Tag: ChargeAfter

MAG Annual Conference and Tech Forum

Posted on by ChargeAfter

MAG’s Annual Conference and Tech Forum is on September 10-13, 2023, at the Hyatt Regency in Atlanta.
Visit us at booth #52.

The 2023 Annual Conference Tech Forum will delve into the intricacies of payment technology. This event aims to foster connections between merchant IT professionals, their business associates, and technology sponsors. It does so through educational sessions concentrating on technology and stimulating networking activities promoting engagement.
Connect with experts and top technology suppliers focused on emerging payment technologies.

Listen to our experts speak on Monday, 11 September, at 2:20 pm, about How Large Merchants Are Driving Innovation Through Payments and Consumer Financing.
We will discuss how the payments and consumer financing industry faces significant changes, adapting strategically to economic uncertainty and consumers’ demand for personalization and choice. Merchants must grasp this new landscape to optimize conversion and customer experience. Session panelists will discuss how large merchants are innovating through their payment and financing offers, covering critical aspects like factors driving change, consumer adoption rates, merchant strategies, priorities, and the changing role of data.

 

Hyatt-Regency-Atlanta-MAG Annual Conference and Tech Forum

* Source

 

Empowering Consumers: A Review of Point-of-Sale POS Financing Products for Retailers

Posted on by chargeafterdev

In the dynamic world of retail, Point-of-Sale (POS) financing, a type of embedded lending, is proving to be a game-changer. Its rapid growth mirrors shifting consumer needs and reflects the changing landscape of the retail industry. According to Future Market Insights (FMI), the embedded lending market, including POS financing, will exceed $32.5 billion by 2023 due to the rapid adoption rate of fintech solutions.

Traditional credit card usage is significantly slowing as younger consumers seek more flexible and accessible alternatives. Unlike the conventional one-size-fits-all approach of credit cards, POS financing platforms offer tailored solutions that cater to the unique needs of different customer segments. The result? A shift towards more versatile financing methods, particularly among younger and underserved shoppers.

Embedded finance solutions come in various forms, each with its unique benefits. From revolving lines of credit that offer a set borrowing limit that businesses can repeatedly tap into to the allure of 0% APR programs that promise zero interest for an introductory period, these POS financing options are as diverse as they are flexible.

Furthermore, Buy Now Pay Later (BNPL) programs have emerged as a popular short-term installment solution. Offering an easy-to-understand structure, BNPL allows consumers to purchase goods immediately and pay for them over time, making the entire process hassle-free. Similarly, the lease-to-own concept has found favor, particularly for subprime borrowers seeking to purchase high-priced items such as appliances, furniture, and electronics.

Types of Retailers Using POS Financing

Retailers in many verticals are adopting POS financing and making it a strategic priority given its flexibility and conveniences. As inflation continues to impact customers, demand for POS financing is rising. According to ChargeAfter data, demand for point-of-sale financing increased by 55% in the first quarter of 2023, compared to the same period in 2022. Retailers benefit from offering a robust POS financing experience that meets the needs of all of their customers, especially those selling big-ticket goods or services that are purchased infrequently. In 2023 retailers that are prioritizing upgrading their POS financing offers include:

E-commerce Stores

Online retailers often use POS financing as it can easily be integrated into their checkout process. This allows consumers to choose a financing option at the point of purchase. However, it’s important for many retailers to offer an omnichannel financing experience. 

Electronics Stores

Given the high price of many electronic items such as televisions, laptops, and smartphones, electronics retailers often offer POS financing to make these purchases more affordable for consumers. Customers need to be able to access financing both in-store and online, depending on how they prefer to shop. Additionally, as many electronic retailers serve businesses, they also need to consider B2B financing in their POS offer.

Furniture Stores

Similar to electronics retailers, furniture stores often sell high-ticket items that can be out of reach to many. POS financing can help increase sales and average order value by making these items more accessible to consumers. Retailers need to consider offering an omnichannel financing experience including pre-approval online before visiting a store. They also benefit from offering financing options that cover a range of customers according to different credit scores. 

Home Improvement Stores

Stores that sell appliances or home improvement goods like hardware and construction materials often use POS financing. These items can range in price and financing allows consumers to make these necessary purchases more manageable.

Healthcare Providers

Healthcare and beauty business provide elective surgeries and other costly procedures. They make their treatments accessible to more people when they offer POS financing. By offering POS financing, healthcare providers democratize services that were previously out of reach to many. 

Automotive Dealerships

Dealerships often use POS financing when selling and repairing cars. They may offer financing options, from traditional auto loans to lease-to-own options.

Jewelry Stores

Given the high price of jewelry, these retailers often offer POS financing to make purchases more feasible for consumers.

Types of POS Financing Products

By offering different types of financing products at the point of sale, retailers  meet the needs of more customers.

Revolving Credit Line

A revolving line of credit is a flexible loan arrangement between a financial institution and a customer that establishes a maximum loan balance that the lender permits the borrower. It allows the borrower to use funds up to a set limit and repay them, potentially over and over again. Unlike a traditional loan, where the borrower receives a lump sum upfront and starts paying it back in installments, a revolving line of credit lets the borrower withdraw funds up to the set limit as needed. Interest is charged only on the borrowed amount, not the entire credit limit. Once the borrower repays any portion of the borrowed amount, that portion becomes available again for future use. This “revolving” structure gives the borrower the flexibility to manage their borrowing and repayment schedules within the agreed terms. A typical example of a revolving line of credit is a credit card, where the cardholder can spend up to a specific limit, repay the balance, and then spend again.

Long-Term Installment Loans

Long-term installment loans are loans that borrowers repay over a set number of scheduled payments or installments over an extended period. Depending on the loan agreement, this period can range from several months to several years. Long-term installment loans can be secured or unsecured. Secured loans require collateral, such as a house or a car, and typically have lower interest rates because the lender can seize the collateral if the borrower defaults. Unsecured loans, which are provided at the point of sale, do not require collateral but usually have higher interest rates to compensate for the increased risk to the lender.

The terms of long-term installment loans, including the loan amount, interest rate, and repayment schedule, are typically determined at the outset and spelled out in the loan agreement. Each installment payment reduces the principal amount owed and covers the interest on the debt, making these loans easier to budget for than revolving credit lines, where the minimum payment can vary. Long-term installment loans are often used for major purchases or investments, such as buying a house (mortgage), buying a car (auto loan), or funding higher education (student loan). They provide borrowers with the means to afford big-ticket items and significant expenses they couldn’t cover upfront, spreading the cost over an extended period.

0% APR

0% Annual Percentage Rate (APR) refers to a promotional interest rate offered by lenders where no interest is charged on the principal amount for a specified period. This period can range from a few months to a few years, depending on the terms set by the lender. Often seen in credit cards or auto financing, this offer allows borrowers to finance purchases or transfer balances from high-interest accounts without accruing additional interest during the promotional period.

It’s important to note, however, that once the promotional period ends, any remaining balance starts to accrue interest at the regular rate as defined in the terms of the agreement. Moreover, 0% APR offers usually require the borrower to have good to excellent credit, and the terms may stipulate that if a payment is missed or late, the promotional rate ends prematurely, and a higher interest rate applies. It’s, therefore, crucial to understand the terms and conditions attached to a 0% APR offer before proceeding.

Buy Now Pay Later (BNPL)

BNPL, or Buy Now, Pay Later, is a type of short-term installment financing that allows consumers to purchase goods or services immediately and pay for them over time. Typically, payments are made in fixed installments over a set period, such as weeks or months. One of the main attractions of BNPL for consumers is that, in many cases, these payment plans do not incur high interest or fees, provided payments are made on time. Some BNPL services offer 0% interest financing if the balance is paid within a specified promotional period. This can make BNPL more affordable than traditional credit cards for some consumers, particularly for more expensive purchases.

Consumers need to understand the terms of their BNPL agreement. Late fees may apply if payments are not made on time, and interest may be charged on the remaining balance. In some cases, if the balance is not paid off by the end of the promotional period, interest may be charged retroactively from the purchase date.

BNPL has seen a surge in popularity in recent years, particularly among younger consumers, and is now offered by a wide range of online and physical retailers. Typically BNPL is used for small-ticket items with a value of between $50 and $1000 (Consumer Financial Protection Bureau). Based on five surveyed lenders from 2019 to 2021, BNPL loans grew by 970%, from 16.8 to 180 million. The dollar volume grew by 109%, from $2 billion to $24.2 billion.(Consumer Financial Protection Bureau). 

Lease To Own

“Lease to own”, also known as “rent to own”, is a type of agreement that allows a customer to lease a product with the option to purchase it at the end of the lease term. This financing option is typically used for expensive furniture, appliances, vehicles, and electronics for subprime customers. The customer makes regular payments over a specified period in a lease-to-own agreement. These payments contribute toward the total purchase price of the product. At the end of the lease term, the customer can buy the item for either a small residual amount or the sum of the remaining unpaid purchase price.

The advantage of a lease-to-own agreement for customers is that it allows them to use and enjoy an item immediately without paying the total purchase price upfront. It can benefit those who cannot afford high-cost items or do not qualify for traditional financing. However, it’s worth noting that the total cost paid over the lease term can be higher than the item’s original price due to the inclusion of interest and fees. Therefore, customers should carefully review the terms of a lease-to-own agreement before proceeding.

B2B Financing

B2B POS Financing (point-of-sale financing), is allows businesses to finance purchases at the point of sale, the same way consumers do. This type of financing is often used for purchases of larger quantities of goods or services since businesses typically purchase in bulk to meet operational needs, inventory requirements, or to fulfill contracts with their own customers.  Most merchants provide their own b2b financing, usually with offers with 30, 60, or 90-day payback.  These terms are not favorable for many businesses, especially SMBs, and new providers are coming into the market offering business loans with expanded terms. These new POS financing options offer immediate approval (or denial) of credit at the point of sale, making the purchasing process quicker and smoother and resulting in higher approval rates. The buyer can repay the amount over time per the terms of the financing agreement, which can be up to 12 months, giving businesses greater flexibility. B2B POS financing can benefit both the buyer and the seller. For the buyer, it provides immediate access to needed goods or services without a significant upfront investment. For the seller, it can facilitate significant sales, increase cash flow, and foster stronger customer relationships.

 

Challenges of Single-Lender POS Financing

While the benefits of POS financing are manifold, relying on a single lender can be limiting. Single-lender solutions can lead to lower approval rates and a poor customer journey. Declined shoppers start the POS financing process again, resulting in cart abandonment, and affecting sales and customer loyalty. There is also the risk of being subject to the changing lending conditions of a single financial institution.

Why Retailers Must Start With Embedded POS Financing Platforms First

Many retailers are turning towards embedded finance platforms that offer many lending options through a single gateway to counter these challenges. With an embedded lending network, retailers can manage multiple financing options like BNPL, installment loans, and lease-to-own, providing an omnichannel financing experience.

Indeed, research by ChargeAfter suggests that 66% of retailers prioritize implementing a consumer financing platform that manages the entire financing cycle, including reconciliations, chargebacks, and dispute resolution.

An embedded finance platform also removes the burden of managing complex requirements from the retailers, facilitating seamless management of waterfall financing, in which applications are automatically sent to lenders in a sequence until approval is obtained.

Merchants are thus looking for point-of-sale financing platforms that offer white-label consumer financing solutions and BNPL white-label options, giving them control over the customer experience while handling the complexity of lending and compliance in the background.

 

Conclusion

As retailers adapt to the evolving needs of their customers, it’s clear that the future lies in leveraging robust POS financing platforms. Offering an omnichannel lending experience through an embedded lending platform can significantly enhance the shopping experience, increase approval rates, and boost sales, making it a win-win for consumers and retailers.

Through white-label POS systems and a waterfall finance approach, retailers offer consumers the flexibility they desire and a better experience.

Retailers that adapt to these changes and invest in POS financing solutions today will undoubtedly be better positioned to cater

To the needs of the next-generation consumer, we are leading the way in the ever-evolving world of retail.

With embedded financing becoming increasingly popular, it’s time to embrace this trend and reap the benefits of enhanced customer satisfaction and increased sales. After all, in retail, customer experience is king – and an omnichannel financing experience through a robust POS financing platform is a significant step in that direction.

POS Financing: How Furniture Retailers Can Beat Declining Approval Rates

Posted on by chargeafterdev

As we enter the second half of 2023, economic uncertainty shows no signs of abating. Big-ticket items, like furniture, continue to be out of reach for many shoppers. This is exacerbated by lenders adjusting their underwriting strategies and approving fewer point-of-sale (POS) financing applications. Despite this challenging environment, furniture retailers can conquer declining financing approval rates and keep their customers happy. We explore how.    

Why Declining Approval Rates Continue to Matter

The current economic landscape, marked by rising inflation and increasing Merchant Discount Rates (MDRs), puts considerable financial strain on consumers. It leads to increased APRs, lower credit limits, and reduced purchasing power. At the same time,  individual lenders are approving fewer applications. This makes it harder for consumers to secure financing for their purchases.

Declining approval rates are likely to continue. Lenders are driven by risk management considerations. They tend to tighten their risk models and underwriting strategies in market instability. This cautious approach aims to protect lenders’ assets and minimize potential losses. As a result, lenders may approve fewer loans, making it harder for borrowers to get credit.

Additionally, regulatory measures play a crucial role in shaping lending practices. Regulators aim to protect consumers from over-borrowing and ensure transparency. They may introduce stricter guidelines and oversight for lenders. This regulatory environment often leads to a more conservative lending landscape. The result is decreasing approval rates, particularly for riskier loan products or borrowers.

How Declining Approval Rates Impact Furniture Buyers 

The decline in consumer finance approvals has clear consequences for retailers. It results in fewer sales and has a negative impact on the customer experience. Meanwhile, there is a shift occurring in shoppers’ credit profiles making the situation more complicated.

Consumers who were once approved by prime lenders at the start of 2022, now only qualify for near-prime loans; near-prime consumers are now subprime borrowers, making POS financing inaccessible for most of an already underserved population for POS financing. A survey by ChargeAfter found that only 17% of retailers offer subprime options.

Another audience to consider is B2B. Many furniture retailers are expanding to serve business clients. This way they tap into new market segments and diversify their revenue streams. Yet, point-of-sale financing for businesses often has approval rates below 15%.

The shift from a single-lender model to a multi-lender solution increases access to best-fit financing.

The Benefits of a Multi-Lender Approach

A multi-lender approach provides shoppers with financing choices. Lenders specialize in lending products usually designed for a specific credit profile. POS financing that meets the needs of the credit spectrum boosts the most important KPIs.

For example, retailers that use ChargeAfter’s platform to manage their POS financing enjoy up to 85% approval rates. ChargeAfter’s data shows that demand for POS financing increased by 62% in Q1 2023 compared to the same period the previous year, while approval rates for retailers using ChargeAfter went up by 14% despite lenders adjusting their credit boxes.

With approval rates from individual lenders fluctuating, adopting a multi-lender configuration is a critical strategy to ensure customers have consistent access to necessary funds in order to maintain and even increase approval rates.

How to Maximize Customer POS Financing Approval

In an unpredictable retail environment, maximizing customer point-of-sale financing approvals is vital. This is why retailers plan to expand their portfolio of lenders in 2023, according to a survey by ChargeAfter. 

Merchants who try to stitch multiple lenders into omnichannel checkouts run into problems. The process involves complex integrations that can take months to implement. When implemented, retailers then face the complicated challenge of managing multiple systems. This approach provides a poor customer experience, since customers who are declined by one lender have to restart the process or abandon their carts, in a moment of the customer journey when speed and convenience are crucial. A streamlined, efficient application process improves sales conversion and customer satisfaction.

Retailers are simplifying the financing process with a platform-first approach, which is becoming more popular as new technologies emerge.

ChargeAfter: The Platform-First Approach to Point-of-Sale Financing

Point-of-sale (POS) financing has rapidly become a critical aspect of the customer experience, impacting approval rates, average order value (AOV), and customer loyalty. ChargeAfter’s platform-first approach to POS financing provides a robust solution.

With ChargeAfter’s platform, retailers easily embed POS financing into omnichannel purchasing journeys. This connects their customers to a network of over 40 trusted lenders that cover the full credit spectrum using a waterfall approach. The platform introduces a more seamless and efficient process for customer financing, enabling merchants to seamlessly provide a wider choice of financing options.

A vital benefit of a platform-first approach is higher approval rates. More approved applications mean more completed sales, contributing directly to retailers’ revenue growth. Furniture retailers using ChargeAfter’s waterfall platform increased AOV  by 22% in the first quarter of the year in 2022 versus the same period in 2022, suggesting that consumers are turning towards financing to buy big-ticket purchases as prices rise.

A platform-first approach enhances the customer experience, offering a seamless and inclusive financing process. Shoppers enjoy less hassle, more flexibility, and financial empowerment, resulting in a more positive shopping experience and improving customer loyalty. It also provides access to data and analytics on customer financing behaviors. This enhances the understanding of customer preferences, trend(s) identification, and strategy fine-tuning. 

Jerome’s Furniture, a family-owned chain of discount furniture stores in Southern California, improved its financing offer with platform first approach. Since implementing ChargeAfter, the company has seen a 67% surge in financing adoption with consistently high approval rates. The strategy has been so successful that Jerome’s Furniture leverages its financing offer in its marketing campaigns. 

Investing in consumer education around alternative financing solutions could also prove beneficial. Customers will feel empowered and better equipped to navigate the financing landscape as they become more informed, increasing their purchasing confidence. Ultimately, a combination of innovative financial partnerships, consumer-centric policies, and education may bridge the gap between customer desire and purchase reality in these challenging times.

Moreover, a multi-lender platform simplifies retailers’ operational load. It makes it easy to manage disputes and chargebacks, and ensures compliance. ChargeAfter manages the complete post-sale financing cycle leaving merchants to focus on their core business.

In this economic climate, providing a choice of financing offers isn’t a service upgrade—it is a necessity. An exceptional embedded lending experience ensures the stability and longevity of retail businesses and safeguards consumer purchasing power. A multi-lender point-of-sale strategy has become essential for weathering economic uncertainty.

Conclusion

The platform-first approach to POS financing is a multifaceted solution helping retailers to optimize their financing processes. By employing a multi-lender platform like ChargeAfter, merchants can enhance their POS financing approval rates, AOV, and customer loyalty, while offering an unparalleled shopping experience.

 

Ready to get your financing right? Book a Demo

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

Posted on by chargeafterdev

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

Posted on by chargeafterdev

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/

Jerome’s Furniture Case Study: Free Download

Posted on by chargeafterdev

Jerome’s Furniture: A Legacy of Quality and Growth:

Established in 1954 by Jim Navarra, Jerome’s Furniture has built a legacy of delivering exceptional quality furniture for over six decades. What began as a single storefront has now expanded into a chain of 25 stores spread across California, catering to a vast customer base. Jerome’s Furniture has also embraced the digital age with a thriving e-commerce website, allowing customers to shop conveniently online.

 

Jerome’s success with ChargeAfter:

Recognizing the importance of providing flexible financing options to their customers, Jerome’s Furniture forged a partnership with ChargeAfter and integrated ChargeAfter’s consumer financing platform. This collaboration was a turning point in the furniture retailer’s financing strategy, significantly increasing customer financing adoption.

Since implementing the new financing strategy, Jerome’s Furniture has witnessed a remarkable 67% surge in customer financing adoption. This surge means many customers now use the store’s flexible payment options. Even during challenging times marked by inflation and market uncertainty in 2022 and 2023, approval rates have remained consistently high. This accomplishment reflects Jerome’s Furniture’s commitment to providing financial access to its customers, empowering them to bring home quality furniture without unnecessary financial burdens.

The success achieved by Jerome’s Furniture provides valuable insights into the impact of consumer financing on retail businesses. By embracing ChargeAfter’s platform, the furniture retailer has expanded its customer base, enhanced customer satisfaction, and ultimately drive business growth. The case study showcases how a strategic partnership and a customer-centric approach can lead to exceptional results.

Jerome’s Furniture’s partnership with ChargeAfter’s consumer financing platform has undoubtedly been a game-changer for the company.

The case study provides an overview of their success, highlighting the significance of consumer financing in the retail industry.

 

Download the Case Study! FREE

If you want to learn more about how Jerome’s Furniture achieved a 67% increase in consumer financing adoption while maintaining high approval rates. We invite you to download the complete case study. Gain valuable insights and unlock new possibilities to help your business thrive in the ever-changing retail landscape.

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The High Cost of Low Financing Approval Rates – ebook

Posted on by chargeafterdev

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.

 

Discover the Future of Consumer Financing at ChargeAfter’s Booth at Fintech Nexus New York!

Posted on by chargeafterdev

Join us at the Fintech Nexus New York event on May 10-11, 2023, as we explore the dynamic world of financial technology and its impact on the financial services industry. As a comprehensive media organization, Fintech Nexus delivers vital insights, networking opportunities, and motivation, bridging the gap between conventional finance and its future evolution.

We invite you to visit ChargeAfter‘s booth at this event to witness firsthand how we’re shaping the future of consumer financing. As part of the consumer lending track, ChargeAfter is hosting an insightful panel discussion in collaboration with Citi Bank on May 11th, titled “Will Banks Dominate the Future of Consumer Financing?”.

Take advantage of this opportunity to learn from industry leaders about the latest trends and innovations in consumer financing and how banks are positioned to take the lead.

The panel discussion will feature Terry O’Neil, Managing Director, Head of Embedded Commerce and Strategic Growth at Citi Bank, and Meidad Sharon, CEO of ChargeAfter. The conversation will be moderated by Jeffrey Tower, EVP Business Development from ChargeAfter, ensuring a lively and thought-provoking discussion.

Fintech Nexus New York promises to be an exciting event for professionals from the banking, fintech, and investment sectors, with over 5,000 attendees expected. Be part of this exceptional gathering, and remember to drop by ChargeAfter’s booth to expand your knowledge, forge new connections, and get inspired for the future of finance.

See you there!