Point of Sale Financing. A more convenient way to pay

Feb 18, 2020

The emergence of new financing options at the point of sale is transforming consumer finance. POS lending is an immediate and convenient credit granting process for consumers that is seamlessly embedded in the checkout process. When this alternative payment option is available to consumers, merchants benefit from potentially higher conversion rates. Seventy-four percent of US cardholders think installment plans are helpful for budgeting and assists in alleviating the stress of making a large purchase upfront.

POS financing is attractive for consumers because it allows them to purchase items in a convenient way. For example, Jake dropped his phone and it broke, to obtain a new one it will cost $700. The only problem is Jake doesn’t get paid for another two weeks and even then he can’t fully afford to pay this fee upfront. He could charge it on his credit card but the only problem is, the payback terms are already set for him and he will likely pay an additional 17- 29.9% APR.  Instead with micro-financing, also known as consumer financing, Jake will purchase the new phone and pay later on terms that best fit his financial situation, he may even add some Airpods to go with his order considering he has the option to finance everything all while receiving 0% APR when the terms are met. 

A second example, Jane is not necessarily in financial stress but she is strategic with how she spends her money. Shopping for the latest trends is what she lives for. With POS financing Jane can add multiple items on her cart compared to the three to four garments she usually purchases at a time. By doing this her order value is increasing, instead of using her credit card which has no set payback date and high-interest rates she can finance her purchase. Jane bought eight garments from Free People coming out to be a total of $675, with point of sale consumer financing Jane will be able to finance these garments over a period of 6, 8, 12 even 48 months! The merchant benefits because their customer just increased her order value by nearly 50%. From 3-4 garments, the merchant was able to sell double the amount of apparel in one transaction!

POS financing is a happy medium between price-minded shoppers and big-ticket online purchases. Unlike traditional credit applications, there are fewer details required from the consumer to process their application. The POS financing application can be easily completed in-store, on a desktop or on a mobile phone! There are only five required fields: name, address, social security number, email, and phone number. Just a few moments later, tailored finance options appear. In the two examples provided, both consumers had the ability to increase their order value because there was no stress of having to pay a large amount of money upfront. With consumers being more cautious of their spending habits and demanding flexibility and control over their payments, technology providers are utilizing innovation on how to deliver convenience. Point of Sale Financing is convenient and strategic. It is much more practical to purchase a $3,905 Pottery Barn L-Shape couch you’ve always wanted over a period of 24 months with 0% APR instead of having the large amount be charged on a credit card upfront.

Borrowers have high expectations from digital offerings. Easy and transparent user experience is essential when it comes to integrating new processes into your business, especially when it comes to checkout options. Keeping borrowers happy can potentially inspire customers across all age groups to use the same method. When installment loans are tailored to meet individual needs, merchants have the ability to make a product more appealing based on financing alone.

Point of sale financing is an instant and convenient credit-granting process for consumers that is seamlessly embedded in the checkout process. Don’t miss out on the countless opportunities you have of generating more sales by only offering traditional payment methods. The consumer landscape is changing, POS financing is booming. Stay relevant in the market place and maximize your business profits by including a consumer financing option at the point of checkout for your customers.

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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.”