The Transformative Power of Embedded Lending in Customer Journeys

The retail industry has successfully navigated a period of uncertainty in recent years. Retailers have improved every step of the customer journey by plugging into technology to respond to challenges such as the COVID-19 pandemic and supply chain disruptions. Shoppers today enjoy a better, more personalized customer experience than ever before. We can buy goods and services online or offline, choose to have our purchases delivered in two hours or two days, buy “off the shelf” or customize our purchases – whatever suits us best.

However, during this era of inflation and high interest rates, retailers have a new struggle: providing choice and personalization in consumer financing.

The Evolving Landscape of Consumer Financing

For most of the last half-century, credit cards have been the primary solution for purchase financing. Analysis by McKinsey states that credit cards remain the most popular unsecured borrowing in the United States. Credit card borrowing accounts for 78% of balances, with a 10% growth in transaction volumes in recent years, contributing to transaction values of $49 trillion in 2021.

However, the credit card is beginning to slow as a legacy solution. Traditionally, the credit industry has worked around, rather than with, the increasing segmentation of borrower profiles. Significantly, this limitation is manifesting in the form of a demographic gap. Research commissioned by GlobalData revealed a marked rise in the percentage of under 35s not possessing a credit card — 47% in 2022, compared to 39% in 2016.

Instead, younger and underserved shoppers are adopting point-of-sale loans embedded in the customer journey as an alternative to credit cards. These demographics enthusiastically embraced Buy Now Pay Later (BNPL) as an attractive alternative for consumer financing. BNPL offers convenience through competitive APR rates, predictable repayment schedules, and flexible approval requirements. However, it has its limitations. Originating from the fintech industry, new regulations by the Consumer Financial Protection Bureau threaten BNPL providers as loan defaults grow.

Additionally, this type of loan is only suitable for small-ticket items. Shoppers need an alternative to finance big-ticket purchases such as furniture, electronics, home improvement, jewellery, etc. And while plenty of other lending products are available for these purchases, retailers struggle to offer their shoppers a choice of financing options at the point of sale.

The Challenges of Existing Embedded Lending Frameworks

Embedded lending is experiencing rapid growth, with market revenue reaching US$4.7 billion in 2021 and projected to rise by US$32.5 billion in the next decade. However, given the complexity of embedding multiple lenders into omnichannel customer journeys, currently, most retailers offer a single-lender solution.

This single-lender model limits retailers’ ability to provide financing options that cater to their customers’ needs and preferences. Lenders typically specialize in specific financing products, such as installments, 0% APR, BNPL, lease-to-own, etc., targeting specific customer segments – prime, near-prime, or subprime. This limited financing focus leads to poor approval rates, abandoned carts, lost sales, and customer dissatisfaction. Furthermore, relying on a single lender exposes retailers to the risk of changing lending conditions, especially as lenders tighten their underwriting strategies and approve lower approval rates and transaction values.

Retailers know this, and many attempt to integrate a second lender into their offer. However, this approach results in a heavy lift for the retailer and a poor and fragmented experience for the customer.

However, this is changing. The technology enabling retailers to embed multiple lenders into omnichannel customer journeys is now available.

An increasing number of retailers are embracing a platform-first approach to point-of-sale financing.

Unlocking the Potential of Embedded Lending in Customer Journeys

Given the difficulties in managing multiple lenders, retailers are adopting a platform-first approach quickly. ChargeAfter’s embedded lending platform enables retailers to easily configure a waterfall of lending options that address all credit profiles from credit-invisible to super-prime and everything in between into omnichannel customer journeys.

This model benefits all of the players in the ecosystem. Retailers offer flexible financing options to customers at their moment of need, resulting in up to 85% approval rates, increased sales, higher average order value (AOV), and improved customer satisfaction and loyalty. Shoppers access financing choices from trusted lenders, enabling them to purchase the goods and services they desire with the terms and conditions that best suit their needs and preferences. Lenders, in turn, gain direct access to customers needing their services. This comprehensive solution creates a win-win-win situation for the entire consumer financing ecosystem.

About Kevin Lawrence

Kevin has worked in the banking and finance industry for over a decade. He has worked closely with some of North America’s largest banks and financial institutions and retailers. Kevin is an expert in embedded consumer financing, with a deep understanding of current trends and where the industry is heading.

5 Common Point-of-Sale Financing Mistakes For Retailers to Avoid

As the retail landscape rapidly evolves, one financial trend has emerged as a game-changer, satisfying the ever-increasing demands of modern shoppers: point-of-sale financing. Point-of-sale financing has garnered significant attention in recent years because it provides shoppers with instant purchasing power, flexible payment options, and simplified access to the goods and services they desire. This article explores the rising consumer demand for point-of-sale financing and delves into the factors contributing to its popularity. From its seamless integration into the shopping experience to its appeal to a broad spectrum of consumers, we delve into the 5 most common mistakes retailers make with their consumer financing offer. 

The 5 Most Common POS Financing Mistakes Retailers Make

  1. Working with a single lender
  2. Ignoring the omnichannel experience
  3. Providing a fragmented customer experience 
  4. Overlooking the value of financing data to build customer loyalty
  5. Adding additional lenders without using a platform

 

Mistake 1: Working With A Single Lender

To cater to their diverse customer base and offer the most favorable lending options, retailers must collaborate with multiple lenders catering to various credit profiles. Lenders typically specialize in specific customer segments, such as prime, near-prime, or subprime, and specific loan products like buy now pay later (BNPL), 0% APR, short/long-term installments, lease-to-own, etc. Additionally, geographical coverage is another aspect, as lenders typically only serve one region.

When a retailer relies solely on a single lender, it poses challenges. For instance, if a shopper is declined for a loan at the checkout stage, they have limited alternatives and are likely to abandon their shopping cart. This results in a lost sale and customer, as they might be deterred from future purchases. Moreover, if the lender with whom the retailer exclusively works changes their terms or ceases operations, they find themselves in a difficult situation without alternative lending options.

Mistake 2: Ignoring the Omnichannel Experience

ChargeAfter Omnichannel experience

It’s often said that one should never put all their eggs in one basket, and this is especially true when it comes to the sales experience. Customers are, in the end, individuals with different preferences when making purchases. It is important to offer a consistent experience regardless of how the consumer engages with your business.

Whether your customers are using an app, website, or physical store, they should enjoy a consistent experience, including when it comes to point-of-sale financing, regardless of how they choose to access your services. Shoppers who rely on financing to make a big-ticket purchase, for example buying furniture, will likely prefer to apply for financing online from home before heading to the store with their pre-approval to complete their purchase. This translates into other purchases that customers know they can’t access without financing and where they want to avoid the embarrassment of in-store declines. 

Mistake 3: Providing a Fragmented Customer Experience

While an omnichannel financing experience is critical, it isn’t the only barrier to a fragmented customer journey. When retailers fail to establish a streamlined process for loan applications and approvals, especially when integrating more than one lender into their offer, the result is a frustrating experience for customers. 

Consider a shopper applying for a loan at the point of sale, which gets declined. If the retailer offers more than one lending option, the customer who wants to continue looking for a loan has to start the application process all over again with a different lender. This repetition not only adds unnecessary inconvenience and time consumption for the customer but also creates a sense of frustration and confusion.

This poor experience leads to customer dissatisfaction, a loss of trust in the retailer, and potential purchase abandonment. Retailers should prioritize integrating their financing options into a single platform to establish a cohesive process that ensures a seamless customer experience, minimizing the need for multiple loan applications and reducing the likelihood of customer frustration and disengagement.

Jerome’s Furniture, a discount furniture chain store in Southern California, achieved a 67% increase in consumer financing adoption with high approval rates by embracing consumer financing as part of the customer journey with ChargesAfter’s embedded lending platform.

Mistake 4: Overlooking the Value of Financing Data to Build Customer Loyalty 

Data about customer financing is an invaluable asset that can help retailers make informed decisions across various aspects of their operations. By harnessing insights derived from customer financing data, retailers can enhance their marketing strategies, identify upselling opportunities, and optimize their lenders.

Customer financing data provides a comprehensive understanding of customer purchasing behavior and preferences. By analyzing this data, retailers gain insights into which products are most commonly financed, the preferred financing options, and the specific factors influencing customers’ decisions. With this knowledge, retailers can tailor their marketing strategies to target the right audience, showcase relevant products, and optimize promotional campaigns to resonate with customers’ financing preferences.

Access to individual shoppers financing data is a powerful way for retailers to build personalized customer relationships and highlights upselling opportunities. By analyzing shoppers purchasing patterns and financing histories, retailers can identify customers who have previously financed products and can invest in higher-priced items. With this information, retailers can personalize their sales approach, offer attractive financing options, and guide customers toward upgrading their purchases. This boosts revenue and enhances customer satisfaction by providing tailored recommendations based on their financial capabilities.

Moreover, retailers can leverage financing data to collaborate with lenders and optimize partnerships that provide their customers with the most successful financing options.

Mistake 5: Adding Additional Lenders Without Using a Platform 

Adding additional lenders without using a point-of-sale (POS) platform contributes to a poor customer experience and makes managing post-sale processes such as refunds, reconciliations, and disputes exceptionally complicated. Without a centralized system, each lender operates independently, making it difficult to streamline and coordinate these critical activities. 

Without an embedded lending platform, managing post-sales transactions becomes a cumbersome process. Each lender may have different refund policies, procedures, and timelines, making it hard to ensure consistent and efficient processing. Reconciling transactions across multiple lenders becomes equally complex, as there is no centralized mechanism to track and match payments, leading to potential errors and discrepancies.

Handling disputes becomes a more arduous task as well. Without a unified platform, resolving issues requires interacting with each lender separately, prolonging the resolution process and causing frustration for customers and retailers. The lack of streamlined communication channels and standardized dispute-resolution procedures can result in inconsistent outcomes and an unsatisfactory customer experience.

Additionally, compliance becomes more complicated without a platform. Each lender may have its own regulatory requirements, and managing and ensuring adherence to these varied compliance standards can be daunting. This increases the risk of non-compliance and potential legal issues for lenders and merchants.

Conclusion – A Platform-First Solution

Retailers are increasingly turning to ChargeAfter to embed multiple lenders into a single platform that is easy to integrate and manage to avoid making these 5 point-of-sale financing mistakes. 

The multi-lender approach increases the likelihood that shoppers who seek financing will be approved, with approval rates reaching up to 85%. Unlike single-lender systems, multi-lender platforms meet the needs of shoppers across the credit spectrum, enabling more customers to make purchases through a fast and seamless experience. This broader access to financing options enhances the customer experience, fosters loyalty, and ultimately drives higher sales and AOV. 

Moreover, the embedded lending platform empowers retailers to offer competitive financing terms to their customers. With different lenders integrated into the platform, they can cater to individual customer preferences, enhance their value proposition, and stay ahead in a competitive market.

In addition to customer benefits, ChargeAfter streamline the financing process for retailers. Rather than managing multiple lender relationships and systems, retailers can leverage a single platform that consolidates the entire financing workflow. This simplifies operations, reduces administrative overhead, and saves valuable time and resources.

 

Are you ready to get your financing right? Book a Demo

 

Cash vs. Credit Card vs. Consumer Financing 2023 Trends

With the advent of more sophisticated consumer financing technologies and services, consumers have more options to pay for goods and services, resulting in new spending trends. 

While credit cards are still a primary method of unsecured borrowing for US consumers, their use is declining, especially with the millennials and Gen-Z. Young Americans are also less likely to use cash; data from the Federal Reserve reveals that 35 to 44-year-olds only pay for 13% of their purchases in cash. 

According to McKinsey, the decline in credit card use has partly been attributed to the rise of buy now pay later (BNPL), which has been adopted by 37% of Gen-Z. As interest rates and prices rise, consumer financing at the point of sale rises. In the first quarter of 2023, ChargeAfter saw a 55% increase in point-of-sale (POS) financing applications. 

This article explores how consumers are shifting their payment habits and what this means for merchants.

Cash 

Since the early 2000s, there has been a global shift towards a cashless society, especially with the rise of mobile and crypto wallets. The US lags behind countries like the UK, Norway, China, and Canada in digital adoption. According to data from the Federal Reserve, 20% of transactions in the US are still made in cash. It’s worth noting that the average cash transaction is $22 compared to $112 for credit cards, indicating that it is primarily used for small transactions. In 2022, Pew Research reported that 41% of Americans said they make no purchases with cash in a typical week, compared to 24% in 2015.

cashless economy consumer financing

** PEW Research Centre

Credit Cards

Research by GlobalData in 2022 indicates 47% of Americans under 35 do not possess a credit card, compared to 39% in 2016. Overall, credit cards remain popular and accounted for 40% of US purchases in 2021, according to Statistica. In July 2023, the Federal Reserve published that 20% of US loans were rejected, suggesting that higher interest rates make it more difficult for Americans to borrow. The Fed raised interest rates seven times in 2022, and the average credit card interest rate in the US is almost 25%. For shoppers with a low credit score, the average APR is around 27%, meaning shoppers are looking for an alternative. 

POS Financing

As the technology to underwrite at the point of sale has been developed, multiple POS financing products have become available, mainly driven by fintech companies. These lenders offer diverse loans, including 0% APR, long and short-term instalments, revolving credit, B2B financing, lease-to-own, and BNPL. According to a survey by LendingTree, POS financing services rose by 12% in the United States between 2022 and 2023 and are popular across all age groups. This form of consumer financing allows customers to obtain instant financing at their moment of need, often providing better terms and greater flexibility than a credit card. Data from ChargeAfter shows that the amount shoppers spent using financing increased by 53% in the first quarter of 2023 compared to 2022 in the US.

The Future of Consumer Financing

The trend towards point-of-sale financing will continue as younger generations reject credit cards and consumers face high-interest rates. As financial technology continues to evolve, the potential of consumer financing is fast growing, suggesting an increasingly integrated and versatile financial landscape.

While cash is straightforward and carries no debt, it lacks the security and reward benefits of credit cards and is quickly replaced with tech-centered payment solutions. Credit cards offer flexibility but can lead to high-interest debt and are unpopular with young people. Consumer finance delivered through a POS financing platform that supports multiple lenders and is embedded into omnichannel customer journeys is fast being adopted by retailers to give their customers financing choices anywhere they shop. 

 

References

https://moneytransfers.com/news/2023/02/03/cash-vs-credit-card-spending-statistics

https://fortunly.com/statistics/cash-versus-credit-card-spending-statistics/ 

Over 20% Of U.S. Loans Rejected In Last Year—Hitting 5-Year High (forbes.com)

https://20831387.fs1.hubspotusercontent-na1.net/hubfs/20831387/e-books/The_High_Cost_Of_Low_Approval_Rates%20(6)%20(1).pdf 

https://moneyzine.com/personal-finance-resources/cash-vs-credit-card-spending-statistics/ 

https://www.pewresearch.org/short-reads/2022/10/05/more-americans-are-joining-the-cashless-economy/

The High Cost of Low Financing Approval Rates – ebook

In today’s ever-evolving retail landscape, businesses must stay ahead of the curve and understand the importance of consumer financing. However, many retailers face low financing approval rates and hence miss out on the opportunities to attract new customers, improve their experience with the brand and build loyalty, ultimately leading to lost revenue. This is where ChargeAfter‘s latest ebook, ‘The High Cost of Low Financing Approval Rates,’ comes in.

The ebook covers various topics relevant to the current retail landscape, including the consumer demand outlook in 2023-2024 and opportunities to gain through consumer financing in 2023. It also dives into BNPL adopters, different types of point-of-sale financing, and the benefits of embedding consumer lending at the point-of-sale.

The ebook provides valuable insights into the different types of point-of-sale financing available, helping businesses make informed decisions about which options to offer their customers.

Another important topic covered in the ebook is the platform-first approach to financing. This approach can support retailers continuously seeking methods to meet the changing customer demands and increase satisfaction.

As there are many complexities involved in integrating and managing multiple lenders and financing options at the point of sale, both in-store and online, there is a growing demand for a seamless and easy-to-use platform for customers and retailers that easily embeds consumer financing at the point-of-sale, empowering retailers to create a better user experience and ultimately increase customer satisfaction and loyalty.

In conclusion, ‘The High Cost of Low Financing Approval Rates’ is a must-read for any business looking to stay competitive in today’s retail landscape. With valuable insights and practical tips, the ebook provides a comprehensive guide to understanding and implementing consumer financing at the point-of-sale. Don’t miss out on the opportunity to increase your revenue and customer satisfaction – download the ebook today!

Download ‘The High Cost of Low Financing Approval Rates’ ebook by ChargeAfter to learn more about consumer financing and how it can benefit your business.

 

The Difference Between Buy Now, Pay Later (BNPL) and Consumer Financing Platforms

The buy now, pay later option has become a widely favored payment method within consumer finance platforms, with over 50% of US consumers utilizing such a service.

What is Buy Now, Pay Later (BNPL)?

 

Buy now, pay later (BNPL) is an innovative payment option that enables customers to acquire products and services without paying the total upfront. Instead, they can instantly finance their purchases and repay them through fixed, interest-free installments over a set period—for instance, a $100 purchase in four equal installments of $25.

Widely used by a diverse range of businesses, particularly e-commerce retailers, BNPL services help boost conversion rates, increase average order values, and attract new customers. Companies that have integrated BNPL services have experienced up to a 30% incremental rise in sales volume. This payment alternative grants customers the convenience of immediate financing for their purchases paid through predetermined installments.

BNPL repayment illustration

As a merchant, you receive the complete payment for the item upfront, excluding any merchant fees, and are not responsible for handling the financing. Buy now, pay later providers undertake the responsibility of underwriting customers, managing installment plans, and collecting payments, allowing you to concentrate on expanding your business.

This guide provides an overview of buy now, pay later payment, and other financing options. It will educate you on their functionality and assist you in selecting a provider.

 

How do Buy-Now-Pay-Later Services Work?

  1. Customers can use BNPL to purchase products or services online or in-store by selecting the BNPL option via an app.
  2. Once a plan is selected, approval from the BNPL platform is obtained, initiating the payment cycle. The first payment is deducted at checkout, while the remaining installments are typically interest-free. Extra costs may be incurred for late payments.

bnpl-fintech-Customer Journey

Businesses obtain the entire payment upfront (excluding any merchant  fees) upon completing the transaction at checkout. Customers make their installments directly to the buy now, pay later provider, often without interest and with no extra fees, provided they pay on time.

 

Do Buy-Now-Pay-Later  Payment Methods Affect A Customer’s FICO Score (Credit Score)?

 

What Is FICO Score?

A FICO score is the number used to determine someone’s creditworthiness. Financial institutions and lenders use this as a guide to determine how much credit they can offer a borrower and at what interest rate. FICO scores can range from 300 to 850. The higher the number, the better. A FICO score is based on a few different factors:

FICO-Score-chart

When customers exercise caution by avoiding overspending and consistently making timely payments, the majority of buy now, pay later payment options should not substantially affect their credit scores.

How Buy-Now-Pay-Later Services Make Money?

Different FinTechs monetize their BNPL platform in different ways. Generally, providers derive income from the merchant, customer, or both. The fees for merchants vary depending on the provider but typically encompass an initial setup fee and a fixed charge for each transaction. Customer fees usually involve late fees incurred due to missed payments.

What Are The Benefits Of Buy-Now-Pay-Later Services?

Seamless checkout experiences are crucial for any business, especially when targeting e-commerce expansion. Customers anticipate smooth, personalized payment experiences that allow them the freedom to select their preferred payment method. Buy now, pay later payment options provide adaptability and ease to your customers, minimize fraud, and enhance conversion rates and average order values.

As the cost of living increases, customer demands for BNPL solutions will likely grow, making it a superior short-term installment payment option even for credit card holders.

Get Paid Upfront And Receive Protection From Repayment Risk And Fraud:

The merchant obtains the entire transaction amount upfront, without delay—regardless of the customer’s success in paying their installments. Consequently, buy now, pay later providers/lender-network assume all customer risks, protecting your business from fraud. In cases where a customer files a fraud-related dispute, the buy now, pay later provider bears the risk and any related expenses.

Extend Customer Reach:

Providing diverse payment methods enables you to establish a relevant and recognizable payment experience, attracting more customers. Buy now, pay later options appeal to younger consumers who frequently lack credit cards: 27% of millennials and Generation Z shoppers utilized buy now, pay later services in 2021*. Additionally, buy now, pay later services to possess well-established marketing channels, including shop directories and email marketing, which may present further opportunities for reaching new customers.

MorningConsult-BNPL-Use-by-Generation-Aug2021

* Marketingcharts.com – August 2021 | Data Source: Morning Consult

Enhanced Customer Experience:

Buy now, pay later payment solutions provide customers with a quicker, more accessible means of obtaining financing. Customers undergo a soft credit check (as opposed to a hard review associated with other financing methods), and there are no separate applications, application fees, or added processing time. Most providers feature easy-to-understand repayment plans and terms. Additionally, returning customers can enjoy a seamless checkout process, finalizing their payments in just a few clicks.

Increased Sales Conversion

Customers are more inclined to complete a purchase if they can pay over time. Buy now, pay later services help alleviate the sticker shock—making four interest-free payments of $50 appears less daunting than a single $200 credit card transaction with accumulating interest.

Increase The Value Of Sales

Buy now, pay later services eliminate the obstacle to making more substantial purchases by enabling customers to split the payment over time, accommodating their budget. For businesses offering lower-priced products, customers might be more inclined to buy extra items when they discover the option to spread the total cost over in installments.

Problems With Providing Buy-Now-Pay-Later

Buy now, pay later (BNPL) is a popular option for consumers who want to purchase without paying the total amount upfront. However, it has many limitations. It is only suitable for specific credit types. BNPL may be an option for those with good credit and a stable income, but it will decline those with lower credit scores, resulting in low approval rates.
Most BNPL loans range from $50 to $1000. For larger purchases, there is a need for other financing options.
Additionally, existing BNPL providers have a one-size-fits-all approach and don’t offer personalized lending. In today’s world – different people need different consumer financing options, and different consumers have unique financial situations; a customized approach can help them access suitable credit for their needs and budget. Without personalized lending options, consumers may be presented with unstable lending options, resulting in an inability to repay, high-interest charges, and potentially damaging their credit score.
The lack of personalized lending options in existing BNPL providers can also be bad for merchants. When consumers are given a one-size-fits-all financing option, it can lead to a higher rate of default and late payments.

Consumer Financing Platforms

While both consumer financing platforms and “buy now, pay later” (BNPL) solutions provide consumers with access to credit, there are some advantages that consumer financing platforms have over BNPL solutions. First, consumer financing platforms often offer more flexible repayment terms, allowing borrowers to choose a repayment period that suits their budget and financial situation. In contrast, BNPL platforms typically require repayment within a short timeframe, which can be challenging for some borrowers. Additionally, consumer financing platforms may offer lower interest rates and fees than BNPL platforms, saving borrowers money in the long run. Finally, consumer financing platforms may offer a broader range of loan options and loan amounts, making them a better choice for consumers who need more substantial financing for significant purchases. The main reason consumer financing platforms are more flexible and carry these benefits is that they connect to multiple lenders and are not the lender itself. Overall, while BNPL platforms can be convenient for smaller purchases, consumer financing platforms are often better for consumers looking for more effective and flexible financing options.

Buy Now, Pay Later Provider Comparison.

BNPL vs Consumer finance

 

Choosing the right buy now, pay later provider depends on the types of products you sell, their prices, and your customer base. When evaluating providers, consider the following:

Repayment terms: Buy now, pay later providers offer varying installment plans and term lengths, ranging from several weeks to multiple years. If your business has a high average order value, seek lenders that provide repayment over an extended period (like monthly installments over six months). Conversely, merchants with lower average order values may opt for fewer installments over a shorter duration, such as four installments over six weeks.

Credit limits: Each customer will have a unique spending limit based on their usage, credit, and repayment history. However, some buy now, pay later providers impose minimum and maximum credit limits. Assess your average order value and choose a provider that offers sufficient credit for customers to complete a purchase.

Customer location: Determine the markets in which you would like to provide buy now, pay later services, taking into account your customers’ locations. Often, this may involve offering multiple buy now, pay later providers to maximize your geographic coverage. With ChargeAfter’s multi-lender platform, this is unnecessary because the ChargeAfter platform connects you to the relevant lenders and services in one platform.

Affirm

Affirm BNPL range from 4 interest-free bi-weekly payments to extended installments for eligible customers of up to 36 months. The usual 0% APR loans range from 3,6, to 12 months.

Afterpay

Afterpay, known as Clearpay in the UK and the EU, enables customers to split payments into four interest-free bi-weekly installments or three interest-free monthly installments. With 20 million active users, it operates in Australia, Canada, France, New Zealand, Spain, the UK, and the US.

Klarna

Klarna Pay in Installments lets customers spread the cost of an online purchase over three or four interest-free payments. Klarna Pay Later in 30 days allows customers to complete a transaction and pay the total amount later, with no extra cost. Klarna Financing provides up to 36 months of credit for approved customers.

ChargeAfter

Multi-Lender Consumer Financing

Offering the power of choice, ChargeAfter provides a single application for personalized point-of-sale financing, guaranteeing approval and acceptance rates for any consumer financing option. ChargeAfter’s multi-lender platform caters to all credit types and currencies and connects consumers with suitable lenders for all e-commerce and in-store financing needs.

Consumer Finance, Not Only BNPL

Unlike other platforms, ChargeAfter allows for various types of consumer finance:

— Straight Revolve:
A type of credit that a borrower can continue to draw from and repay.

straight revolve Revolving-Credit-Facility

* wallstreetprep.com

— Deferred Interest (6/12/18/24 Months):
The interest is deferred during the promotional period. To avoid paying finance charges, the entire balance must be paid off, in full, at the end of the promotional period.

— Equal Pay:
Equal monthly payments are required during the promotional period. Interest does not accrue during the promotional period. This type of financing is designed to pay off promotional balance in full within the promotional period.

— Fixed Pay:
Fixed monthly payments are required during the promotional period. APR is assessed during the promotional period.

— B2B Financing

B2B financing can take many forms, including trade credit that can help businesses manage their cash flow, invest in new equipment or technology, and fund growth initiatives. B2B financing can benefit both the lender and the borrower. It can help businesses maintain strong relationships with their suppliers and customers while accessing the capital they need to succeed.

— LTO

Lease-to-own (LTO) is a financing option to lease a product or equipment with the option to buy it at the end of the lease term. This financing option is also available for businesses or merchants.

— Private Label Credit Cards

A retailer or brand issues private-label credit cards that can only be used to purchase at that specific retailer or brand. These credit cards may offer rewards, discounts, or other benefits to incentivize customers to use the card for purchases. Private-label credit cards can help retailers build brand loyalty and increase sales by providing customers with a convenient financing option and encouraging repeat purchases.

Supports All Platforms

Easily integrate point-of-sale financing options on your Magento, Shopify, WooCommerce, BigCommerce, hybris, custom platforms, and more with simple-to-connect extensions or basic JavaScript code.

Providing POS checkout financing for your website or physical store has always been more complex.

Credit spectrum

Credit spectrum refers to the consumer’s creditworthiness range, from those with excellent credit to those with poor credit. Lenders use credit scores and credit reports to determine a consumer’s creditworthiness, and this information is used to determine the interest rate and terms of a loan. The credit spectrum typically includes different categories, such as prime, near-prime, subprime, and deep subprime, each reflecting a different level of creditworthiness.


Post Sale Management

ChargeAfter offers all-around performance and transaction reporting through an intuitive dashboard. Access your transaction history, monitor live trades, and effortlessly handle settlements, up-selling, refunds, and partial credits with just a click of a button.

White-label Consumer Finance platforms

As a large retailer or established brand, ChargeAfter is dedicated to promoting your brand rather than ours. Tailor the entire point-of-sale checkout financing experience to align with your brand identity and provide customized Point of Sale finance offers that your customers will easily recognize.

Support

ChargeAfter prioritizes the success of our merchants by offering 24/7 support and assistance. Whether you require aid with processing financing settlements, custom reporting, or developing creative for your next buy now pay later financing campaign, we’re here to assist you in achieving your goals.

About ChargeAfter

ChargeAfter’s headquarters is in New York. The company’s investors comprise prominent entities such as The Phoenix, Citi Ventures, Banco Bradesco, VISA, MUFG, BBVA, Synchrony Financial, PICO Venture Partners, Propel Venture Partners, Plug and Play VC.

For more information & or to Schedule a Demo, visit https://chargeafter.com/contact-merchant/

 

ChargeAfter Expands Lender Network in Canada with Leading B2B BNPL Provider Tabit

By adding more B2B lenders to its point-of-sale financing platform, ChargeAfter enables merchants in Canada to provide their business customers with additional B2B financing options

NEW YORK, April 4, 2023 ChargeAfter, the leading multi-lender point-of-sale financing platform announced today that it is expanding its network of lenders through a partnership with Canada’s leading B2B Buy Now Pay Later (BNPL) provider Tabit, powered by Merchant Growth. 

As a result of the partnership, ChargeAfter will provide merchants in Canada with more financing options for their business customers at the point of sale. Financing options are very limited for businesses, resulting in low approval rates. To help merchants provide a solution for their business customers, ChargeAfter partners with financing providers that specialize in serving businesses. 

Tabit is a B2B Buy-Now-Pay-Later solution powered by Merchant Growth. Merchant Growth was recently recognized as the fastest-growing B2B financing provider in Canada. Tabit’s integration into the platform means that merchants that use ChargeAfter to manage their point-of-sale financing can now provide their business customers with installment options from 30 days to 12 months.

Elias Beaino, EVP, Tabit commented “We are thrilled to announce our partnership with ChargeAfter, a leading multi-lender platform. Through this collaboration, Tabit is able to offer its innovative B2B BNPL solutions to even more merchants. We look forward to working closely with ChargeAfter to bring flexible payment options to businesses and help them grow and succeed.”  

Meidad Sharon, CEO, ChargeAfter commented “We are delighted to partner with Merchant Growth to add their Tabit’s B2B BNPL solution to ChargeAfter’s network of lenders in Canada. This new partnership is an important step in our B2B financing program expansion. Embedded point-of-sale financing is fast becoming the new standard for the modern customer journey and I am excited that ChargeAfter’s lending network is leading this change.”

About ChargeAfter
ChargeAfter is the leading multi-lender white-labeled point-of-sale consumer financing platform and lender network for merchants, and financial institutions. Powered by a data-driven decisioning engine and network of lenders, ChargeAfter streamlines the distribution of credit into a single platform that merchants can implement rapidly online, in-store, and across any point of sale.

ChargeAfter investors include Visa, Citi Ventures, Synchrony Financial, Banco Bradesco, MUFG, BBVA, PICO Venture Partners, Propel Venture Partners, The Phoenix, and Plug and Play VC. ChargeAfter is headquartered in New York and has a research and development center in Tel Aviv. For more information, visit https://chargeafter.com/about-us 

About Tabit
Tabit is a B2B Buy-Now-Pay-Later solution powered by Merchant Growth. Tabit was founded in 2021 with the purpose of bringing the consumer buying experience to B2B. Through decades of data and a deep understanding of the borrower and lender landscape, Tabit partners with B2B suppliers to provide small businesses with flexible payment options at point-of-sale and eliminates the risk and expense associated with in-house credit management. Learn more at: https://tabit.ai/   

 

About Merchant Growth
Merchant Growth is a leading Canadian financial technology company that specializes in small business financing. Over the past decade, Merchant Growth has supported Canadian businesses with hundreds of millions of dollars in growth financing. Using an innovative approach that includes the latest technology, complete transparency and thoughtful customer care, Merchant Growth is committed to helping make business financing easy to understand and accessible. To learn more, visit: www.merchantgrowth.com

For further information, please contact
Varda Bachrach, varda.bachrach@chargeafter.com
Investor Relations, ir@chargeafter.com 

PCN Podcast: Solving critical issues within the BNPL market with Meidad Sharon

Introduction:

 

The consumer credit market has evolved significantly, from its limited offline beginnings to the emergence of point-of-sale financing and Buy Now Pay Later (BNPL) options. These developments have provided consumers with greater choice and flexibility. However, limitations in lending offerings at the point of sale – in-store and online – can still restrict consumer options and hinder merchant sales. This is where ChargeAfter comes in, connecting lenders and consumers at any point of sale, offering a seamless solution akin to how Visa and MasterCard operate in the payment space. In this podcast, Meidad Sharon, the founder and CEO of ChargeAfter, explores the evolution of the credit market and how ChargeAfter addresses the limitations in the current market.

 

The Evolution of the Credit Market:

 

In the podcast, Meidad Sharon discusses how the credit market has evolved from a limited, offline solution to one with point-of-sale financing and Buy Now Pay Later (BNPL) options, offering consumers more choice and flexibility. However, he points out how current lenders tend to focus on specific financial products, credit segments, and territories, limiting consumer options and hindering merchant sale conversions.

 

ChargeAfter’s Solution:

 

ChargeAfter aims to address these limitations by easily connecting multiple lenders and consumers at the merchant’s point of sale, online and in-store, providing a seamless solution similar to how Visa and MasterCard connect the payment space. With ChargeAfter, merchants can access multiple lenders in a single integration, covering the full credit spectrum and offering various financing solutions for B2C and B2B customers. This approach aims to optimize financing options, increase sale conversions, and create a more connected consumer credit market.

 

Support Each Lender Unique Underwriting Model:

 

ChargeAfter presents lending options to consumers based on each lender’s unique underwriting model, which considers various data points beyond credit scores. Consumers can then choose the best fit for their preferences from the available credit options, allowing them to find the most suitable financial solution.

 

Future of the Credit Market:

 

The market now recognizes that BNPL and point-of-sale financing are here to stay and will likely be the future of consumer credit. Consumers are likely to expect all their credit options to be available instantly at the point of sale. Major payment players have adopted consumer finance, including BNPL, within the last 18 to 24 months, merging the previously separate payments and point-of-sale financing markets. This trend indicates that BNPL and point-of-sale financing will become a standard offering alongside credit cards and alternative methods like PayPal.

 

ChargeAfter’s Role in Enabling Regulation:

 

As the BNPL market matures, regulation is essential to protect consumers from over-borrowing and to ensure transparent disclosures. ChargeAfter, as the platform embedding lenders and BNPL providers at the point of sale, plays a significant role in enabling this regulation by connecting merchants to regulated and trusted lenders while providing the best solution to consumers.

 

Demand from Banks to Enter or Expand Their Presence in  POS Financing:

 

There is a growing demand from banks to enter or expand their presence in the POS financing and  BNPL market. They have provided credit for many years and are eager to expand their offering at the point of need with multiple consumer financing products.

ChargeAfter supports banks and financial institutions by embedding them in the merchant’s customer journey, shopping carts, and checkout experiences through white-label BNPL & consumer finance solutions, allowing banks to offer financing to their consumers without being a tech expert or a customer experience expert.

 

Sector-Specific Differences in Financing:

 

Point of sale financing and BNPL vary across different sectors. In industries with high average order values, such as healthcare, home improvement, furniture, and electronics, financing is crucial for consumers, accounting for up to 80% of sales. In other industries, financing accounts for 10%-50% of sales, it is on the rise.

 

ChargeAfter’s Vision for the Future of the BNPL Market:

 

ChargeAfter has a big vision for the future of the BNPL market, anticipating more lenders, financing products, and more consumer financing options. They see new forms of financing emerging to cater to changing consumer preferences, like renting items instead of long-term ownership. As consumer demand increases and the number of solutions are on the rise – the need for an embedded lending platform for POS financing becomes inherent to omnichannel customer journeys, simplifying the consumer financing process end to end. 

Financing data will become increasingly important to merchants, lenders, and financial institutions,  enabling them to optimize their offerings and gain better visibility into consumer behavior. ChargeAfter provides control, connectivity, and real-time matching between consumers, transactions, and lenders while addressing data security and compliance challenges for banks and merchants.

 

 

Conclusion:

The consumer credit market has undergone significant changes, and point-of-sale financing and BNPL options have emerged as key players. ChargeAfter is an innovative solution that connects lenders and consumers at the point-of-sale, offering a seamless and optimized financing option for B2C and B2B customers. Its unique technology simplifies complex underwriting, regulations, and compliance needs. Its data-driven approach allows its partners to maximize the benefits of offering point-of-sale financing. The future of the BNPL market looks bright, and ChargeAfter has a big vision to expand its platform by adding more lenders, financing options, and countries. The credit market continually evolves, and ChargeAfter is well-positioned to create a more connected credit market.

 

Take advantage of valuable insights into the evolution of the credit market and how ChargeAfter is changing the game with point-of-sale financing and BNPL options. Listen to the podcast featuring Meidad Sharon, the founder and CEO of ChargeAfter, now to learn more!

 

 

Boost Your Sales Growth: The Benefits of Ecommerce Financing

Consumer finance is not set to grow. It’s growing!

According to data from the Federal Reserve, (POS) Point-of-sale financing makes up approximately 10% of the total unsecured lending balances in the United States. In 2020, credit card balances amounted to around $750 billion, while POS balances totaled about $100 billion. Nevertheless, POS financing is expanding more rapidly than any other category of unsecured lending. It is set to grow at a compound annual growth rate (CAGR) of 20% for the 5 years preceding 2024. (I.e. financial years 2020 up to and including 2024)

Consumer Finance market growth

Similarly, according to McKinsey Consumer Lending Pools, the same trend is can be seen internationally with POS financing making up 11%

growth of point of sale financing pos financing

 

Prudence Research has also shown, how BNPL, a financial instrument for short term installment loans,  falling within the POS Finance umbrella, has grown and how it is forecasted to grow dramatically in the coming years.

For instance, the Buy Now Pay Later market size is forecasted to grow to a staggering 3.2 Trillion dollars by 2030.

buy now pay later market size

Financing can expand the customer base for various purchases, including appliances, electronics,  furniture, home improvement projects, and services like elective medical procedures and dental equipment and procedures. Offering financing options can boost sales for any seller, whether in a brick-and-mortar store, online, or through a call center, and cater to all consumer types.

Buying a product or service that costs between $1,000 and $10,000 is more complex than making a $50 purchase by swiping your credit card. Businesses need to make an effort to attract a broader range of consumers.

Through embedded finance, consumer financing has expanded beyond buy now, pay later and adopted long-term installment payment, 0% APR, revolving lines of credit, and more, to offer consumers flexible payment options.

Industry analysis found how consumer financing increases merchant sales. For instance:

  • According to The Inaugural Citizens Point of Sale Survey by Citizens Financial Group, the most notable finding is that 76% of consumers are more likely to make big-ticket sales when given the option of consumer financing, such as BNPL or other payment plan options.Of those surveyed, 66% want consumer finance alternatives to credit cards.The survey revealed that consumers would prefer non-credit-card consumer financing with fixed monthly plans,  clear payment terms, and a clear understanding of how the amount will be paid off as the most important factors when considering a large purchase.

 

  • Comparably, a study by Futurepay.com reports that 56% of shoppers are more inclined to purchase a high-priced item online if financing options are available. This percentage increases to 73% for frequent online shoppers. These statistics are very close to findings by the Citizens Financial Group.

    shoppers using layaway & consumer finance on big ticket items
  • A recent FREE retailer insights survey by ChargeAfter indicates that from a retailer’s perspective, 85% of retailers expect year-on-year growth in consumer financing.

 

Consumer Finance: Higher Value, More Sales


Merchants selling higher ticket items who offer consumer finance options achieve more sales than merchants without consumer financing options.

‘The Big Ticket: What’s stopping Shoppers’ (big-ticket survey) published its findings.

According to them, financing alternatives stimulate high-value purchases. Over two-thirds of shoppers (68%) and 79% of daily shoppers would be more inclined to purchase a high-priced item if they could divide the cost into smaller payments. For high-priced items under $1,000, almost half of all shoppers (47%) prefer alternative financing over a credit card to complete the transaction. Even at a price as low as $200, 15% of shoppers were willing to switch away from a credit card.

price point when shoppers use consumer finance**

 

Similarly, ChargeAfters’ Retailer survey released in 2023, from a retailers’ perspective, states that merchants recognize that financing options drive big-ticket purchases.

The number of BNPLs merchants offered to customers is not affected by the retailers Average Order Value (AOV). However, other POS financing options vary significantly depending on the AOV of the business. When the AOV is less than $500, companies typically offer 2.5 different POS financing options. However, when the retailer AOV exceeds $500, this number increases to 3.5 different POS financing options. As their AOV increases, merchants seek to diversify their payment options to meet customer demands. There is no one-size-fits-all solution regarding financing options, particularly with a substantial AOV. Offering a limited BNPL of pay in four or six installments is insufficient as customers require more flexibility and choice.


Financing options by Average Order Value (AOV)

Financing options by Average Order Value AOV

Fintech companies at the forefront of consumer finance innovation offer embedded financing & lending technologies making it easier for merchants to integrate omnichannel consumer financing solutions.
Embedded finance solutions that integrate easily, such as ChargeAfters’ multi-lender platform, allows merchants to offer their customers quick, convenient, and personalized financing options.

Customers connect to a wide choice of financial products and lenders in a single application, resulting in an 85% approval rate. Merchants increase sales by offering consumer financing and installment payments on sales where the same customers would typically walk away from the sale.

 

Reduce Cart Abandonment with Consumer Finance


The Big Ticket: What’s stopping Shoppers survey found that 66% of shoppers abandon their carts after adding an item to their shopping cart.
72% of this abandonment was due to the items being too expensive, and 16% because there were no payment options.

shopping cart abandonment reasons

 

 

Another Research conducted by beymard.com in 2022 shows that site trust (18%), complicated checkout process (17%), inability to calculate total order cost upfront (16%), not enough payment options (9%) and. Credit card declines (4%) are the main reasons for abandonment. These statistics can be significantly improved with the correct embedded finance technology.

reason for shopping cart abandonments during checkout

With an embedded lending platform like that of ChargeAfter, merchants can increase sales by decreasing cart abandonment.

Conclusion

 

Reducing cart abandonment is one of the most significant benefits of offering consumer financing and installment payments in e-commerce stores. Many customers abandon their carts because they need help to afford the full price of an item at the time of purchase. However, by offering financing options, merchants can make sales more affordable and accessible, reducing the likelihood of cart abandonment and increasing the chances of a sale.

In addition to reducing cart abandonment, offering financing options can increase customer loyalty and repeat business. Customers who take advantage of financing options are more likely to return to the same merchant for future purchases, as they have established a relationship and trust with the merchant through the financing process.

Offering financing options can help merchants reach a wider audience of potential customers. Many consumers who may not have been able to afford high-ticket items in the past may now be able to do so with financing options, opening up a whole new market for the merchant.

Finally, offering financing options can help merchants stand out from the competition and differentiate themselves in the crowded e-commerce marketplace. By providing financing options, merchants can provide a more comprehensive and customer-centric shopping experience that distinguishes them from other retailers.