The Loyalty-Building Power of Waterfall Financing

Explore how merchants selling big-ticket items harness the power of waterfall financing to reach a wider customer base, maximize approvals, and simplify the purchasing journey.

Building brand loyalty requires more than offering exceptional products or services. Today’s shoppers expect seamless experiences, including access to best-fit financing choices within their purchasing journey from luxury boutiques to eCommerce websites. To meet customers’ demands across the credit spectrum, leading luxury brands are implementing a waterfall finance model that cascades applications through multiple lenders, which has become an essential strategy in 2025.

Which industries benefit from waterfall financing?

Waterfall financing is particularly impactful in industries selling high-ticket items, where affordability can be a barrier to purchase. For example:

• High-end jewelry
• Luxury goods by top brands such as bags, shoes, and accessories
• Home goods

Unlike small everyday purchases, big-ticket items often require financing because the upfront cost is too high for many consumers to pay out of pocket. Traditional financing options may reject applicants with lower credit scores, leaving them without alternatives. Waterfall financing solves this by sequentially matching customers with lenders, ensuring more approvals and higher purchase conversions. Additionally, these large purchases often involve longer decision-making cycles, and flexible financing can be the deciding factor in whether a customer completes the transaction.

This model is also transforming B2B transactions. Small and medium-sized businesses (SMBs) often struggle to secure traditional financing for equipment, supplies, or technology upgrades. With embedded waterfall financing, merchants can offer tailored solutions that allow SMBs to scale their operations without cash flow constraints.

Serve more customers, build stronger relationships

Expanding your customer base starts with inclusivity. Waterfall financing empowers luxury and jewelry retail businesses to serve a diverse range of customers by cascading applications through a network of lenders, accommodating credit profiles from prime to no-credit-required. 

For example, a customer declined by both prime and near-prime providers might qualify for a lease-to-own option, turning a potential lost sale into a completed transaction. By integrating a full waterfall finance cascade with prime, near-prime, and subprime options instantly available, Raymour & Flanigan achieves over 94% in-store approval rates and over 80% approvals overall. Click here to download the case study. 

By ensuring all credit tiers are catered to, merchants demonstrate flexibility and commitment to their customers’ needs, fostering brand loyalty. 

For example:

• Prime customers purchasing an engagement ring  can quickly and easily secure a 0% installment loan.
• A near-prime shopper declined for a 0% loan, can be instantly approved for a low-interest plan.
• A shopper with low or no credit can be quickly referred to a tertiary option within the same application process.

All leave satisfied, increasing the likelihood of positive reviews and repeat business.

Flexible terms build trust and confidence

Customers value financing solutions tailored to their unique financial situations. Waterfall financing ensures each customer is matched with the most suitable lender, maximizing approval rates and guaranteeing terms that fit their needs. However, our recent survey highlights significant gaps in the market:

• 67% of merchants provide near-prime lending options
• Only 26% offer prime financing solutions.
• A mere 6% cater to the entire credit spectrum.

This imbalance leaves a significant segment of customers underserved. Prime shoppers will be tempted to take their business elsewhere if they think they can get better terms. Subprime shoppers without an option at all will also be likely to abandon their carts. These scenarios represent a missed opportunity to build loyalty.

By prioritizing transparency, affordability, and flexibility across all credit tiers, merchants can achieve approval rates as high as 85%, driving sales and customer loyalty.

How waterfall finance simplifies the customer journey

A seamless financing process is critical to delivering a positive customer experience, and waterfall financing makes this possible. By integrating an embedded lending platform, businesses can provide customers with a consistent, frictionless experience across all touchpoints—whether they’re shopping online, in-store, through a call center, or even at home through a contractor.

Waterfall financing matches customers with the best financing option for their credit profile without requiring them to apply multiple times. Customers appreciate the efficiency of receiving tailored options quickly and without hassle, increasing the likelihood of completed purchases.

By eliminating complexity and creating a user-friendly experience, businesses build trust, enhance satisfaction, and strengthen their competitive edge.

Conclusion: Putting Customers First with Waterfall Financing

Waterfall financing is more than a payment solution—it’s a strategic tool for building trust, fostering loyalty, and driving long-term growth. By providing tailored, flexible, and inclusive financing options, merchants selling big-ticket items can meet the diverse needs of their customers and remain competitive. 

If your business is ready to enhance the customer journey and achieve higher approval rates, now is the time to explore the transformative power of waterfall financing.

About Nufar Bareket
Global Head of Partnerships
Nufar has over 15 years of experience in global business development with Fortune 500 companies in the Retail and Financial Services spaces.