Point of sale consumer financing is growing in popularity. It’s a simple and convenient way for shoppers to pay for goods.
Whether it makes sense for your business to offer buy now, pay later options depends on the type of products you sell and the price range. However, POS financing is simple, especially when partnering with a firm specializing in this area.
Easy Access to Cash
POS financing can be a powerful tool for merchants. It can increase sales, improve customer satisfaction, and make the whole experience more accessible for shoppers. In addition, it can also reduce the risk of bad debt and allow you to collect payments more efficiently.
Many thrift store POS finance providers offer fast access to credit, allowing shoppers to purchase their goods or services immediately. This eliminates the need to apply for a credit card or loan and often means that more shoppers can be approved for financing than would otherwise be possible.
POS financing can benefit consumers in some industries, like pet retailers and medical practices. These high-ticket items can be expensive, and a POS financing solution can make the difference for some buyers who would otherwise not purchase.
POS lenders typically have less stringent qualifications than banks or other financial institutions, and many are fee-free. This can benefit shoppers with limited credit histories who may need access to credit cards or loans. Approved customers can choose from payment terms that are affordable and flexible, including three-, six- and 12-month options. Small monthly payments can make large purchases more manageable for shoppers and encourage them to buy more than they might have otherwise.
Convenient Payment Options
When consumers choose to use a POS financing platform, they’re often able to purchase items that they would not usually be able to afford. This can benefit shoppers who need products like cars, furniture, or medical procedures but need more cash to pay for them immediately.
POS lenders typically have less stringent credit eligibility requirements than traditional loans or credit cards, and many of them allow customers to apply for financing right from an ecommerce retailer’s checkout page. This means that a POS financing option can be a great way to reach new consumers who may need access to other forms of credit.
A POS financing option can make it easier for shoppers to manage payments. Many lenders will send borrowers payment reminders via email or text, helping them keep up with their monthly installments. This can be a valuable feature for a business that wants to reduce late and missed payments while keeping repayment terms as short as possible for their borrowers.
While the benefits of POS financing for merchants are clear, it’s important to note that there are also potential risks. For example, some POS lenders may charge high-interest rates or may require minimum loan amounts that can be easily exceeded by shoppers who overspend.
Reduced Risk
Many consumers hesitate to buy expensive products and services if they don’t have the funds in their bank account. POS financing helps alleviate this issue by offering flexible payment plans to meet customers’ needs. The cost of a product is spread out over several months, making it easier for them to afford a high-quality item. This solution also makes adding more items to their cart more comfortable as they aren’t worried about blowing their credit card limit.
Additionally, POS financing programs offer merchants the opportunity to increase their bottom line. By allowing customers to pay over time, businesses can charge higher prices without scaring away their customers. This strategy can significantly increase the business’s average order value (AOV) and profits.
Moreover, customers are more likely to spend more when they can finance their purchases with a POS program. They’re also more comfortable when a price increase is implemented, as they can break the increased amount into small monthly payments.
POS programs also make it easy for customers to shop at multiple stores. This allows them to access more offers and choose the best deal based on their unique circumstances. Emerging POS lending platforms further this concept by getting lenders to compete for customers’ business. This provides a better customer experience and saves businesses considerable fees and implementation costs.
Better Customer Experience
Many POS financing providers focus on creating an enjoyable online and in-store customer experience. They offer simple application processes, instant loan preapprovals, and transparent payment terms so customers can understand their repayment responsibilities. Unlike credit cards, where consumers are often subject to high-interest rates and temptations to overspend, POS loans are designed to be more transparent for borrowers.
Moreover, offering POS financing enables businesses to increase their average order value. Customers who use the buy now pay later solutions will likely purchase other items to go with their new item, like a footstool for their chair or headphones to complement their speakers.
Another benefit of POS financing is that it allows retailers to expand their consumer base without discounting their products, as customers can purchase their desired items on their terms. This also helps mitigate risk for the lender, as they can collect payments promptly and reduce the chance of defaults and late fees.
Lastly, many POS lending companies are more relaxed on their qualification criteria for borrowers than banks and other traditional lenders. Some may conduct a soft credit check, which does not impact a borrower’s credit score, while others may focus on a borrower’s available checking account funds and monthly income. Many of these lenders report their borrowers’ repayment history to the credit bureaus, which can help build a positive credit score.
