More payment options, more sales opportunities for you!
Competition between merchants is at an all-time high. To stay on top, merchants are exploring new and creative avenues to cultivate stronger and more personalized relationships with their shoppers. Some of those efforts have included memberships, coupons, exclusive items or express shipping. The end goal is to always increase sales. The simplest way to do so, is by providing your customers with choice and flexibility in payments through point of sale financing. By incorporating consumer financing into your business, you are maximizing the opportunity of building more powerful relationships with your customers.
The attitude towards credit cards is changing. In a survey of over 1000 consumers ages 22 – 44, nearly half said they were less satisfied with their purchases knowing they’re carrying a hefty balance on their credit cards for that purchase. It’s important to remember, credit card interest rates vary from 18-29.9% and there is no set pay off date. In the same survey reported by American Banker, 87% of respondents expressed interest in paying for large purchases via monthly installments. The respondents emphasized that the most appealing aspect of an installment plan is the fact that it is a line of credit that is not associated with their credit card. They also appreciated the transparency provided, for example, knowing how much they are going to pay monthly and when the purchase will be paid off entirely.
The Federal Reserve Bank of New York reported that credit card debt is at an all-time high of $800 billion. It demonstrates that Americans still love their credit cards but the number of active accounts is well below crisis level. This data reveals that consumers are trying to avoid revolving debt. Especially Millennials and Generation Zers who have favored debit cards and are more conscious of their spending habits. It’s important to acknowledge that these consumers will make up more than 40% of the consumer landscape by mid-2020, yet 63% of Millennials and Generation Zers do not own a credit card. Think about how the change in consumer attitudes will affect your sales in the near future.
To combat the declining use of credit cards, consumers have been looking for alternative payment options. Fifth Third Bancorp revealed that Millennials and Generation Zers have very little problem taking out a loan to pay for everyday goods or high-value items such as a laptop, vacations, etc. Point of sale financing is the perfect solution for merchants conducting business in a sea of evolving consumer attitudes.
Imagine asking your customers these questions when they are checking out with their purchase:
-What monthly rate are you comfortable paying?
-How long do you want the financing terms to last?
-What sort of interest rate do you want?
Point of sale financing is essentially just that, asking your consumers which financing terms they would like to select for checkout. Merchants who have incorporated point of sale financing in their business have a competitive advantage because they are able to offer their customers personalized payment options. Forrester reports seeing a 32% increase in sales to those companies that offer POS financing. However, when offering consumer financing from a multi-lender platform like ChargeAfter, merchants have reported enjoying a 45% increase in sales. The benefits of point of sale financing are beneficial for consumers because there are accommodating terms, controlled payments, a set pay off date, 0% interest, and it does not impact credit scores in a negative manner as long as the terms are met. The fact that POS financing is a form of personal loan means the consumer’s credit score will be affected positively with set on-on time payments.
Consumer financing is just the tip of the iceberg for merchants, it is important to acknowledge other data which may be affected positively by offering your consumers POS financing. For example, margins, acquisition costs, and cart abandonment rates. When offering consumers alternative payment methods at checkout, you are creating more opportunities for your business to succeed.