eCommerce and POS Financing, a Dynamic Duo
The internet is a modern wonder that has changed the way we view the world. It has revolutionized the way we live, the way we talk and the way we shop. The world of e-commerce continues to grow at a rapid speed and humans have the power to receive almost anything they desire at the touch of their fingertips or, at the sound of their voice.
Until recently consumers felt the need to go to a physical store when purchasing big-ticket items. This involved quite some effort, think about it. It involves taking time out of the day, making sure there’s cash available, it involves getting in the car and driving through traffic, and then dealing with a crazy parking lot. That doesn’t even include what goes into selecting a product and standing in line to checkout. Consumers no longer have to worry about this as much because e-commerce is becoming so powerful. Shoppers appreciate the fact that they can make purchases online, and have recently become more trusting of online processes because retailers have transformed their e-commerce business practices. For instance, by offering more favorable returns and insurance policies. As more purchases are being made online, traditional in-store point of sale financing has also moved online!
One problem which still continues to be prominent in the e-commerce industry is cart abandonment rates; 81% of shoppers abandon their carts online!
There are a few variables that affect cart abandonment rates:
28% of shoppers abandon their carts due to complexities during the checkout process
19% leave because they do not trust the website with their credit card information
8% leave due to lack of payment options
4% skip the checkout because their credit cards are declined
This data demonstrates that the longer the checkout process, the more likely customers will walk away. It is important for the purchasing experience to be user-friendly, simple and accommodating to consumers so you have the ultimate chance of converting your lead into a sale.
As we’ve pointed out, consumers have become more cognizant of their time and budget. They are fully aware of the burden credit card debt entails and the interest rates that come along with it. Apart from interest rates, once consumers pass the 30 – 40% utilization mark of their credit cards, the credit score starts to decline because bureaus see the individual is reliant on credit instead of hard cash or debit. Citizens Financial Group found that 76% of consumers surveyed said, they’re more likely to make a purchase if it is backed up by a simple and seamless point of sale financing experience. The study also discovered that two-thirds of consumers’ desire for credit cards have satiated. US cardholders think installment plans are more helpful for budgeting. Essentially they want credit, but they do not want to deal with the burden of having a credit card and the high APR that comes with them.
Merchants can modernize their payment model by moving away from co-branded cards, private label cards, and sales finance cards. Instead, think about offering point of sale financing along with traditional payment methods. In a study conducted by Forrester, there was a 32% increase in average order value for companies that offered consumer financing as an alternative checkout method.
Now imagine offering your customers financing from a multi-lender platform with approval rates as high as 85%?
It is likely your cart abandonment rates will decline as your average order value will grow. Think about how much revenue point of sale financing can help bring in when applied to a multitude of industries? Automotive, furniture, travel, entertainment and more! Merchants who use POS financing from ChargeAfter saw a 45% increase in overall sales.