A recent DivideBuy survey found that 86% of UK buyers are concerned about the impact of inflation and the cost of living on their ability to purchase goods and services. Of those surveyed, 38% said they are likely to consider consumer credit in the next 12 months.
Giving your customers the option to spread the cost of a purchase is a must for retailers – especially if you want to grow your business. But some merchants are wary of making finance available, and they have their reasons.
BNPL (Buy Now Pay Later) has become somewhat of a dirty word lately. This refers to interest free credit over a maximum of 12 months, which has been unregulated by the FCA (Financial Conduct Authority) for years.
No one wants their customers to fall into hardship as a result of irresponsible lending. The good news is that regulation is coming to the BNPL space, meaning you can proceed with confidence in offering consumer credit to your buyers.
But with a wide range of lenders to choose from, how can retailers choose the right consumer credit provider for their customer base?
Here are five key factors your customers will consider when checking out POS finance on a product:
1. Can they offer interest free credit?
As mentioned previously, 48% of UK shoppers say they will only look for consumer credit products that are interest free.
Whether it’s a ‘pay in 3’ solution, or the option to spread it over 3,6 or 12 months, customers will expect interest free options if credit is available.
2. How long is the interest free period?
Shoppers are wising up to fast-’n-easy BNPL offerings with initial interest free periods but high rates which kick in when the clock runs out.
31% of UK shoppers told DivideBuy that the length of any interest free period is the first thing they look at when considering a purchase on finance – so make sure the terms are fair.
3. Is there a soft credit check available?
24% of people told us they’re more likely to take out a finance agreement if they knew they were eligible up front. Being rejected for credit leaves a black mark on your history and is a huge barrier to borrowing.
Find a provider who offers customers a soft check first – like DivideBuy’s Eligibility Checker – which tells them if they’re eligible to apply for what they want to borrow.
4. Can you buy multiple products with one credit agreement?
Credit cards remain the number one consumer finance option for many. We use them to buy goods, pay service providers and pick up the restaurant tab.
Your customers will want a solution that lets them add as many of your products as they want to their cart, then spread the cost of those purchases combined into a single agreement (hint: you can do with DivideBuy).
5. Are there fees for late or missed payments?
Crippling late fees for payment issues are a harsh blow to customers who have either missed the payment in error (for example, if their card has expired) or unexpectedly found themselves in financial difficulty.
It’s why we removed all late fees in 2021. Make sure your consumer credit provider isn’t harming your customers’ loyalty – or kicking them when they’re down.
Knowing what your customers will look for in a POS finance solution is the first step to choosing the right provider for your business. But what questions do you need ask to be sure you’re getting the best solution for you, the merchant?
We’ll explore this topic in depth in another article, but briefly, a strong POS finance solution should:
– Increase conversions and sales
– Decrease cart abandonment and CPA
– Help you outperform the competition
At DivideBuy, we work with your business and tailor our finance solution to suit your needs. Our modular tech can integrate seamlessly with your eCommerce platform for a seamless user journey that will lower your cart abandonment rates and increase conversions. Set minimum spend thresholds for longer repayment terms to encourage higher average order values.
To find out more about our POS finance solution and why DivideBuy is trusted by hundreds of UK merchants, visit our Retailer page here.