How ChargeAfter’s Buy Now Pay Later (BNPL) MultiLender Platform Can Help You Get Higher Approval Rates
Buying a product now and only paying for it later has always had the upper hand in gaining a customer’s attention. And today, the concept is gaining more and more momentum around the globe due to the recent economic decline brought on by the COVID19 pandemic. Customers are looking for more ways to get the most out of their dollars and Buy Now Pay Later (BNPL) or also known as Point Of Sale financing is giving them the financial flexibility they want and need.
Previously, consumers only really had access to credit cards in order to help alleviate some of the financial stress of paying for the product up front. While the credit card system has worked for many, it has also caused financial destruction and amounted to crippling debt for many others. Now, with the new generation of shoppers, consumers are becoming warier of credit cards and are looking for alternative payment methods to get more bang for their buck, this is where BNPL bridges the gap. In fact, 87% of shoppers between the ages of 21 to 44 seek out retailers who specifically offer Buy Now Pay Later options.
This has not only taken care of the needs of shoppers, but merchants are also seeing a rise in sales and average order values! However, like most things in life, not all Buy Now Pay Later providers are created equal. Looking for one that enables you, as the merchant, to attract and retain the customer’s attention is a key factor in boosting overall sales.
So What Is The Best Buy Now Pay Later Business Model To Look For?
The answer is simple. Multi-lender BNPL consumer financing!
So what does that mean? A multi-lender BNPL platform is quite different from others in the way that it enables your shoppers to get the best and most affordable payment options through various lenders. Usually, microloans are provided by merchants to the consumer using what’s known as Prime Lenders. Prime lenders hold most of the cards in their hands, and rightfully so seeing that they are offering up a whole lot of cash. However, gaining access to this cash means that your consumers have to meet strict criteria when applying for the loan. Prime lenders do stringent background checks and base their final decisions on factors such as previous debt history, credit record, and current income.
Unfortunately, many consumers are unable to meet these criteria. Everyone has unique financial needs and putting them in a single box means that they more than likely won’t qualify for the microloan. With very few options to choose from, your consumers are unable to purchase your product, meaning that you miss out on the sale and the opportunity to gain a loyal repeat customer.
With a Multi-lender BNPL platform, it is a very different scenario and outcome…
How Does Multi Lender BNPL Financing Work?
A multi-lender, or waterfall financing network broadens the lending potential. BNPL service providers like ChargeAfter cast a wider net for consumers when seeking out the right lender and terms. Instead of applying for the microloan with a prime lender, shoppers are also able to apply for the same loan amount from near-prime and subprime lenders. Near-prime and subprime lenders do not have the same stringent protocols and criteria in place compared to prime lenders, instead, they offer various terms based on the financial wellbeing of the customer. With this type of waterfall financing, should a consumer fail to meet the criteria of a prime lender, they are automatically vetted against a near-prime lender. If the consumer is unable to meet the criteria of a near-prime lender, they are then given the opportunity to source the loan from a subprime lender.
While this may seem like a lengthy process for your shoppers, it only takes a few seconds and without ever having to leave your website page either!
How Does Multi-Lender Buy Now Pay Later Financing Help To Increase Approval Rates?
It all boils down to the power of choice and financial flexibility. By giving your customers more freedom to choose their lending terms without worrying about in-depth credit checks and income requirements that most prime lenders have in place, there is more opportunity for them to actually get an approved loan through various other types of lenders. More approved loans means more sales for your business!
The benefits of multi-lender financing include:
- Customers can choose the best payback terms based on their current financial state.
- Less admin work for your staff.
- Fewer shoppers are turned away when applying for the loan.
- Up to 85% more approval rates.
- Higher AOVs.
- More sales.
- Fewer abandoned carts.
- More repeat customers.
It is very rare that your customers all have the same requirements in terms of their finances and by giving them a payment method that caters to the vastly different needs of your customers, they will not only appreciate your brand but also be more inclined to support your company in the future!