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Big Brands Embracing Consumer Finance

Posted on Mar 27, 2023Nov 27, 2023 by chargeafterdev

Over the past few years, many retailers have concentrated on direct-to-consumer and e-commerce. As part of this – specific consideration has been given to consumer financing, and significant agreements have been made between consumer finance FinTech companies and big-brand companies such as Walmart, United Airlines, Amazon, Lenovo, and many others, even though these retailers already have well-established private label credit card programs.

Consumer appetite for consumer financing and BNPL drives merchant demand for point-of-sale financing.

* https://www.oberlo.com/statistics/buy-now-pay-later-us-users

Beyond surveys, historical growth statistics, or forecasts for rising popularity in consumer finance, the evidence lies with two simple metrics:

— How many companies include consumer financing at their point of sale, and
— Are any big brand retailers are embracing it

The fact is, consumer financing has always been a staple with big retailers.

The difference in recent times is that big brands recognize the benefits of partnering with innovative FinTechs, allowing them to concentrate on their core business while benefiting from new technologies as they are developed.

Previously, this was exclusive to merchants with the resources to integrate or develop point-of-sale finance options into their platform.

Innovation by FinTechs has accelerated the adoption of consumer finance as demand by merchants is fueled by consumers’ need for affordability in the face of the current and imminent challenging financial environment.

It is essential to understand that consumer finance does not exclusively mean Buy Now Pay Later (BNPL), although BNPL does fall under the umbrella of consumer finance.

Evolution of consumer finance

Consumer financing has evolved from credit cards and prime lending solutions often offered by traditional financial institutions such as banks to a technology-diverse fintech landscape with various financial service providers and platforms.

But what does this new ‘landscape’ offer, and how do we navigate it?

We look at how merchants use various consumer finance options and highlight their benefits.

Credit Card

The credit card option at checkout is widely known to us. It is the most prevalent payment method. Almost all banks and financial institutions provide many credit card types that are accepted as payment methods offering goods or services anywhere. One can purchase anything within a predetermined credit limit and pay later without impacting their monthly budget. A key advantage of using a credit card is converting the total purchase amount into affordable equated monthly installments (EMI), facilitating easy repayment over time. EMI conversions from credit card purchases have transformed the shopping experience significantly.

As popular as credit cards have been, consumers know their glaring disadvantages. The most infamous being high-interest charges. Further, the prime lender provides the loan (credit). i.e., the institution that issued the credit card reduces the credit limit by an amount equal to the bill amount converted into EMIs.

Buy Now, Pay Later

Single Lender BNPL Platform

BNPL (Buy Now, Pay Later) is unsecured consumer credit and an increasingly popular fintech-enabled payment option, most commonly offered on e-commerce platforms. The history of BNPL traces back to the installment plan – a way to pay for large purchases over time by spreading it over several smaller payments.

As a form of POS (point-of-sale) financing, credit originates directly at the time and point-of-sale, as opposed to a customer being required to secure credit from a lender ahead of their shopping experience.

Fintech companies have developed different flavors of BNPL. However, most are similar in that they have a single lender. Sometimes, as with PayPal, the lender is also the technology provider.

Studies have shown that BNPL increases retail sales. The reason is that some consumers may not have a credit card, prefer not to use credit cards, and many times look at BNPL as a better alternative to credit card installments, as BNPL offers an alternative to installment payments that is often with favorable repayment terms when compared to the use of credit cards.

Most, if not all, well-known big brands, such as Amazon, Walmart, and many more, have teamed up with BNPL FinTechs to expand their consumer financing options to increase sales while limiting risk. This strategy has proved to be successful.

Walmart

Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. With over 10,000 stores in 27 countries, Walmart offers a wide range of products, including groceries, electronics, clothing, and home goods, at low prices to attract budget-conscious shoppers. The company is known for its efficient supply chain management. Walmart added Affirm as a BNPL for installments of 3,6 and 12 months.

Amazon

The largest retailer in the world and founded in 1994, Amazon is a multinational technology company. It specializes in e-commerce, cloud computing, digital streaming, and artificial intelligence.

In this example , Amazon has partnered with ZIP to offer short terms installments.

The problem with single-lender BNPL

However, although very convenient, single-lender BNPL platforms do not necessarily offer the consumer the best loan terms and are limited to BNPL only.

Customers must conform to single-lenders’ terms of service and credit score policy.

Imposing these terms of service may result in less than desired loan terms offered to the consumer or, even worse, a failed loan origination. Both scenarios heighten the probability of sale abandonment.

Big brands have recognized that consumers shop for the best deals, not only in products and services but also in costs and terms associated with financing their purchases.

For this reason, established merchants offer customers multiple payment options at checkout. Including multiple BNPL service providers and options. Most of which are single-lender platforms.

Bed Bath & Beyond, for instance, diversifies its consumer financing options to its customers by partnering with multiple BNPL financing providers.

Merchants have found that sale abandonment decreased because customers have more options for lending at the point-of-sale. While this is a good strategy by the merchants, it has many limitations. For one, it is still a limited short-term installment offering. Even when using several BNPLs, surveys found that almost 30% of merchants report that their consumer financing approval rates are less than 60%.

Furthermore – it creates a fragmented checkout experience. Sometimes, customers may still abandon their cart, feeling overwhelmed, unsure, and confused with the various options. Decision paralysis occurs because there is too much choice.

A study by SMARTASSISTANT found that 54% of consumers have stopped purchasing products from a brand or retailer website because choosing was too difficult.

The same is true for products & services and checkout payment options alike.

Multi-lender Consumer finance & BNPL platforms

As a means to offer the advantages of the different types of consumer finance options available and address their shortcomings, ChargeAfter developed a multi-lender consumer finance embedded lending platform.

Backed by over 40 lenders, in a single checkout financing option, merchants can offer their customers the best consumer loan at checkout, which is lightning fast and provides the best loan terms.

ChargeAfter’s platform and network finds the best loan suited for the customer and merchant with a streamlined and efficient process that feels indigenous to the merchants’ site and brand.

Unlike conventional consumer finance options and single-lender BNPL, surveys have shown that multi-lender consumer finance platforms achieve loan approvals of 80% or more.

ChargeAfter’s platform is seamlessly integrated throughout the merchants’ channels – online and in-store – to create an omnichannel experience that feels proprietary to the consumer. The benefit of omnichannel experience in itself adds value to the merchant.

As a solution that maximizes return through its obsession with the customer journey experience, ChargeAfter’s platform elevates the consumer experience, reduces cart abandonment, and increases return business.

Some examples of big brands using a multi-lender platform include:

Lenovo

Founded in 1984 and specializing in personal computers, smartphones, tablets, and other electronic devices, Lenovo is the world’s largest PC vendor by unit sales.

Lenovo is a multinational technology company that operates in over 60 countries.

Jerome’s
Jerome’s Furniture is a family-owned and operated retailer that has been serving Southern California for over 65 years.

About ChargeAfter

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

ChargeAfter investors include The Phoenix, Citi Ventures, Banco Bradesco, Visa, MUFG, BBVA, Synchrony Financial, PICO Venture Partners, Propel Venture Partners, and Plug and Play VC. ChargeAfter is headquartered in New York.

For more information, visit https://chargeafter.com/about-us.

Boost Your Sales Growth: The Benefits of Ecommerce Financing

Posted on Mar 15, 2023Oct 18, 2023 by chargeafterdev

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)

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

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.

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.
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.

**

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)

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.

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.

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.

Consumer Buying Trends Survey – The Importance Of Consumer Finance

Posted on Jan 3, 2023Oct 18, 2023 by chargeafterdev

Furniture industry research specialist Dana French conducted the Consumer Insights Now research, which was released in September and was co-sponsored by ChargeAfter. The consumer finance study highlights customer behaviors across age groups (18-74). The primary goal of the research was to identify customer preferences and trends which would provide furniture sellers with useful information.

The survey provides data on how buyers often use consumer financing in a variety of ways. The research’s results include the kinds of goods they want to purchase, how they intend to finance such purchases, and how the furniture fits into their overall shopping list.

The research gives furniture retailers all the information they need to know about customer trends right now. For both new and established retailers looking to offer the precise services that customers want, the data may be of tremendous assistance. Especially when the study displays a variety of consumer behavior statistics.

The study emphasizes once more how essential consumer financing has become to our daily lives and how it affects every significant purchase made by a customer. Numerous survey results show that younger customers are more inclined to utilize consumer financing in their everyday life which is evidence that retail finance has become popular in recent years.

The survey’s findings could help retailers understand the value of customer financing in the furniture industry. It may be a signal for them to introduce additional buy-now, pay-later (BNPL) loans or POS financing alternatives.

The results of the survey also revealed which age group is the most significant group of consumers and which of them must be the primary category of potential customers. As a result, the data may be used by retailers to create a precise marketing strategy for upcoming sales and ensure that customers will have access to the financing choices they require. When properly applied, research may boost sales and conversion rates for shops.

How Consumers Plan To Pay

According to the chart above, different age groups have different plans for how they will make their payments, or use consumer finance solutions. Although the numbers for customers who use credit cards and those who prefer to pay with cash are practically identical, we can see that younger groups are slightly biased towards cash payments. Due to their familiarity with traditional banking services and installment payments, older generations are more inclined to utilize credit cards for payment.

In contrast, younger Millennials and Gen Z tend to choose Buy Now Pay Later services from financing platforms when it comes down to consumer financing options available to them.. There are two potential causes for this. Namely, younger consumers may like BNPL since it offers superior services and the benefit, occasionally, of no interest charges, or are often unable to qualify for credit cards because they do not yet have a solid credit score. Similar considerations apply to cash payments, which are often made from savings accounts and are more frequently made by older generations.

Are Consumer Financing Options And Promotional Terms Important To Consumers?

Promotional terms are significant to 49% of customers overall for home goods, whereas financing options are important to 43% of customers when we compare how financing choices and promotions trigger the purchase for the consumers. The younger generations of Gen Z are the only age group, as shown in the table above, that is more likely to make a purchase when the shop offers financing choices at the point of sale. However, this is not true for other age groups. Only 27% of Baby Boomers believe that financing alternatives at the store are the reason to make a purchase, according to the lowest numbers for consumer finance.

Though the comparison is close across practically all age groups, younger generations are more influenced by both possibilities and are more likely to purchase as a result. As we can see, promotional conditions are an excellent instrument for boosting sales and luring customers. Conversely, the businesses that choose to use both of the proposed solutions will succeed the most and draw in the most number of customers.

As shown, the Consumer Insights Now consumer finance survey provides the exact data and facts furniture retailers require to develop effective new tactics and know which consumer financing solutions to use.

References:

Consumer Insights Now research, Home News Now (September 11, 2022) Consumer Insights Now: Research highlights consumer buying behavior in the second half

3 Ways Retailers Combat The Changes In Demand For Consumer Financing

Posted on Jan 2, 2023Oct 18, 2023 by chargeafterdev

The way retailers construct their marketing strategies and how customers shop have all been disrupted by digital technology, which is the main reason why the world of retail is very different today than it was just five years ago. Consumers now use their smartphones to see product reviews and compare prices. In other words, it is now a lot simpler for consumers to make informed decisions. The same is true for the financial component. The form of funding the buyer chooses has altered as a result of the changes in consumer financing over the past few years.

For example, the usage of BNPL lending has increased drastically after the pandemic hit, and the trend is still going as BNPL has become a kind of habit for consumers:

SOURCE: CORNERSTONE ADVISORS

As shopping patterns continue to change, let’s examine how brands may develop and apply next-generation marketing tactics to enhance the customer experience with different consumer financing options in the upcoming years.

Why Is Consumer Financing Necessary

Retailers struggle to select the best consumer financing option due to the wide range of options available. As the usage of consumer financing is increasing every year, it is impossible to have a successful business without it.

So why is consumer financing so important?

To increase sales – you can offer customers lower prices, promotions or discounts on your products, but it’s becoming more attractive to consumers to pay full price if they have the option to finance their purchase and split the payment. Using lending services has become a part of our merchant offering, and consumer lives.

In addition, clients can split payments over time without incurring any costs thanks to current financing solutions. Because of this, BNPL lending and POS financing are among the most popular types of consumer finance available today. Many times, even though a person has sufficient funds on hand, they still choose to employ a BNPL or installment loan, for instance. There is a simple reason behind it, wise use of financing options increases their purchasing power and allows consumers to have an extra amount in their accounts to feel secure and be ready for any emergencies.

Because of this, funding choices are now available for products and services like furniture. home improvement, vacation, autoparts, education, and many more, as an integral part of the shopping experience.

The Increased Popularity Of Omnichannel Consumer Lending

Consumer financing has become more popular overall during the past ten years. More consumers frequently use lending services to obtain the funds required for shopping or unexpected expenses. According to the statistics, consumers favor BNPL loans or point-of-sale financing solutions. Consumer financing choices give consumers freedom, and if they’re used appropriately, they make it much easier for them to manage their finances. However, online financing isn’t the only instrument that can help the buyer have a positive purchasing experience. Customers who prefer local shopping or need a product that was nearly hard to select or purchase online required retailers to adjust to their needs.

For instance, if a customer wants to purchase a new mattress or any other type of furniture, they may want to physically inspect it to ensure that they are making the appropriate decision. Therefore, when a customer went to a store after seeing the retailers’ pleasant financing options online, they had to have the same financing experience there. For situations like that, retailers offer in-store financing. To provide the buyer with the same comfortable shopping experience, several furniture stores, including Raymour & Flanigan, are now leveraging the POS financing and BNPL lending features via an omnichannel multi-lender platform.

Point-Of-Sale Financing

POS financing has evolved into one of the key tools for consumers, making it seamless to access flexible lending options, , and younger generations are also the main customers here.

Source: TransUnion US Consumer credit Database

The fact that customers receive the quickest and coziest method of financing is one of the reasons the service has become so well-liked. It usually only takes a few seconds to apply and receive the funds you require when reputable third parties are involved. It also allows customers to receive the best financing options: Installments, Revolving loan, BNPL or LTO (Lease-to-Own) are amongst the most popular examples of financing.

Potential Problems For Retailers

Since the economy has begun to expand again in recent months, retailers have faced difficulties on both the top and bottom lines as a result of some sales growth that has slowed and margins that have shrunk. In the future, the industry will probably have to contend with a more difficult growth environment in addition to higher expenses. In addition to the rising cost of goods, retailers must also deal with increased costs for everything: from production inputs to freight, fuel, and labor. Although inflation hasn’t yet had a significant effect on nominal consumer spending, we are starting to notice the first indications of a future slowdown. Despite unprecedented inflation in the first quarter of 2022, US consumers kept their wallets open. Considering that US consumers had almost $3.3 trillion more in funds than they did in 2019, the increase in consumer spending was maybe not unexpected. Many people didn’t hesitate to use their savings when credit constraints loosened. And it hasn’t only been the savers who have been spending; credit card debt is also starting to increase.

Consumer financing is undergoing the same changes, so retailers are currently juggling two issues at once. Although the increase in prices and inflation has forced customers to use additional financing choices, it has also made them more anxious and made it more difficult to decide whether to apply for extra loans. Consumers are increasingly attempting to use financing services with caution and only select the ones they trust the most.

To ensure that customers are receiving the services they desire when they visit a retail website or physical location, retailers must now pay close attention to consumer behavior and implement innovative consumer financing features.

If retailers take risky, thought-out actions, they can turn these difficulties into opportunities. Businesses that do very well during recessions often outperform their competitors over the ensuing ten years

3 Ways Retailers Can Combat The Demand For Consumer Financing

1. Be On Every Channel

According to TIDIO statistics, various customers utilize POS financing and BNPL in-store and online in different ways. Online services are not preferred by all customers. Some customers prefer to purchase goods and services from brick and mortar establishments.

This once more demonstrates the need for consumer financing solutions like POS financing or BNPL lending across all channels. Whether it will be for customers who choose to shop in-person at the neighborhood store or for online users on websites or mobile applications.

2. Offer Simple And Clear Financing

According to the findings of Citizens Point of Sale Survey, 76% of American consumers are more inclined to make a retail sale if a payment plan is supported by an easy and smooth point of sale experience. The survey found that 62% of respondents would like fixed monthly contracts with unambiguous payment terms, and a good understanding of how the sum will be paid off as the most crucial elements. Additionally, 66% of customers believe they already have sufficient credit cards and would rather avoid adding an additional credit card merely to make a large purchase. This suggests that customers seek a different option than applying for a new credit card to make a sizable purchase at a store. Retail brands can modernize their payment solutions by moving away from the store credit approach and adding simple financing options to their customers.

3. Offer White-Labeled Consumer Financing

Consumers are flocking to private-brand products in the current market to combat inflation. Retailers should periodically reevaluate their category strategies in order to take advantage of this. Successful stores will strike a balance between fast-changing consumer tastes and pressures from individual inflation rates. This would need to reconsider their balance of national and private brands.

Consumers planning a major purchase viewed trust in the organization providing the financing and this is one of the main reasons they like branded lending platforms over independent FinTech firms. It demonstrates how retailer brands can profit from branded white-label financing solutions to attract more customers. As consumer financing has gained popularity, a wider range of independent businesses now provide these services.

Additionally, financing platforms like ChargeAfter, provide customizable white-label financing options. This allows the merchant to change the financing software however they see fit while still giving customers the financing options they need and demand.

Choosing The Right Consumer Financing Company For Your Store

Ready to provide your clients with immediate financing? Great! But which should you pick? It’s difficult to single out the top consumer financing providers because so many fintech firms provide BNPL products. Having said that, there are some qualities to consider while selecting a BNPL and consumer financing providers:

Positive customer experience: Businesses need to be able to deliver satisfying user experiences. For instance, ensure a smooth checkout experience would help prevent cart abandonment. Since over 80% of shoppers leave their carts empty before making a purchase, financing and BNPL ought to have superb integration to your customer journey. User-friendly features and no interruptions during checkout help decrease cart abandonment.

Perfect payment plans: By offering a variety of payment options, retailers open up their products to more people, which can increase sales and brand loyalty. Customers and business owners alike can benefit from high flexibility. Any retailer can act as a lender thanks to financing platforms. A financing platform gives shoppers the freedom to choose their financing conditions based on sophisticated risk assessment models. Customers will be able to select from a variety of payment plans, without having to worry about not being approved.
Reduced risks: Flexibility and scalability are features that reputable consumer finance businesses can provide. You may increase sales, draw in new clients, and maintain existing ones by making it simple for people to finance the goods and services, but risk management should always be taken into account. Make sure to work with providers with low MDR (Merchant Discount Rate) and can provide the best interest rate for your customers. In addition, make sure the PoS financing solution of your choice has cutting-edge management including managing reconciliation, chargebacks and dispute resolution.
Helps you control Data: Lastly, reputable BNPL and PoS financing solutions ought to assist retailers in regaining control over consumer data in addition to streamlining payments. This would enable retailers to better understand what customers want, need, and like. Advanced financing solutions don’t just permit retailers to give clients financing options, but give the retailers the ability to safeguard user information, and build long-lasting relationships with customers.

Summary

In the end, we can say with certainty that consumer financing is still an evolving industry, and that brands must stay on top of emerging trends to ensure they offer the services that customers want. If not, retailers won’t be able to take full use of financing options. Therefore, we can conclude that both the retailers and the financing platform are involved in the process and that it is not a one-party job.

About ChargeAfter

ChargeAfter is a leading multi-lender platform for Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees lending to every shopper, by matching the most relevant lender to every client. Using the unique consumer financing technology, ChargeAfter provides consumers with the best shopping experience. MUFG, VISA, Bradesco, BBVA, Synchrony, CITI Banks are among the investors of ChargeAfter.

How to get Embedded Finance Right

Posted on Dec 12, 2022Oct 18, 2023 by chargeafterdev

The coronavirus epidemic in 2020 and 2021 forced firms to reevaluate and speed up their digitization initiatives more than ever. Years-long planned digitization efforts were finished in a matter of months. These modifications will remain as we move deeper into 2023.

The fintech industry, in particular how established companies involved finance on a different level by integrating financial processes into their whole company plan, is one of the most famous examples of digitalization. With an expected market price of above $138 billion in 2026, it’s obvious that the embedded finance age is here to stay and not simply a passing trend in finance.

What is Embedded Finance?

It can be difficult to grasp what this term actually means for individuals who are just getting familiar with the idea, as it is with any new ideas. The use of financial instruments or services by a non-financial provider, such as loan or payment processing, is known as embedded finance. An electrical retailer, for instance, might provide point-of-service insurance for items purchased in-store.

Consumer financial processes will be streamlined through embedded financing, making it simpler for customers to access the services they require when they do. In the past, customers might have needed to physically visit a bank branch to request credit in order to make a significant purchase. Thanks to embedded finance, they can now do both at the same time at the point of service. ChargeAfter, Amazon’s EMI financing choices, Klarna, and Applepay are some of the best-known examples of embedded finance.

The simplicity of embedded finance for consumers is one of its main advantages. Customers could be more likely to finish a purchase and enjoy customer pleasure, which is crucial for fostering brand loyalty, if pain points experienced by consumers are eliminated, such as the requirement to seek credit elsewhere. Because customers are more inclined to buy something and return to do so often, firms may have the possibility to boost profits.

But ease isn’t the only benefit of embedded finance. It also serves as a tool for a greater understanding of consumers, their requirements, and their purchasing patterns. Later, this information can be used to motivate more corporate growth.

Five types of Embedded Finance

1.Buy Now Pay Later (BNPL)

Modern consumers are opening a new line of credit thanks to buy-now, pay-later services. Consumers are empowered to shop differently when they have access to a greater variety of items that can be paid for overtime, whether they decide to spend more on a newborn’s travel system or a higher-end piece of home equipment. The consumer is given the option to divide the payment in order to avoid large transactions

2.Point-of-Sale Financing

Integrated lending, goes a step further with loans. Businesses looking to fund larger or more substantial purchases can integrate these financial instruments. To be able to lend responsibly, they frequently need more information, such as information on creditworthiness.

In contrast to BNPL lending, POS financing offers a suite of financing products such as B2B financing, Installments, revolving line of credit and even lease to own. Additionally, the application process is more pleasant and the application form is simpler. POS financing has grown in popularity with omnichannel and brick and mortar-retailers. For instance, Raymour and Flanigan, one of the major furniture merchants, recently began collaborating with ChargeAfter to equip its retail locations and online business with point-of-sale financing.

3. Embedded Insurance

Customers may wish to make certain that, should the worst occur, their money won’t be wasted while investing in a new good or service. Integrated insurance comes into play in this situation. Businesses are in a better position to provide insurance fast by integrating insurance finance technologies.

4.Trading and Investment

Users can connect with their physical bank to make investments in a way that suits their current financial condition and spending patterns thanks to embedded finance capabilities in investment applications. This is an illustration of how a different sort of financial services provider has used embedded finance.

5. Fintech-as-a-service

A fintech API called fintech-as-a-service enables businesses, including non-financial ones, to integrate financial functionality into their current goods, services, and programs.

The use of financial technology-as-a-service products in a whole is growing, from billing to customer acquisition and all in between.

Using Embedded Finance

Creating an embedded financial strategy that meets their customer demands can be the first step for businesses. This entails assessing your digital requirements and choosing the tools you want to integrate. Identifying your company’s objectives for its integrated finance initiative is the first stage in that process.

These could include initiatives like enhancing customer service, expanding an existing clientele, or starting a new business to cater to a particular target market or demand. For instance, if you want to enhance client loyalty, one strategy to consider is embedded payment.

For some customers, a BNPL model might increase access to products or services. You could find it simpler to establish yourself as a one-stop-shop concept with embedded finance. But before choosing the best option, you must first be aware of your needs.

Connect Lenders and Consumers

If your business is a retailer, connecting consumers with a variety of lenders can also help you. For this reason, ChargeAfter developed a platform wherein a network of global lenders are assigned to any point of sales, connecting them to customers who want to finance.

In other words, ChargeAfter’s multi-lender P2P platform connects the three parties in a way that is mutually beneficial.

About ChargeAfter

ChargeAfter is a leading multi-lender platform for Point of Sales Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees personalized lending to every shopper, by matching the most relevant lender to every client. Using the unique network and technology, ChargeAfter provides all parties, merchants, lenders, and consumers, with the best shopping experience. Phoenix, MUFG, VISA, Bradesco, BBVA, Synchrony, PICO Partners, CITI, Propel Venture Partners, Plug and Play, and other companies worldwide are among the investors of ChargeAfter.

Buy Now Pay Later (BNPL) Stats for 2022

Posted on Aug 26, 2022Oct 18, 2023 by chargeafterdev

Consumers are increasingly turning to Buy Now Pay Later (BNPL) or POS financing to purchase items or services and spread out their payments over time with a preset payment plan.

A recent poll found that during the COVID-19 outbreak, 60% of participants used a buy now, pay later service. 66 percent of respondents stated that they believe adopting buy now, pay later services to be “financially dangerous” at the same time. This is probably because services that let customers purchase items now and pay for them later might lead to overspending. Services that let you buy now and pay later may give the impression that an item is less expensive than it is. If shoppers indulge themselves, they could accumulate more credit than they can manage.

Important Data for BNPL

In 2022, there are expected to be 59.3 million BNPL users. The amount of BNPL customers has been sharply rising over time, driven in part by the financial difficulties associated with COVID and in part by the proliferation of BNPL businesses.

This line of credit is adaptable and simple to qualify for. For example, 45% of customers said they picked BNPL because paying with it was simpler than using a credit card, while 44% claim they did so because it offers more flexibility.

BNPL Use by Age

Age	BNPL User Percentage
18-24	61%
25-34	60%
35-44	61%
45-54	53%
54+	41%

BNPL Use by Average Household Income

Average Household Income	BNPL User Percentage
>$35,000	39%
$35,000-$49,999	47%
$50,000=$74,999	50%
$75,000-$99.999	43%
>$100,000	41%

People between the ages of 18 and 24 and 35 to 44 are the most likely to finance BNPLs. In general, younger age groups utilize BNPL more frequently. The income range of $50,000–74,999 is the one most probably to use BNPL. Customers in this range and those above it utilize BNP at around the same rates.

According to the most recent statistics, BNPL loan usage decreases as income and age rise. However, the trend suggests that this pattern is changing, and more and more individuals are beginning to use BNPL lending, which is hurting traditional banking products.

Top Reasons for BNPL Usage

Reasons to Use BNPL	Percentage of Users
Out of Budget Purchase	44.98%
Avoiding CC Interest	36.92%
Borrow Money	24.73%
Avoiding to Share Personal Data	20.79%
Credit Card Alternative	19.18%
Reached Credit Card Limit	17.2%
Can’t get CC	14.16%
No Bank Account	7.71%
Other	5.73%

Generally, purchasing clothing and electronics is the most frequent usage of a BNPL plan. The most frequent reason for selecting a BNPL plan is to make an expensive purchase.

Amounts People Owe to BNPL

Amount owed	User Percentage
Less than 100	28%
101-250	18%
251-500	25%
501-1000	17%
1001-2500	9%
2501-5000	2%
More than 5000	1%

BNPL Companies

Not just businesses and consumers benefit from BNPL loans; BNPL service providers also make significant profits. Even if the majority of the top financing platforms don’t charge consumers any additional fees, they nevertheless make money from the merchant companies that use their services to run their online storefronts. Simply defined, BNPL services are simple to use, but difficult to produce and secure. As a result, rather than developing a new system on their own, retailers employ the established and reliable financing systems of BNPL companies to increase their sales and conversion rates. Additionally, it draws a lot more customers overall.

Instead of just employing basic BNPL services, merchants and retailers are increasingly turning to the newly created and deployed BNPL white label services. Retailers can adopt BNPL services and do so under their name by using ChargeAfter’s white-label services. They get considerably better outcomes from branded BNPL solutions, which also improves the reputation and overall attractiveness of their business.

ChargeAfter’s BNPL Financing Platform

ChargeAfter’s Waterfall financing increases the chance of approval — up to 85%.

As a result, merchants and financial institutions are using ChargeAfter’s BNPL white-label services to increase customer retention and maintain a competitive edge in the consumer financing sector.

Additionally, ChargeAfter is constantly improving and working to provide its merchants and banking partners with the best and most up-to-date services. According to Meidad Sharon, CEO of ChargeAfter, in an interview with Fintech Blueprints, the system is updated at least montly, and by the end of this year, they intend to increase the number of lenders to further ensure that every customer can get the financing they need.

References:

Haughn, R. (2022, July 8). 2022 Buy now, pay later statistics. Bankrate. https://www.bankrate.com/loans/personal-loans/buy-now-pay-later-statistics/

Want to learn more? Reach out to us here.

Why ChargeAfter Launched a White-Label BNPL (Buy Now Pay Later) Service

Posted on Aug 11, 2022Oct 18, 2023 by chargeafterdev

Financing platforms must create new services or integrate existing ones to stay up with the demands of merchants and customers in the market as modern consumer financing develops quickly. Given the intense competition in the market and the growing popularity of BNPL lending, it is difficult to stay on top without modernizing the financing system and providing the highest level of customer service. That has become the reason why the leader in consumer financing, ChargeAfter, has decided to implement BNPL white label services.

What is the BNPL white label?

The company can employ consumer finance in its e-commerce store and brand it under its name when using the BNPL white label services provided by the financing platform. Simply put, the retailing business can make its operation appear more professional and can do so in the simplest method imaginable. Instead of spending a ton of money developing a new finance system, retailers may now provide branded POS financing services by just utilizing the existing model.

Why did ChargeAfter adopt a White-Label service?

As the market becomes more competitive, more BNPL providers are attempting to gain an advantage by introducing fresh services that rival BNPL providers do not. Additionally, BNPL white label has grown in popularity among both consumers and merchants, and since ChargeAfter’s lending platform has always given customers the best services possible, the company decided to implement white label services as well. This will keep merchants informed about the consumer financing industry and allow them to enhance their performance. Retailers are now able to get greater results and rise to the top of the selling sector thanks to BNPL white label, which has its advantages.

Benefits of BNPL White Label

BNPL white label has advantages of its own, much like other consumer financing features. With many BNPL benefits in general, we can go over the following three advantages of white label services:

1. Makes your Business Well-known and Reliable

White label services, as we already established, are branded with the firm’s name, giving the company a more trustworthy appearance in the eyes of the customer. As the corporate name is less easily recalled than the lending system itself, when customers use consumer financing without a white label, it is typically a one-time transaction. The reason for this is that customers search for the best BNLP lending option rather than the store itself because the financing platform is the one that specifically allows customers to divide their payments, and customers prefer to select the right platform rather than search for the right store online. So, branded finance software will increase customer loyalty and brand recognition for your business.

2. Makes the Financing Experience Better

When a customer wants BNPL services at the point of sale, they are typically referred to the websites of various financing platforms, where they may have to spend a lot of time filling out numerous forms to obtain the funds they require. In the case of the BNPL white label, the customer fills out the application on the e-commerce website. In particular, when using ChargeAfter’s white label services, the merchant can be confident that the customer will receive credit for the purchase because ChargeAfter provides them with a number several lenders from which the system will select the most appropriate option for their needs.

3. Boosts Sales and Conversion Rate

As was already mentioned, white label services provide a better user experience, which may be a key factor in reducing cart abandonment and increasing traffic to your websites. By utilizing ChargeAfter’s BNPL white label services, your business can provide the greatest experience to the consumer, which will naturally have a favorable impact on sales and conversion. Buyers want simple financing and a shopping experience.

Summary

To sum up, ChargeAfter’s global lending platform has adopted BNPL white label services to stay up with the industry’s rapid expansion and provide the best BNPL lending services to retailers. As consumer finance is becoming one of the main ways to purchase items or services, ChargeAfter makes it possible for consumers to buy things online in the best way possible.

Want to learn more? Reach out to us here.

Provide BNPL to your retail clients with ChargeAfter’s Buy Now Pay Later White Label Solution

Posted on Aug 8, 2022Oct 18, 2023 by chargeafterdev

It goes without saying that the BNPL (Buy Now Pay Later) consumer financing strategy aids businesses’ expansion and success. It affects customers’ experiences and gives the company a more modern, polished appearance.

If BNPL lending is properly executed, it will undoubtedly boost sales and AOV (Average Order Value). According to studies from previous years, BNPL consumer financing is assisting e-commerce online stores to convert more buyers and provide them with the finest experience so they will become regular customers in the future.

Selecting the appropriate finance platform for your e-commerce is crucial. Many businesses rely on ChargeAfter’s BNPL financing platform, which only works with reputable and knowledgeable lenders.

Benefits of White Label BNPL

Fintech businesses are inventing better ideas as retail finance advances each year, and merchants must keep up with them and use their services to ensure that their online stores are modern and that they are providing their customers with the greatest BNPL lending alternatives. According to Meidad Sharon, the CEO of ChargeAfter, they check their software system monthly to make sure it is always up to date and they also always encourage their merchant customers to use their newly developed services.

There are three main reasons why you should implement ChargeAfter’s BNPL white label services.

1. Makes Shopping Experience Better

There are typically a few BNPL lending choices available when the retailer company uses consumer finance on their website, which can occasionally make it uncomfortable for the customers to use the services. With a variety of online options, customers must navigate to several websites and create accounts in order to apply for BNPL services. ChargeAfter decided to integrate BNPL white label services because all those processes took a long time, giving retailers the chance to provide their customers with a far better and more seamless purchasing experience. Due to how much easier and faster the procedure is, it allowed consumers to access consumer financial services more easily.

2. Consumers Trust you More

Putting your name on the service can improve your company’s reputation and increase consumer confidence. In order to see what kind of payment plan or interest rates they receive when using BNPL services to purchase a product online, consumers are more inclined to look to the Fintech company providing the BNPL services. However, when you offer the BNPL white label service, where BNPL services are performed under your brand, it naturally boosts consumer trust and the rate of repeat business. Therefore, with this technique, customers receive BNPL loans directly from your business, and by providing them with the finest services, customer loyalty is raised.

3. Boost Conversion and Sales

As was already said, white label services can greatly simplify the buying process and give shops the opportunity to win over more customers and boost sales. When the business is adopting the proper white label BNPL choices, the customers find it more alluring. Customers always choose simple processes to obtain consumer financing and shop online. Most of the time, when someone wants to buy a product, they search online for the best option. The shops must ensure that their offerings effectively convert visitors who are browsing their websites into buyers. Therefore, the conversion rate is readily boosted when you have a quick and simple way, like white labeled BNPL service.

The same is true for current clients. If a business can provide the best services, like ChargeAfter’s white label choices, it can be confident that clients will make additional purchases and come back for their subsequent ones.

We may conclude that using ChagreAfter’s BNPL white label services will only help your business and increase its performance in the long run.

We never interfere with your customers’ experiences while Certegy is your white label BNPL partner. You benefit from cheaper expenses, less risk, larger transaction volumes, greater average buying capacity, or more regular sales with higher conversion, while your customers enjoy a quick, smooth checkout.

Want to learn more? Reach out to us here.