How to strengthen point of sale financing amid a crisis

The COVID-19 pandemic has had a dramatic impact on global economies. The world is feeling the strain with flights grounded, major events canceled, and even celebrities like Tom Hanks testing positive. From widespread toilet paper shortages to social distancing measures, it’s clear that businesses, especially in retail, must point towards finding ways to adapt.

One pressing question remains: What will the long-term effects be on both physical retail and eCommerce?

The shift to eCommerce and at-home living

As people stay home to reduce the spread of the virus, the White House has recommended avoiding gatherings of more than ten people. This Shift has affected daily activities like shopping, dining, and entertainment. Yet, thanks to eCommerce, consumers can comfortably get what they need without leaving the house.

With delivery services like DoorDash and streaming platforms like Netflix, staying in has become the new normal. But does this mean the end of physical retail?

No, but retailers must adapt. Expanding eCommerce offerings, introducing contactless payments, and providing point-of-sale (POS) Financing options will be crucial for maintaining foot traffic and sales.

Why point of sale financing is vital for retailers

If your business already operates online or as a brick-and-mortar store, offering POS financing is critical to ensuring continuity. This will give consumers an alternative to credit cards, allowing higher transaction values and increased conversion rates.

Understanding single lender vs. multi-lender point of sale financing

Not all Point of Sale (POS) financing options are created equal. There are two primary models: single-lender and multi-lender platforms.

Single lender point of sale financing

Single lenders provide a single form of financing, typically through a bank or broker, and usually target consumers with prime or super-prime credit. While this can work in stable economic conditions, it often leads to high decline rates—up to 60-70% of applications may be denied. A crisis like the COVID-19 pandemic can negatively affect business stability, as businesses and consumers may face tighter credit conditions.

Multi-lender point of sale financing for all credit tiers

On the other hand, multi-lender platforms, like ChargeAfter, offer financing from various lenders, catering to consumers across all credit tiers. This flexibility is crucial in a fragile economy, as it ensures higher approval rates and better options for consumers, regardless of their credit score. ChargeAfter’s multi-lender platform approves 80-85% of all applications within two seconds.

The benefits of multi-lender point of sale financing for businesses

One of the key advantages of a multi-lender platform is redundancy. In times of economic uncertainty, having access to multiple lenders means that if one lender tightens its requirements or reduces approvals, others can fill the gap. This significantly provides businesses with much-needed stability when consumers’ credit profiles fluctuate.

With a multi-lender platform like ChargeAfter, retailers can offer a variety of financing options, including:

• 0% APR deferred interest for 6-48 months
• Installment plans
• Open lines of credit

These options ensure that businesses maintain a higher approval rate and attract a broader audience of consumers. By offering multiple payment options, companies can encourage higher cart values and greater customer satisfaction.

How credit impacts consumer confidence during a crisis

During economic stress, consumers may hesitate to use their credit cards due to concerns about their financial future. Some may view their credit cards as an emergency backup, while others struggle to meet scheduled payments.

Offering flexible POS financing options helps alleviate these concerns by providing consumers with more manageable payment plans. This, in turn, encourages consumers to continue shopping, knowing they have options that won’t overextend their credit limits.

Communicating with consumers to build trust

Effective communication is essential during a crisis. Consumers need reassurance that your business is operational and ready to serve their needs. Businesses should:

• Keep consumers informed about operational updates
• Highlight any health and safety measures, such as wearing masks and gloves while handling orders
• Offer special discounts and flexible shipping options

This type of transparent communication strengthens customer loyalty, reminding them why they trusted your business in the first place. When consumers feel safe and valued, they are more likely to return and make purchases, even in uncertain times.

Adapting your product offering to remote workers

With more people working from home, now is the time to rethink your product offerings. Many consumers need items that can improve their home office setups, such as ergonomic chairs, desks, and electronics like extra monitors or headsets.

Consider creating a dedicated “Work from Home” category on your website to cater to this new demand. Not only will this drive sales, but it will also show your customers that you’re attentive to their evolving needs.

The growing role of eCommerce in a post-pandemic world

The COVID-19 pandemic has been a significant catalyst for the Shift toward eCommerce. With social distancing and lockdowns in place, more consumers have turned to online shopping. This trend is expected to continue, with experts predicting that eCommerce will account for an even more significant percentage of total retail sales in the coming years.

For businesses, investing in robust eCommerce financing platforms is no longer optional—it’s essential. Offering flexible payment options like point-of-sale (POS) Financing will give consumers the confidence to make larger purchases online, increasing overall revenue.

Preparing for future market changes with flexible credit options

The truth is, no one can predict how long the current economic uncertainty will last. However, we know that consumers are becoming more cautious with their spending. Many will rethink how they use their credit cards, prioritizing purchases they can finance over time with lower interest rates or installment plans.

Businesses that offer diverse embedded finance solutions through POS financing will be better equipped to navigate future market changes. You’ll maintain sales and foster long-term loyalty by providing flexible, consumer-friendly payment solutions.