits of point-of-sale financing. A reliable partner should offer a seamless integration that suits all your customers’ credit needs, enhancing the shopping experience while boosting sales.

ChargeAfter’s multi-lender platform provides merchants personalized and instant consumer financing tailored to diverse credit needs. Shoppers receive the best and most customized financing options by employing a unique ‘waterfall’ method involving prime, near-prime, and sub-prime lenders. This method ensures a comprehensive approach, accommodating various credit requirements without affecting the customer’s credit score.

Benefits of ChargeAfter’s multi-lender platform

ChargeAfter connects merchants to a global network of lenders, simplifying the process of sourcing embedded financing solutions. This broadens the options for shoppers, catering to different types of credit profiles. Here are some key advantages:

Instant loans with high approval rates

Customers receive instant loans with up to 0% APR and up to 85% approval rates. This quick approval process increases the chances of converting potential sales and enhancing customer satisfaction.

Higher average order values

By offering buy now, pay later options, merchants can encourage customers to make larger purchases, increasing the average order value and overall sales revenue. POS financing options allow customers to buy what they need without immediate financial strain.

Seamless integration with your platform

The white-label POS system ChargeAfter offers seamlessly integrates into your existing platform, providing a cohesive omnichannel financing experience. This simplifies the checkout process and strengthens brand loyalty by keeping customers within your ecosystem.

Embedded lending and omnichannel strategies

Incorporating embedded lending into your omnichannel strategy ensures that customers receive a consistent and convenient financing experience, whether in-store or online. Embedded finance solutions like in-store financing enhance the customer journey, offering flexible payment options at every touchpoint.

Implementing a white-label BNPL solution

Choosing a white-label BNPL solution allows you to offer buy now, pay later services under your brand, enhancing customer trust and loyalty. This approach maintains brand consistency and provides a competitive edge by offering a personalized and secure embedded finance platform.

How to integrate point-of-sale consumer financing explained.

Integrating point-of-sale consumer financing into your business can be straightforward with the right partner. Here’s a step-by-step guide to implementing a POS financing platform:

Step 1: Choose the right embedded lending platform

Selecting a reputable embedded lending platform is crucial. Look for a provider that offers a multi-lender network, ensuring a wide range of financing options to meet diverse customer credit profiles. The platform should seamlessly integrate with your existing systems and provide white-label capabilities for brand consistency.

Step 2: Seamless integration and setup

Once you’ve chosen a platform, the integration process should be smooth and quick. A reliable embedded finance platform will provide easy-to-use tools and support for integrating the financing solution into your checkout process, both online and in-store. This enhances the omnichannel lending experience, providing customers with consistent payment options.

Step 3: Train your staff

Proper training for your staff on how to offer and explain in-store finance options is essential. They should be able to guide customers through the process, highlighting the benefits of buy now, pay later, and ensuring a positive shopping experience. This is especially important for in-store financing, where face-to-face interaction can significantly impact customer decisions.

Step 4: Promote your new financing options

Once your POS financing solution is in place, it’s essential to promote it. Inform your customers through various channels such as your website, social media, email newsletters, and in-store signage. Communicate the benefits of your new consumer financing options to encourage customers to take advantage of them.

The impact of embedded finance on sales and customer loyalty

Implementing embedded finance solutions like POS lending and BNPL white-label options can significantly impact your sales and customer loyalty. Here’s how:

Increased conversion rates

Offering e-commerce financing and in-store financing options can reduce cart abandonment rates by providing customers with flexible payment methods. When customers can buy now and pay later, they are more likely to complete their purchases, increasing conversion rates.

Improved customer retention

Providing convenient and transparent consumer financing options fosters trust and satisfaction. Customers with a favorable financing experience are more likely to return for future purchases, improving customer retention and loyalty.

Higher average spend

By offering omnichannel financing, customers feel more confident in making larger purchases. This increases the average transaction value and enhances the overall shopping experience, making it more likely that customers will choose your brand over competitors.

Conclusion: Enhancing customer experience with embedded financing

Integrating embedded lending and POS financing into your business strategy is a powerful way to enhance the customer experience, increase sales, and build brand loyalty. By choosing a comprehensive embedded lending network and implementing a white-label BNPL solution, you can provide customers the flexibility they need while driving growth for your business.

Embedded financing, explained through options like buy now pay later, reshapes how consumers shop, making it essential for businesses to adapt to this evolving landscape. By leveraging the right POS financing platform, you can create a seamless, transparent, and customer-centric shopping experience that sets your business apart.