Furniture POS Financing – Single or Multi lender

Apr 10, 2020

Furniture POS Financing – Single or Multi lender

Did you know that eCommerce was up 25% in the U.S between March 1st through 11th? In fact, Adobe Analytics reports there has been a 62% increase in the buy-online-pickup-in store option between Feb 24th and March 21st as “shelter in place” guidelines are being enforced across the country. Online shopping has been making a steady increase in retail market share within the last few years. However now, as many retail stores have no option but to close during the COVID-19 pandemic, retailers are heightening their digital presence and communication efforts. Retailers of mid and high-cost,  merchandise such as those in the furnishings industry are utilizing innovative ways to keep their business growing.

A tool that can assist in maintaining high conversion rates and even lift average order values – always, and especially during these times, is offering your consumers point of sale financing. It is an alternative payment for shoppers. Instead of racking up a huge credit card bill, consumers are able to receive financial solutions at the point of purchase in order to assist them in buying goods or services. Point of sale financing is a quick solution for mid to high dollar value checkouts and dividing a purchase into easy and affordable payments.

Are you aware that there is a distinct split within the world of consumer point of sale financing? There are single lenders and there are multi-lender platforms. To the consumer, the distinction is almost impossible to spot but for retailers, it makes a big difference. It can have an effect on the percentage of consumers who are approved or declined for financing, it will impact the financing terms available, and the merchant’s conversion rates.

What is point of sale financing from a single lender?

A single lender who offers point of sale financing as a service will typically only focus on “prime” credit applicants. This means they’re solely interested in consumers with very good to great credit. The strategy of single lenders involves servicing consumers who are least likely to pose risk to the lender meaning, they are only servicing consumers who are most likely to pay back their loans in the allotted time and on their specific terms.

The strategy of single lenders is great but can be limiting to merchants and consumers. The problem with single lenders and how they directly affect your business is that because they are only approving prime credit and super-prime credit consumers, they are declining around 70%~ of applicants. Imagine what that would do to your conversion and cart abandonment rates. These companies only focus on the top 30%~ of consumers with pristine credit. As a merchant in the furnishings industry using a single lender may have a negative impact on maximizing your conversion rates.

What is point of sale financing from a multi-lender platform?

Multi-lender point of sale financing platforms are fairly new. ChargeAfter is the first global network to provide a complete solution to merchants for point of sale financing from multiple lenders. ChargeAfter works with a network of over 10 lenders (and adding more constantly). At checkout, the consumer fills out a short, four field application, consisting of their name, address, social security, and phone number. The application then goes through a “waterfall” of diverse lenders who offer financing to consumers across every credit type. Finally, personalized financing options appear. ChargeAfter is able to provide merchants with 85% financing approval rates.

What does the “waterfall” method consist of?

The waterfall method is simple. Once the financing application is submitted, it is then checked against prime lenders for approval. If the applicant is denied at the first stage, the application moves down to near-prime or “second look” options for approval. If the applicant is still denied, the application is then shared with sub-prime lenders (“lease to own”) for approval. Multiple lenders are checked in the waterfall so various rates and terms are available to shoppers once approved. This allows consumers to pick the best-personalized offer for them at checkout. The applicant may have the option to finance their purchase between a period of 6 – 48 months while receiving 0% APR as long as the terms are met. Merchants who use ChargeAfter’s point of sale financing platform enjoyed a 45% increase in their average order value and a 35% increase in site-wide sales.

It’s necessary for high-cost, low-repeat merchandise, such as those in the furnishings industry to incorporate innovative strategies, like point of sale financing to maximize each sale opportunity. 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.

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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.”