Credit Distribution Through Point Of Sale Consumer Financing

chargeafterdev
Oct 2, 2020

Credit Distribution Through Online And In-store Point Of Sale Consumer Financing

Point-Of-Sale consumer financing has tapped into a whole new market by incorporating technology with our need for instant gratification. By offering shoppers more flexibility when it comes to making payments, you are opening the door for more revenue, increased basket sizes, and a seamless customer experience that is bound to take your business to the next level. And we are not just talking about high-value items like mortgages or cars, we are also talking about everyday items like shoes, appliances, and that undeniably cool pair of sunglasses. 

So why are these instant loans so effective at driving sales? Well, it all boils down to the credit distribution and approval rates. With the right Point Of Sale financing partner who offers a smooth credit distribution process with higher approval rates, you as the merchant will see a noticeable change in profits and return customers.

Let’s take a look at the different credit distribution processes through in-store and online Point Of Sale financing.

How Does Consumer Financing Work?

Consumer POS financing, or also known as buy now pay later financing is a flexible payment option that allows shoppers to purchase the goods or services they want without using credit cards or laying out the cash upfront.

On check out, consumers will select this payment option and fill in a quick application form. Without ever having to leave the checkout page or counter, the customer’s data is matched against qualifying criteria from lenders. If they meet these criteria, they are approved for an instant loan that can be paid back over some time.

Single Lender Credit Distribution

In most cases, Point Of Sale partners will use a single lender for their credit distribution. This means that customer data is matched against a prime lender’s criteria after filling in the application at check out. Prime lenders generally only approve loans based on low-risk borrowers because they usually only have one source of funding. During the customer assessment, prime lenders look at different factors including credit history, credit rating, high income, and existing debts. Should your customer fail to meet the requirements or are considered a high-risk borrower, the loan application is denied. 

While the lender may have avoided high risk, you as the merchant may have lost a sale. Unfortunately, in the case of a single lender platform, roughly 70% of applicants are turned away. 

But what about those shoppers who can afford the monthly payments but don’t meet the prime lender’s requirements? The answer is a multi-lender credit distribution platform. 

ChargeAfter’s Multi-Lender Credit Distribution

ChargeAfter’s multi-lender platform gives consumers easy access to a network of lenders that have tailored solutions to suit their unique financial needs. Much like the single lender platform, your customer’s data is verified against various prime lender requirements. However, the difference is that should your customer’s application be denied by prime lenders, they are then verified against a network of near-prime lenders for a “second look”. If your customers don’t meet the criteria for near-prime lenders, their data is then shared with sub-prime lenders for approval. While it may seem like a lengthy process, the application and approval occur on the checkout page within seconds. 

This diverse network of lenders allows your customers to choose the best financing options for them based on their needs. And it’s not just the consumer who benefits from instant approvals and affordable payments. You as the merchant benefit by closing the sale. In addition to that, higher approval rates also mean that your customers are more than likely going to return to your store when they need to use buy now, pay later solutions. 

Instead of turning away 70% of applicants, you can successfully provide your shoppers with up to 85% approval rates by partnering with ChargeAfter

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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.”