Implementing flexible financing options can be a powerful business-generating tool for companies of all sizes. Point of sale solutions, also referred to as flexible financing, provide incentives for shoppers to purchase items they may not be able to afford right away but can pay back over time. As a result, consumers feel empowered buying big-ticket items knowing they can confidently pay them back in increments. POS options can increase profitability for your business and provide a satisfactory shopping experience for consumers. But there are a few things to consider before implementing a solution.
Why Implement Point of Sale: Flexible Financing Options for Consumers
Implementing flexible financing options increases the likelihood of consumer adoption. Around 75% of consumers financing big-ticket items decide to do so early in the purchase journey, before the actual purchase. This scenario provides an opportunity for merchants to have financing options readily available to expedite the buyer's journey. Point of sale financing options can enhance cart conversion and help to retain current customers while also attracting new ones.
Merchants offering POS financing will see the following benefits over time:
- Increased Profitability
- Positive Brand Reputation
- Increase in Average Order Value
- Large Ticket Item Purchase Increase
- Recruits New Customers
- Retains and Widens Current Customer Base
When determining point of sale financing options for your business, you may be curious about the best option. Below are our top three considerations for merchants before implementing a point of sale platform.
1. Consider Your Demographic
Demographic and consumer behavior are crucial in selecting suitable financing options for your business. Consumers are more likely to make a retail purchase if a payment plan backed by a seamless and straightforward point-of-sale experience is available.
If your target audience has a low credit score or unestablished credit, you may want to consider a partnership with a loan provider that can offer a lease-to-own option. If your customers are low-income, a buy now, pay later option is also beneficial, as they are typically offered on low-ticket items payable in smaller and shorter increments. For borrowers with good to excellent credit, point-of-sale loans can be relatively inexpensive.
Millennials are the biggest and most influential consumer group in the market. Data indicates that Gen Z (aged 18-25) and Millennials (aged 26-40) manage their debt better despite the lower earnings than baby boomers at their age. Millennials are averse to credit and understand the responsibility of quickly securing a large amount of money for large purchases such as home renovations, weddings, travel expenses, and more. The younger generations want a quick and easy way to make purchases and pay them off with manageable payments.
2. Who Will You Partner With?
The next thing to consider is what sort of partnerships to build. While some platforms may develop proprietary solutions, the financial aspect can lay heavy on a merchant. Using a third-party vendor can shorten the sale time and reduce the merchant’s workload.
One of the most significant benefits of using a third-party vendor for POS is the approval percentage offered. Customers who do not have substantial credit can still be approved, broadening applicant pools. It may require some effort, but finding a partner with competitive rates and reasonable implementation costs is ideal. POS financing platforms can be easily integrated but may come with costs, including:
- A Customization Fee
- Platform License Fee
- Transaction Fee
Every loan provider has its policies and procedures based on customer spend, repayment schedule, APRs, and the fees the merchant will be charged. Conducting research can ensure that the right loan provider works for you.
3. What Financing Options Do You Want to Offer?
Quick financing has become a must for digital shoppers. And with loan availability implemented at checkout, shoppers can set up a quick and easy payment plan in just minutes. Specific payment options cater to certain demographics. Buy now, pay later programs enable consumers to apply for short-term financing for smaller ticket items. This type of purchase is typically broken up into four easy payments with no interest. The global buy now, pay later market size is expected to reach 20.40 billion by 2028, making it a profitable option for merchants.
Flexible financing options attract younger consumers to the merchant’s platform and are often used for high-value items like furniture or mattresses. Point-of-sale financing offers a convenient solution for those who do not want to pay the APR on a credit card. It also provides a smoother approval process, as, unlike a credit card, the provider knows the purpose of the loan.
Those with higher credit scores typically choose 0% options. Higher rate products can allow those with lower credit scores the ability to pay over time, giving them more purchasing power. Some APRs can go up to 30% leaving shoppers paying more than they expected. Therefore, zero percent interest options offer more incentives and opportunities for merchants.
Why Choose Skeps For Your Point-of-Sale Solution?
Skeps is a point-of-sale software financing solution for merchants and lenders. Our low-cost financing options allow both to give their customers exactly what they need. Skeps can help your customers find the best lender with a single application and credit check.
Simultaneous Evaluation: Our patented process ensures your customers never experience multiple declines.
Early Customer Engagement: Notify your customers when they click on your site that they have financing offers.
Program Cost Control: This allows you to take control of what products are displayed on your site.
True Omni Channel: This allows you to promote financing online, in-store, email, or even through direct mail.