You may be given a new payment method the next time you shop: a personal loan, lease, or line of credit. Rather than using cash at checkout, you’d be providing some personal details.
Making transactions online now is simpler than ever thanks to point of sale (POS) lending services contributing to the rise of the so-called “buy now, pay later” phenomenon.
These schemes, which represent just a tiny percentage of the wider market for personal loans, allow clients to break the costs of large transactions into regular installments. Learn all about point of sale lending companies as you read on.
POS Lending Companies and How They Work
The current top POS lenders include the Swedish Klarna, Afterpay, and Affirm. POS lenders typically form joint retail partnerships to grow and maintain their markets.
In particular, Klarna is used by almost 200,000 retailers in 17 countries, and by brands, including (but not limited to) ASOS, H&M, TopShop, Michael Kors, and Samsung. POS lenders vary in their management of bad debt, in addition to their exclusive brand partnerships.
For example, Klarna removes its customers’ accounts that refuse to pay using the platform and reports their outstanding loans to credit bureaus. Afterpay and other similar companies, though, have not set out explicitly what happens when it comes to missed or late payments.
Besides, companies such as Affirm, Bread, Klarna, Acima Credit, and Greensky provide POS lending to purchase big-ticket items, such as mattresses, furniture, appliances, or home improvement items.
How POS Lending Works
The procedure is identical to the selection of a store credit card during checkout. The option may appear in your online shopping cart next to the purchase price, or at the in-store checkout counter.
Choosing it will lead you to the website of the lender or an application form. You input some pieces of personal data, usually your name, date of birth, and last four digits of your Social Security number, or only your phone number in some situations.
You sign the agreement if approved, and complete checking out. Much like using a store credit card, the entire process may take a few seconds to a few minutes, anywhere.
Providing free credit access at POS can be a valuable business-generating tool for businesses of all sorts. A Forrester Research study found that companies adopting an online POS lending method reported a revenue increase of 32%.
Benefits of POS Financing
Offering POS financing increases the purchasing power of consumers, as it gives them more flexibility to pay for their transactions, which in turn encourages them to buy higher-priced goods.
Increasing the average order value without cutting margins will dramatically improve the profitability of a company. But, not all businesses have the working capital at their disposal to provide in-house funding schemes.
There’s still hope if it describes your business. Working with a third-party POS financing platform provides an enticing alternative. One of the most significant advantages of using a third-party POS credit provider is that it can shorten the period between sale and payment receipt.
Another value is that third-party POS providers may accept customers who do not qualify for a conventional personal loan or do not have enough credit. The key is to find a partner with competitive rates and an acceptable cost of implementation.
The advantages of providing a quick and swift financing program to current and future customers are evident. POS lending companies have an upsurge in profits, a rise in average order value, and significant profitability gains. Consider learning more about these companies by doing some additional research.