Category: Blog

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.

 

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Consumer financing has been integral to retail for years, evolving with advancements in technology and shifts in consumer behavior. The rise of point of sale (POS) financing has significantly impacted how consumers make purchases, especially as online sales continue to trend upward. With more shoppers turning to e-commerce, many consumers now buy items online that they previously would have purchased in-store. According to a trends report by Attentive, this shift resulted in a 27% increase in sales in March and a 32% increase in April across various e-commerce sectors.

ChargeAfter: enhancing sales through personalized financing

ChargeAfter is transforming the consumer financing landscape by making it easier and quicker for shoppers to complete purchases. By connecting merchants with multiple lenders, ChargeAfter offers personalized point of sale (POS) financing at checkout. This platform accommodates consumers across all credit ratings—prime, near-prime, and subprime—enabling them to instantly apply for and secure Buy Now Pay Later (BNPL) financing.

Traditionally, managing lending partnerships with individual lenders has been a cumbersome task for merchants, often resulting in limited options and high decline rates during the application process. ChargeAfter simplifies this process, allowing merchants to approve up to 85% of consumers applying for financing at checkout, significantly surpassing the industry average of 30-50%.

How the ChargeAfter multi-lender platform works

The ChargeAfter platform streamlines the financing process for both merchants and consumers. When a customer selects “checkout financing” as their payment option, they fill out a simple four-field application. This application is then processed through ChargeAfter’s “waterfall.” Initially, it is checked against prime lenders. If the application is declined at this stage, it moves to near-prime or “second look” lenders. If still declined, the application is reviewed by subprime or lease-to-own lenders for additional financing offers. This multi-lender approach ensures that borrowers receive various rates and terms once approved.

Increasing sales with omnichannel financing

Competition between retailers is fierce, and ChargeAfter’s vision is to help every consumer access financing options that best fit their needs, available when and where they are ready to make a purchase—be it online, in-store, or over the phone. Omnichannel financing plays a crucial role in this, providing a seamless experience across various purchasing channels.

With embedded lending platforms like ChargeAfter, shoppers receive instant, personalized loans with favorable terms, such as 0% APR. This flexibility encourages consumers to complete their purchases, ultimately helping merchants increase sales by up to 30%. Additionally, the simplified transaction process benefits merchants, and lenders can reach new consumers while reducing integration costs.

The benefits of embedded lending networks for retailers

As consumers continue to explore new online stores, the demand for flexible ecommerce financing solutions grows. Embedded finance platforms like ChargeAfter offer merchants a competitive edge by providing choice and flexibility in payment options. By integrating white label BNPL solutions and in-store financing, merchants can cater to a broader audience, enhancing customer satisfaction and boosting sales.

ChargeAfter’s embedded lending network allows retailers to tap into a pool of multiple lenders, increasing approval rates and providing tailored financing offers. This network is crucial for meeting the diverse credit profiles of customers, ensuring more consumers find a financing option that works for them.

Enhancing customer experience with a white label POS system

Implementing a white label POS system allows retailers to offer a seamless financing experience under their own brand. This not only reinforces brand loyalty but also streamlines the checkout process for customers. By utilizing a white label BNPL solution, retailers can provide personalized financing options directly at the point of sale, both online and in-store.

Customers value simplicity and ease when it comes to financing. By offering a white label POS system, merchants can maintain control over the customer experience, ensuring that it aligns with their brand identity while providing the flexibility and convenience that shoppers demand. This integration helps in reducing cart abandonment and increasing overall sales.

The future of POS financing platforms

Embedded finance solutions is shaping the future of retail. POS financing platforms are becoming essential tools for retailers looking to stay competitive in an increasingly digital marketplace. The integration of embedded lending and omnichannel lending into the retail experience is driving a new era of customer-centric financing.

As more consumers expect instant and personalized financing options, retailers that leverage embedded lending platforms will be better positioned to capture more sales and foster long-term customer relationships. These platforms offer not just convenience but also a way to bridge the gap between consumer expectations and the purchasing process, creating a win-win scenario for both retailers and shoppers.

Building customer loyalty through in-store finance

In-store financing remains a vital component of the retail experience, even as e-commerce gains ground. By integrating embedded financing options within physical locations, retailers can enhance the shopping journey and build stronger customer loyalty. Offering financing directly in-store, whether through a white label POS system or other POS lending solutions, provides consumers with immediate purchasing power and the flexibility they desire.

The key to successful in-store finance is offering a seamless, quick, and personalized process. When consumers have access to financing options that suit their credit profiles and purchasing needs, they are more likely to make larger purchases and return for future shopping. This approach not only drives sales but also establishes the retailer as a trusted partner in the consumer’s shopping experience.

The importance of omnichannel lending for modern retail

Retailers today must adapt to the changing landscape of consumer preferences, which increasingly demand a cohesive experience across multiple channels. Omnichannel lending addresses this need by integrating financing options across online, in-store, and mobile platforms. This ensures that consumers can access flexible payment solutions wherever and however they choose to shop.

By adopting omnichannel financing strategies, retailers can provide a consistent and streamlined financing experience. This approach reduces friction in the purchasing process and helps convert more browsers into buyers. Additionally, embedded finance platforms like ChargeAfter support retailers in implementing these strategies, enabling them to meet the diverse needs of their customers and ultimately drive more sales.

The impact of embedded finance solutions on conversion rates

The introduction of embedded finance solutions has a significant impact on conversion rates in both online and offline retail environments. By integrating embedded lending directly into the checkout process, retailers can reduce the friction that often causes cart abandonment. Providing consumers with easy access to financing options encourages them to complete their purchases, even for higher-priced items they might otherwise hesitate to buy.

By offering multiple financing options through an embedded lending platform, merchants can cater to various credit profiles and preferences, ensuring a higher likelihood of approval. This flexibility not only boosts conversion rates but also enhances the overall shopping experience, contributing to increased sales and customer satisfaction.

Leveraging ecommerce financing to drive growth

Ecommerce financing has become a crucial tool for retailers aiming to drive growth in an increasingly competitive market. By implementing pos financing options such as Buy Now Pay Later and other flexible payment solutions, online retailers can make their products more accessible to a wider audience. This approach helps remove price as a barrier, allowing customers to make purchases that align with their budgets.

Integrating white label BNPL and other embedded finance options into the online shopping experience can lead to higher average order values and repeat purchases. For retailers, this means not only an increase in sales but also a stronger, more loyal customer base that values the flexibility and convenience offered through these financing solutions.

Conclusion: The future of embedded lending in retail & sales

The evolution of embedded lending and POS financing platforms is shaping the future of retail by providing more inclusive and accessible payment options. As consumer expectations continue to shift towards convenience and personalization, retailers that adopt these embedded finance platforms will be better equipped to meet the demands of the modern shopper.

By offering a range of financing options through omnichannel lending strategies, retailers can increase sales, enhance the customer experience, and build long-term loyalty. The integration of in-store financing, ecommerce financing, and white label POS systems into a seamless network creates a holistic approach that benefits both consumers and merchants. This innovative approach to embedded financing is set to become a key driver in the retail industry, enabling merchants to thrive in an ever-changing marketplace.

In light of the ongoing pandemic, retailers are working hard and taking proactive measures to ensure business progression during this time. An easy action all merchants can adopt to fuel business stability and continuity now and during the post-pandemic world is to offer consumers Buy Now Pay Later solutions.

The amount of consumers ordering online has been on the rise and that number continues to grow as many retailers are forced to temporarily close their brick and mortar locations. Providing consumers Buy Now Pay Later options make shopping more accessible due to the accommodating payment terms being offered. In turn, offering consumers Buy Now Pay Later encourages larger average order values, directly increasing revenue for the business. This payment method is becoming increasingly popular with big-named brands which means it’s also becoming an expected part of the shopping journey for many consumers. Offering Buy Now Pay Later options will provide your business with the boost it needs, here are 5 reasons why you should offer your consumers this alternative payment method. 

1. Millennials are driving BNPL

Short-term installment loans have been on the rise throughout the past 3-5 years and it’s in large part due to Millennials (individuals ages 23 – 38). The financial crisis of 2008 instilled a lack of trust in traditional financial institutions and their parents Gen X (individuals ages 40-54) and in some cases, Baby Boomers (individuals ages 66 – 75) have often warned them of the dangers of credit card debt and high-interest rates. Younger generations including Generation Z, those who are 18 years or older, are moving towards digital banking and as a result, they’re walking into their banks’ traditional brick-and-mortar branches less often than ever before. 

The concept isn’t foreign, financing has always existed for big-ticket items like appliances, furniture, jewelry, and more. Buy Now Pay Later options can be thought of as a modern version of layaway. What is new, is the instant point of sale financing available online at checkout. It’s a line of credit that is not associated with a consumer’s credit card. Shoppers may have the option to finance their purchase between a period of 6 – 48 months all while enjoying 0% APR vs. traditional credit cards that can carry 17% APR on average. As more retailers are driven to take their businesses online, Buy Now Pay Later is the easiest way to bring financing choices to shoppers. 

2. Consumers prefer BNPL over Credit Cards

Credit cards are still commonly used however consumers are no longer relying on them as a primary payment method instead, shoppers are favoring their debit cards. As a business owner, it’s naive to think most shoppers have access and/or use credit cards as a payment method. In reality, many of your shoppers may not have one. Business Insider reports 68% of Millennials do not own a single credit card! This generation accounts for the greatest share of the U.S population at 26% and the employed population at 34%, so it’s easy to understand why their behaviors and preferences will have a profound impact on commerce. 

Although Millennials are primary targets of Buy Now Pay Later, older generations are just as attracted to the idea of short-term installment loans. In a survey conducted by American Banker, 87% of respondents expressed more interest in paying for purchases via monthly installments vs typical credit cards. Consumers are increasingly demanding control of their purchasing experience. Buy Now Pay Later is great for those who do not have access to a line of credit or who don’t want to rely on it exclusively. Buy Now Pay Later is a smart option to offer today’s cautious and responsible shoppers.

3. Buy Now Pay Later Increases Sales 

The checkout process can be strenuous for consumers, any friction with the payment process or lack of payment options at the checkout will likely result in lost sales. Cart abandonment rates are one of the biggest problems online merchants face. Studies have found that 81% of shoppers abandon their carts online before they complete their purchase. A valuable way to combat cart abandonment rates and become more appealing to your consumers is by offering Buy Now Pay Later solutions that offer instant and flexible credit options from multiple lenders to ensure flawless user experience.

Imagine having a conversation with your shoppers at the point of sale and asking them what monthly price they feel comfortable paying and how long they would like the monthly payments to last. Think about the surprise and satisfaction that would bring your buyers. Point of Sale Financing or Buy Now Pay Later is essentially just that, it’s offering your shoppers choice and flexibility in payment options. 

Forrester reported that merchants who offer point of sale financing from a single lender have seen a 32% increase in sales, however, merchants who offer Buy Now Pay Later options from ChargeAfter, a multi-lender platform, have enjoyed a 45% increase in sales! Offering Buy Now Pay Later will help you maintain business stability and fuel business growth due to the accommodating payment terms offered to your consumers.

4. Buy Now Pay Later is User-Friendly 

Technological advancements are enabling consumers to be in the “driver’s seat” for their shopping experience. A transparent user-friendly experience is necessary when it comes to integrating new processes into your business. ChargeAfter’s Buy Now Pay Later platform is clear and easy to maneuver. When your consumers are ready to checkout they simply select the financing option which is offered alongside traditional payment methods. The consumer would then fill out a short financing application, after approval personalized financing options would appear. Once the shopper selects the financing terms that best fit their needs, it would be applied directly to their checkout. This whole process takes less than a minute!

When you have an online retail presence but also a traditional brick and mortar store you should ensure that you are able to offer an omnichannel financing experience. ChargeAfter specializes in customized and “in-house” platform integrations using our JavaScript and API solutions to provide a fully customized point of sale financing experience for your consumer. Shoppers can apply for financing at the end of their shopping experience whether they are in-store (at the checkout counter or through kiosks), online, or over the phone.

5. Buy Now Pay Later makes shopping more accessible 

Consumers are loyal to businesses that help them manage their relationship with credit and avoid its pitfalls. Consumers don’t mind the “buy now, pay later” model, they appreciate it. Not only will you gain a competitive advantage among other retailers but you will enable a stronger relationship with your consumers due to the accommodation being offered. In a study conducted by PYMNTS, it was reported that 74% of  US cardholders think installment plans are helpful for budgeting while 70% of consumers think installments help alleviate the stress of making large purchases upfront. In a survey conducted by Citizens Financial Group it was found that 62% of consumers would prefer fixed monthly plans with clear payment terms. The statistics demonstrate that consumers want a simple and easy experience when they make purchases. Research shows that retail brands should modernize their payment model by moving away from co-brand/store credit approaches and instead offer instant financing options at the point of sale. 

Before signing up to offer a point of sale financing from both a single lender or a multi-lender provider, knowing the platforms’ average approval rates should be on the top of your due diligence. Single lenders only focus on approving the top 35% of consumers with pristine credit which means they’re declining 70% of consumers who apply for financing at checkout. This leads to increased site abandonments, cart abandonments, and your rejected potential consumers ending up completing their purchase by your competitor. ChargeAfter is the first global lender to provide a complete solution for Point of Sale financing from multiple lenders. Merchants have the ability to offer personalized and instant Buy Now Pay Later options to shoppers across all credit tiers (prime, near-prime, and subprime) from multiple lenders. Meaning, merchants can offer 85% approval rates to their consumers who apply for financing while checking out! Imagine the impact that could have on your conversion rates! 

Will you jump on the next wave of credit?

Furniture Today announced traffic conversion and average order values are down for many retailers even though online browsing has increased at an exponential rate. Yes, some industries are prospering, specifically grocery stores, athletic gear, and furniture however, there are many industries like automotive, apparel, cosmetics, hospitality, and more that are down. Having a plan to deal with the on-going pandemic and its after-effects will be key for your business to thrive. 

Focus on your business continuity now and plan for a post-pandemic world by offering consumers Point of Sale Financing. It’s a simple solution that will help your business prosper while providing your shoppers the flexibility to help them buy items they need whether they are mid or high ticket purchases.

Buy Now Pay Later – A valuable solution for today’s online merchants & shoppers

As the coronavirus outbreak continues and “shelter in place” guidelines are extended, US eCommerce is prospering and has become the new norm. Consumers are spending more on furniture, apparel, footwear, and accessories. Data suggests that shoppers are likely buying comfortable items to work from home, diving into home improvement projects, or purchasing workout gear that will get them through the next several weeks of being confined to their households. Consumers are also taking advantage of Buy Now Pay Later options as it gives them control and flexibility over their payments. 

Furniture Today reported that online browsing for furniture alone has increased 200% within the last month, this suggests consumers are spending an increased amount of time on the internet browsing. Consumers are paying more attention to marketing messages, social ads, and more. Further research demonstrates that consumers aren’t necessarily spending less money but they aren’t spending more money either. Rather consumers have turned to make their purchases entirely online. Consumers are now looking for more viable alternatives for items they’re used to purchasing in-store and are open to purchasing more comparable products, in fact, it’s been reported that over 40% of consumers have been trying new brands. 

Businesses across the globe are being challenged to think differently about how to approach customer acquisition and retention in light of COVID-19. The best action merchants can take is to connect with their consumers on a basic human level. Educate consumers through your marketing efforts on how you are tackling COVID-19 and/or include pictures of your staff taking all the necessary safety precautions during this time. Another immediate action you can take to maintain business continuity is by offering your consumers Buy Now Pay Later solutions.

ChargeAfter enables merchants to offer Buy Now Pay Later solutions to their consumers across all credit tiers (prime, near-prime and sub-prime), this way all consumers have access to acquire the products they need, today. Imagine having a conversation with your shoppers at the point of sale and asking them what monthly price they feel comfortable paying and how long they would like the monthly payments to last. Think about the surprise and satisfaction that would bring your buyers. Point of Sale Financing or Buy Now Pay Later is essentially just that, it’s offering your shoppers choice and flexibility in payment options.

Merchants using ChargeAfter as the Point of Sale financing platform can approve up to 85% of their consumers’ applications. Shoppers will have the option to finance their purchase between a period of 6 – 48 months while enjoying 0% APR. The diverse group of global lenders ChargeAfter works with allows us to offer the highest approval rates for consumers who apply for financing. More than ever consumers are demanding flexibility in payment options, it’s necessary to adapt to buyers’ demands to fuel business stability and continuity. 

The Buy Now Pay Later option ChargeAfter provides merchants would be seamlessly embedded in their checkout process. Meaning, Point of Sale Financing would be another payment option offered alongside traditional payment methods such as Visa, MasterCard, Paypal, and more. Once the consumer selects financing as an option, the entire process would take place on the merchants’ website without any redirects to a subdomain. Forrester reported that merchants who offer point of sale financing from a single lender have seen a 32% increase in sales, however, merchants who offer Buy Now Pay Later solutions from ChargeAfter, a multi-lender platform, have enjoyed a 45% increase in sales! Before signing up to offer a point of sale financing from both a single lender or a multi-lender provider, knowing the platforms’ average approval rates should be on the top of your due diligence. Single lenders only focus on approving the top 35% of consumers with pristine credit which means they’re declining 70% of consumers who apply for financing at checkout which leads to increased site abandonments, cart abandonments, and your rejected potential consumers ending up completing their purchase by your competitor. 

When merchants meet consumers halfway by offering Buy Now Pay Later financing options, it enables a stronger relationship, and consumers are more likely to become returning shoppers due to the choice and flexibility being offered. At ChargeAfter our goal is to help your business thrive even through challenging economic conditions.

Understanding buy now pay later (BNPL)

Selecting a payment method is a critical part of the customer journey. Any friction in the payment process or lack of options at checkout can lead to lost sales. Flexibility in payments is crucial for reducing cart abandonment rates, which remains one of the biggest challenges for online merchants, with 81% of shoppers abandoning their carts before completing their purchase. Providing alternative payment methods and flexible credit options can significantly reduce this rate and enhance the user experience.

Point of Sale Financing (POS Financing) or “Buy Now Pay Later” (BNPL) is an innovative alternative payment method offered alongside traditional options. It allows consumers to receive financing options instantly at the point of purchase, alleviating the need to rack up credit card bills. BNPL offers consumers accommodating terms, controlled payments, a set payoff date, and often 0% APR, compared to traditional credit cards that can carry an average APR of 17%.

The rise of installment buy now pay later solutions

Installment Buy Now Pay Later financing has surged, becoming a standard payment option among shoppers of all ages. Merchants utilizing BNPL solutions can see an increase in sales by up to 35%, as consumers are drawn to short-term installment plans that help them manage cash flow and budgets more effectively.

ChargeAfter, for instance, offers a “Multi-lender” waterfall platform that delivers personalized financing options from more than ten lenders at checkout. This network specializes in point-of-sale financing across various credit types, approving 80-85% of applications in under two seconds. In today’s economic environment, offering a robust POS financing platform that serves consumers across every credit spectrum is essential.

Flexibility in payments: A competitive advantage

Merchants not offering a multi-lender waterfall financing platform could lose up to 60-70% of their potential sales. ChargeAfter’s eCommerce waterfall is designed to achieve maximum results. Applications are first checked against prime lenders, who cater to borrowers with excellent credit. If declined, the application moves to near-prime lenders and finally to subprime lenders, ensuring multiple rates and terms are available to shoppers. This system allows consumers to select the most personalized offer at checkout.

ChargeAfter merchants can offer diverse financing products, including 0% APR deferred interest for 6-48 months, revolving lines of credit, installment plans, and lease-to-own offers, all on a single platform. This payment flexibility helps merchants increase order values while providing consumers with more accommodating payment terms.

By offering Buy Now Pay Later options, merchants gain a competitive edge due to the flexible payment choices provided. It’s not just about offering a wide range of products; providing an additional payment solution at checkout is equally essential. Embedded lending aims to give consumers more accessibility to purchasing desired products wherever they shop.

Buy Now Pay Later (BNPL) is making a resurgence across various industries. Historically, this concept was closely tied to the layaway model—a popular form of consumer financing where customers deposited items, often luxury goods or household appliances, for later pickup. While some retailers still use layaways today, the rise of embedded financing technologies has significantly enhanced point-of-sale (POS) financing models and the overall checkout experience for both consumers and merchants.

POS Financing, also known as checkout financing, consumer financing, or micro-financing, is an immediate and convenient credit-granting process seamlessly integrated into the checkout process. Unlike traditional credit cards, this embedded lending method provides a line of credit without being tied to a consumer’s credit card. Consumers can finance their purchases for 6 to 48 months, often at 0% APR. The significant advantage? Shoppers can receive and use their products or services immediately, with no delays.

Why not just use a credit card?

While credit cards offer convenience, they typically come with high interest rates ranging from 18% to 29.9%, with no fixed repayment date. Additionally, consumers who exceed 30-40% utilization of their credit limit may experience a decline in their credit scores, as credit bureaus perceive them as overly reliant on credit. Recent trends indicate a shift in consumer behavior, with decreased credit card usage. Notably, 63% of Millennials and Generation Zers do not own a single credit card and are poised to make up more than half of the consumer landscape by the mid-2020s. This changing dynamic raises the question of how the declining use of credit cards might impact businesses shortly.

The rise of short-term installment loans

Over the past 3 to 5 years, there has been a notable increase in short-term installment loans, driven by consumer demand for choice and flexibility in payment options. Point-of-sale financing allows merchants to sell more by providing consumers with in-store financing and e-commerce financing options beyond traditional credit cards. This method offers more affordable, personalized financing solutions directly at the checkout. The omnichannel lending approach caters to mid and big-ticket items, aiming to make desired products more accessible to consumers, regardless of where they shop.

Consider this scenario: purchasing a $2,196 set of heavy-duty wheels for your Land Rover is more practical when spread over 24 months with 0% APR rather than charging the entire amount to a credit card. Although younger adults are primary targets for POS financing, older demographics like Gen X and Baby Boomers are also drawn to the convenience of short-term installment loans. 74% of all U.S. adult consumers believe installment loans alleviate the stress of large upfront purchases.

Merchants offering the Buy Now Pay Later option benefit from higher conversion rates, while consumers enjoy flexible repayment terms without the financial strain of making large purchases upfront. Platforms like ChargeAfter, a multi-lender embedded finance platform, have reported a 45% increase in sales for merchants offering POS lending options. This strategy fosters more robust relationships between merchants and consumers by providing a white-label BNPL solution that meets consumers halfway, making POS financing an intelligent payment option for today’s discerning shoppers.

Enhancing customer experience with buy now pay later

Implementing Buy Now Pay Later options has redefined the customer experience by offering a seamless and flexible payment process. Unlike traditional financing methods, embedded financing provides a straightforward approach directly integrated into the point of sale, whether in-store or online. This omnichannel financing approach ensures that customers can access flexible payment options wherever they shop.

POS financing simplifies checkout by eliminating the need for lengthy credit applications or paperwork. Customers can apply for funding and receive an immediate decision within seconds, enhancing their shopping experience and reducing the potential for cart abandonment. This streamlined process is particularly beneficial for e-commerce businesses, where shoppers often make purchasing decisions quickly and expect a hassle-free checkout.

Boosting merchant sales with in-store and e-commerce financing

Merchants benefit significantly from offering in-store financing and e-commerce financing solutions. By integrating a white-label POS system that includes Buy Now Pay Later options, retailers can cater to a broader customer base, including those who may need access to traditional credit or prefer not to use credit cards. This flexibility can lead to an increase in average order values and customer loyalty.

The availability of POS lending also encourages repeat business, as customers are more likely to return to merchants that offer convenient and flexible payment options. By leveraging an embedded lending platform, companies can provide tailored financing solutions that meet the diverse needs of their customers, whether they are purchasing in-store or online. This approach improves customer satisfaction and enhances the overall brand experience.

The role of embedded lending networks

An embedded lending network plays a crucial role in the success of POS financing platforms. By connecting merchants with a network of lenders, these platforms can offer customers a broader range of financing options, increasing the likelihood of approval and ensuring that more customers can complete their purchases. This network-driven approach allows businesses to offer more competitive financing terms, such as 0% APR, making it easier for consumers to manage their payments.

Additionally, integrating embedded finance solutions into a merchant’s checkout process can significantly improve the customer experience by providing a one-stop solution for financing. Customers can browse, select, and finance their purchases all within a single platform without navigating multiple websites or applications. This cohesive approach to funding enhances the overall shopping experience and helps merchants stand out in a competitive market.

The advantages of white label buy now pay later solutions

Implementing a white-label BNPL solution allows merchants to customize the financing experience to align with their brand identity. This branding flexibility ensures that the financing process feels like a natural extension of the merchant’s offerings, building trust and providing a cohesive shopping experience. Businesses can use a white-label POS system to present the Buy Now Pay Later option as their own, creating a seamless transition from browsing to checkout.

A white-label BNPL approach also enables merchants to retain customer loyalty by offering a consistent and personalized experience. When customers use a financing option branded with the merchant’s identity, it reinforces the brand’s reliability and encourages repeat purchases. Moreover, white-label BNPL solutions can be tailored to meet the specific needs of the merchant’s target audience, offering flexibility in payment terms and promotional financing options.

Enhancing sales through embedded finance platforms

Integrating an embedded finance platform into a merchant’s sales strategy offers numerous benefits. By providing omnichannel lending solutions, merchants can offer flexible in-store and online financing options, creating a more inclusive shopping experience. This approach caters to different consumer preferences and captures a broader customer base, including those who may not have immediate access to funds or prefer alternative financing options.

Embedded finance solutions streamline the purchasing process by offering instant credit decisions and transparent terms, boosting customer confidence and reducing checkout hesitancy. For instance, shoppers who might be reluctant to make a large purchase can be encouraged by the availability of manageable installment plans, leading to higher conversion rates and increased sales.

Integrating POS financing into your business model

To maximize the benefits of POS financing, businesses must strategically integrate embedded lending into their sales model. This integration involves selecting the right embedded lending platform that aligns with the business’s goals and customer base. Factors to consider include the platform’s ease of use, the range of financing options available, and the level of customization it offers.

By embedding POS financing options directly into the checkout process, whether online or in-store, merchants can create a frictionless customer journey. This integration enhances the overall shopping experience and provides valuable insights into customer preferences and spending behaviors. With the right POS financing platform, businesses can offer flexible, customer-friendly payment options that encourage more significant purchases and foster long-term loyalty.

The future of POS financing and buy now pay later

Buy Now Pay Later and POS financing are poised to play an increasingly important role in consumer purchasing behavior. With the growing demand for flexible payment options, merchants who embrace embedded financing solutions will be better positioned to meet customer needs and drive sales growth. Integrating white-label BNPL and omnichannel financing into business models will become a key differentiator, offering a competitive edge in the market.

The ongoing development of embedded lending networks will further enhance the availability and accessibility of POS financing, enabling merchants to offer their customers a broader range of options. By adopting these innovative financing solutions, businesses can create a more inclusive and personalized shopping experience, ultimately leading to higher customer satisfaction and loyalty.

Conclusion: Embracing buy now pay later for business growth

Incorporating Buy Now Pay Later into your business model is more than just offering an additional payment option—it’s about enhancing the overall customer experience and fostering brand loyalty. By leveraging embedded financing solutions such as white-label BNPL and POS financing platforms, merchants can provide their customers the flexibility and convenience they seek. This not only increases conversion rates but also encourages repeat business.

Embedded lending platforms have transformed the way consumers approach purchasing, allowing them to make more informed and manageable financial decisions. Integrating these solutions into your omnichannel lending strategy, whether in-store or online, can significantly impact your sales and customer satisfaction. Offering in-store financing and e-commerce financing options allows you to cater to a diverse audience, ensuring that you are meeting the needs of all your customers.

As embedded lending networks continue to grow and evolve, businesses that adopt these innovative embedded finance solutions will be well-positioned to thrive in an increasingly competitive market. By providing a seamless and personalized financing experience, you can build stronger relationships with your customers and create a shopping environment that is both accommodating and forward-thinking.

In summary, integrating Buy Now Pay Later options into your business helps boost sales and enhances customer loyalty and satisfaction. The future of retail lies in offering flexible, customer-centric payment solutions, and embracing embedded finance is a strategic step toward achieving this goal.

Did you know eCommerce surged 25% in the U.S. between March 1st and 11th? Adobe Analytics reports a 62% increase in the “buy-online-pickup-in-store” option from February 24th to March 21st as “shelter in place” guidelines were enforced nationwide. Online shopping has steadily gained retail market share over the past few years. With many retail stores now closed due to the COVID-19 pandemic, retailers are focusing on their digital presence and communication efforts. Retailers of mid and high-cost merchandise, such as those in the furnishings industry, are exploring single or multi-lender POS financing to keep their businesses growing.

One tool that can assist in maintaining high conversion rates and even lift average order values—always, especially during challenging times—is offering point-of-sale financing (POS financing). It’s an alternative payment method for shoppers. Instead of accumulating a large credit card bill, consumers receive financial solutions at purchase to help them buy goods or services. POS financing is a quick solution for mid to high-dollar value checkouts, dividing purchases into easy and affordable payments.

Understanding single lender POS financing

Are you aware of the distinct split within consumer point-of-sale financing? There are single-lender and multi-lender platforms. While this distinction might be invisible to consumers, it makes a significant difference for retailers. It can affect the percentage of consumers approved or declined for financing, the financing terms available, and the merchant’s conversion rates.

A single lender offering POS financing typically focuses on “prime” credit applicants, primarily interested in consumers with good to excellent credit. The strategy of single lenders is to serve consumers who pose the least risk, ensuring they’re more likely to repay their loans on time and specified terms.

While this strategy works well for single lenders, it can be limiting for merchants and consumers. Since they only approve prime credit consumers, single lenders decline around 70% of applicants. This can negatively impact conversion and cart abandonment rates. As a merchant in the furnishings industry, using a single lender may limit your ability to maximize conversion rates.

The benefits of multi-lender POS financing

Multi-lender point-of-sale financing platforms are a more recent development in retail financing. Unlike single lenders, these platforms connect merchants with a network of lenders, offering consumers a broader range of financing options. For instance, ChargeAfter is the first global network to provide a comprehensive solution to merchants for POS financing from multiple lenders. It collaborates with over ten lenders, constantly expanding its network.

At checkout, consumers complete a short, four-field application consisting of their name, address, social security number, and phone number. This application is processed through a “waterfall” of diverse lenders, catering to every credit type. The consumer is subsequently presented with personalized financing options. With this model, ChargeAfter enables merchants to achieve an 85% financing approval rate, significantly higher than what single lenders offer.

How the waterfall method enhances multi-lender platforms

The “waterfall” method is a critical feature of multi-lender platforms. It ensures that consumers receive the best possible financing terms by submitting their application through a tiered approval process. Here’s how it works:

1. Prime Lenders: Prime lenders first review the application. If the consumer is approved at this stage, they typically receive the most favorable terms.
2. Near-Prime Options: If prime lenders deny the application, it moves to near-prime or “second look” options. These lenders are willing to take on slightly more risk and offer financing to consumers with less-than-perfect credit.
3. Sub-Prime Lenders: If the applicant is still denied, the application is shared with sub-prime lenders, known as “lease-to-own” options. These lenders cater to consumers who may have poor or limited credit histories.

This multi-tiered approach allows for a wide range of rates and terms, giving shoppers more choices at checkout. Depending on the terms, consumers can select financing options that best suit their needs, possibly financing purchases over 6 to 48 months and even enjoying 0% APR.

Retailers who implement multi-lender POS financing platforms like ChargeAfter see substantial benefits. These include a 45% increase in average order value and a 35% increase in site-wide sales, making it a powerful tool for businesses looking to boost their e-commerce financing performance.

Choosing between single or multi-lender POS financing

Deciding whether to implement a single-lender or a multi-lender POS financing solution depends on your retail business’s specific needs and goals. Single lenders might suit merchants targeting a high-credit clientele and seeking a straightforward financing option. However, this approach can significantly limit potential customers, primarily if your business serves a diverse demographic with varying credit profiles.

On the other hand, a multi-lender platform opens up the possibility of serving a broader customer base. By leveraging a network of lenders, you can offer financing solutions to various consumers, from prime to subprime credit applicants. This inclusivity can lead to higher approval rates, reduced cart abandonment, and increased conversion rates.

Implementing multi-lender POS financing for maximum impact

If you decide to go with a multi-lender POS financing platform, integrating it into your business can be seamless. Most embedded lending platforms offer simple integration options, whether you’re incorporating it into an eCommerce site or an in-store POS system. For retailers looking to create a consistent and branded experience, white-label BNPL solutions are an excellent choice. These solutions allow you to offer financing under your brand name, enhancing customer trust and loyalty.

Another essential aspect is the adoption of omnichannel financing. By providing in-store finance alongside online embedded lending, you ensure your customers can access financing options no matter where they shop. This unified approach caters to modern consumer behaviors, where customers may browse online and complete their purchases in-store or vice versa.

How single or multi-lender platforms affect customer experience

The choice between single or multi-lender platforms plays a significant role in shaping the customer experience. Single lenders may provide a streamlined process but limit the flexibility and options available to shoppers. This can lead to a higher cart abandonment rate, notably if consumers are declined for financing due to stricter credit requirements.

In contrast, multi-lender platforms offer a more flexible and inclusive approach. By working with a network of lenders, they can accommodate a broader range of credit profiles, providing more options for shoppers. This flexibility improves the likelihood of completing a sale and enhances customer satisfaction, as shoppers are more likely to find a financing option that suits their needs.

The future of POS financing in the retail sector

As the retail landscape continues to evolve, POS financing is becoming vital for businesses looking to remain competitive. The choice between single or multi-lender platforms will shape how effectively you can cater to your customers’ financing needs.

Retailers can offer a more inclusive and flexible financing solution by choosing a multi-lender approach and incorporating an embedded finance platform. This approach increases approval rates and enhances the overall customer experience, leading to higher average order values and increased sales.

Conclusion

Incorporating POS financing into your retail strategy can be a game-changer, especially in industries like furnishings where high-ticket items are standard. While single-lender solutions may serve a niche market, multi-lender platforms provide a more inclusive and effective way to meet diverse customer needs. Integrating embedded lending networks into your POS system offers a seamless, branded financing experience that drives customer satisfaction and boosts your bottom line.

Choosing the right POS financing platform will set the foundation for a more prosperous future in retail. It will allow you to meet evolving customer demands and stay ahead in a competitive market.