Consumer credit is a type of personal finance product that customers use to pay for goods and services. It’s offered by merchants, service businesses, healthcare specialists, training providers (and more), and funded by POS Finance providers, banks or finance brokers.
With consumer credit, you can split the cost of an item over multiple payments, from 3 months up to 60 months (and in some cases, even longer) – rather than paying all in one go at the point of purchase.
As of 2022, more than 17 million consumers in the UK have used consumer credit options – so there’s never been a better time to make credit work for your business.
However, adding a POS finance solution to your checkout isn’t free – so you need to be certain you’re getting your money’s worth.
As a trusted UK LendTech partner working with hundreds of merchants, we’ve compiled our top seven questions to ask when considering a POS finance provider.
1. What are their average conversion rates?
Every consumer credit provider is going to charge you rates. Some will be higher than others, but this is less important than the real question: how much are they driving sales for you in return?
For example, DivideBuy merchants see a typical increase in conversions of 40% – so it’s worth checking to see how your potential provider is performing, especially where your specific industry is concerned.
2. What are their approval and delinquency rates?
Your lender should treat customers as individuals and be capable of making credit decisions based on common sense (instead of ‘computer says…’). You don’t want credit handed out recklessly and end up putting your customers in financial difficulty. But at the same time, you need good approval rates if you want your credit sales to increase.
Ask about approval rates, and if they seem healthy, dig deeper to find out the logic behind these choices – especially if the lender has a high track record of customers defaulting on agreements.
At DivideBuy, we use manual underwriting processes to ensure our decisions are made on a case-by-case basis, protecting both your customers and your profit margins. They can even run a soft credit check in advance with our Eligibility Checker tool on your website.
3. How quickly can they integrate your solution?
Make sure their solution can be easily embedded into your eCommerce platform. Is their tech team able to do this for you, or support you with setting it up, if not? What about maintenance, or repairs if things go wrong?
DivideBuy uses its own tech and has custom-built its solution, meaning its not reliant on any external software updates, and can be integrated in a matter of days. Whatever solution you choose, make sure there are continuity management systems in place for minimal disruption to the business if something goes wrong.
4. Is their user experience quick and seamless?
74% of customers say they are likely to buy a product based just on a favourable customer experience. If they have to fill out long-winded application forms or wait hours for a credit decision, chances are they’ll drop that cart and go elsewhere.
DivideBuy’s seamless customer journey helps merchants reduce cart abandonment and increase sales by an average of 50%. We achieve this through single-screen forms, instant lending decisions, in-store QR codes for your shop and more.
5. How much control can they give you?
It’s vital that your consumer credit provider can customise elements of their solution so it works for you.
Can they adjust minimum spend thresholds for credit, increasing average order values depending on your sales goals? Do they own their technology so they can make changes quickly as needed?
Flexibility is crucial, which is why DivideBuy built its own tech in a modular structure for quick and easy changes.
6. What is their customer service like?
Your credit provider should assume ownership of handling customer queries and concerns around their product. This means being accessible to customers when they need to get in touch (like DivideBuy’s UK-based CS team with 7-days-a-week service).
Are they proactive, responsive, and empathetic? A good place to start is their Trustpilot scores, which come straight from the customer’s mouth. They should also adhere to the FCA’s Treating Customers Fairly guidelines, even if they aren’t a regulated company.
7. What marketing support do they offer?
Your customers will only use your credit offering if they know that it exists – and the earlier on in their journey this happens, the better.
Can your credit provider help with marketing your offer to new and existing customers? For example, DivideBuy provides merchants with an asset library they can use to signpost their solution – including banners, graphics and more.
Choosing the right credit provider doesn’t have to be stressful. Our DivideBuy experts can help point you in the right direction for your business size and needs. Send us a request for more information here.
To find out more about the current consumer credit landscape, and how to make it work for you, download our free guide now.