According to a projection cited by Accenture, point-of-sale finance holds a more than $1.8 trillion opportunity.
As the payments landscape continues to undergo rapid technological innovation, point-of-sale (POS) financing for consumers will expand its horizons and certainly be an exciting space to watch for merchants. According to a projection cited by Accenture, point-of-sale finance holds a more than $1.8 trillion opportunity. You, as a merchant, can bank on POS financing as it increases your customer’s purchasing power. If your customer has a home renovation on their list of needs, POS financing gives you the power to propose the best option available with you. But, before we dive deep into the best way to leverage POS financing, let’s understand what POS financing is and how did it evolve.
The evolution of point-of-sale financing
Traditionally, two common types of consumer credit are available for making purchases — credit cards issued by the banks, and store-branded credit cards, such as Lowe’s Advantage Card, Target REDcard, etc. Credit card companies are facing market competition from alternative payment methods, which gives merchants a significant opportunity to improve POS financing options that extends beyond the traditional private label credit card. POS financing complements other credit types available, as it gives borrowers an opportunity to purchase when their credit card limit has been reached.
What is POS financing?
Technology-enabled point-of-sale financing has become attractive to the consumer credit system. It allows the buyer to apply for a loan, financing a specific purchase that can be paid off over time. Offering the option of an installment loan at the point-of-sale not only widens the spectrum of customers served but also improves the user experience and makes it easier and quicker — for both the customer and the merchant — to extend and access credit at checkout. The Citizens Financial Group study conducted in 2018, found that 76 percent* of consumers said that they are more likely to purchase if a payment plan is backed by a POS financing option.
Consumer interaction with POS financing
Online, point-of-sale financing can be integrated directly into the merchant’s website checkout experience. Many platforms have been facilitating such integrations for quite some time. What is different with platforms like Skeps is that it also facilitates your customer data privacy along with the smooth integration of the below-discussed experiences into your systems. With a single customer credit report pull, not only your customer’s credit score remains unaffected but, he also gets personalized offers from various lenders. The best part about this integration is, your customer data remains within your firewall and no data is disclosed to partner lenders while evaluation. When your customer applies for a loan on your website, Skeps’ decentralized blockchain-based product collaborates with you to help your customers get the best-personalized offers whilst limiting customer data within your infrastructure.
Let’s see what all experiences can be explored with Skeps —
– Loan options at checkout
Your website can prompt the customer to apply for financing at any point in the shopping journey. From the product/category page to the checkout page you can give various personalized options of financing, spread over pre-agreed installments for a specific time period. Here, approval is instantaneous and the monthly payment amount is clearly laid out so that the buyer can consider interest rates while making the purchase. Recently a study revealed that 62 percent of the customers are more likely to consider multiple financing if they don’t have to fill out another application. Collaborating with Skeps’ blockchain does away with the problem of multiple pulls of your customer’s credit report whilst proposing various personalized options from a whole array of lenders.
– Pre-approved loans
You can improve your customer’s experience with personalized pre-approved loans. It is valuable because it means the lender has checked your customer’s credit to approve a specific loan amount for a particular period. As discussed in ‘4 Reasons Why Consumer Lending Won’t Be The Same’, pre-approved loans using Skeps’ blockchain make your customers aware of their loan eligibility thereby, giving them greater purchasing power to access products or services they need when they don’t have funds available. Your customer can get multiple pre-approved loan options from various lenders and no data will be shared with any of the partner lenders.
– Financing through partner lenders
In some cases, there are chances that you or your financing arm might not be able to give the best loan option to your customer. Partnering with other lenders through Skeps tends to be a profitable solution as it would enhance the customer experience to a whole new level. You can direct your customers to your partner lenders where they can choose the best-personalized loan option for themselves.
A study** recently concluded that retailers offering POS financing options have seen up to a 33 percent lift in average-order-value and a 9 percent increase in sales. POS financing, if leveraged via Skeps’ blockchain tends to offer much-improved shopping experience when compared to the tedious process of applying for a store-branded or a credit card. The quick and transparent product, assures better experience for your customers translating to higher loyalty, better conversions, and more sales for you.
Skeps financing isn’t just a payment option, it’s an effective way to enhance customer experience and coax a customer off the fence to close bigger sales. So what are you waiting for? Schedule a demo to see how Skeps can help you thrive.
*Citizens Financial Group Study 2018
**Bread: What is POS Financing?