Point of Sale Financing is here

Credit cards, PayPal, and other traditional payment methods have offered shoppers various advantages. They’ve allowed consumers to buy now and pay later, granting access to goods and services that may have otherwise been unattainable. However, as global credit card usage declines, the demand for point-of-sale financing is increasing, pushing multi-channel merchants and retailers to adopt this modern alternative.

The appeal of point-of-sale financing

Point-of-sale financing is becoming an essential tool for both consumers and businesses. Shoppers benefit from transparent terms, predictable payments, and often, 0% interest rates. It also gives them the option to finance their purchase without the risk of maxing out their credit cards, which can negatively impact their credit scores.

Consider these two examples illustrating how point-of-sale financing transforms the shopping experience:

Example 1: Kim’s dilemma with traditional credit

Kim, a college senior, is financially independent and recently experienced her laptop breaking down. She desperately needs a new one and opts for a 13″ MacBook Pro with TouchBar, priced at $2,000. Typically, Kim uses her credit card for emergency purchases, which has a $5,000 limit. At the time, she had already utilized 25% of her credit, leaving her with $3,750.

After buying the MacBook, Kim would have used 75% of her credit, drastically reducing her available credit and leaving her with a hefty balance. With an interest rate between 18–29.9%, she faces uncertainty about how long it will take to pay off the debt, potentially damaging her credit score. Kim now must deal with the fixed terms her credit card company offers, paying increasing interest the longer it takes to settle her balance.

Had Kim chosen point-of-sale financing, she wouldn’t have maxed out her credit card, her credit score would have remained unaffected, and she could have benefited from 0% interest. Moreover, she would still have access to her credit card in case of another emergency.

Example 2: Ron’s Smart Financing Choice

Ron, on the other hand, needs a new laptop for gaming. Apart from his day job, Ron is also a competitive Esports athlete. He has a credit card limit of $8,000, but only 15% is utilized, leaving him with a balance of $6,800. The computer he wants to purchase is an MSI GT83 Titan, which costs $5,230 — a significant investment.

Rather than using his credit card and increasing his credit utilization to 80%, Ron opts for point-of-sale financing at checkout. The application, approval, and personalized financing option took less than a minute to complete. Ron was given flexible repayment terms, choosing to finance the laptop over 18 months with 0% APR. This allowed him to budget comfortably with payments of $290.55 per month while leaving 85% of his credit card limit available for future use.

Using point-of-sale financing, Ron avoided the negative impact on his credit score and felt more in control of his finances.

Why consumers prefer point-of-sale financing

The flexibility offered by point-of-sale financing is a significant factor in its growing popularity among consumers. With accommodating terms, predictable payments, 0% interest options, and no negative impact on credit scores (as long as the terms are met), it’s easy to see why shoppers are turning to this option. Point-of-sale financing often improves credit scores when payments are made on time, as it’s treated as a personal loan.

This modern financing solution provides a precise pay-off date, making it easier for consumers to manage their finances without the uncertainty and high interest rates associated with traditional credit cards.

How point of sale financing benefits merchants

For merchants, point-of-sale financing offers a distinct advantage. It encourages customers to make higher-value purchases by giving them access to a line of credit that isn’t tied to their traditional credit cards. This method increases the likelihood of larger purchases, as customers feel less pressure to pay large sums upfront.

In fact, businesses that offer point-of-sale financing often experience a 44% increase in average order value (AOV) and a 30% boost in overall sales. These benefits make point-of-sale financing a powerful tool for merchants seeking to boost revenue and provide customers with flexible payment options.

As shoppers become more mindful of their spending, point-of-sale financing offers them the choice and flexibility they need, whether for everyday purchases or high-ticket items.