DivideBuy and your customers – how does interest free credit work?

The popularity of point-of-sale (POS) finance is on the rise. A Worldpay report from earlier this year found that almost 40 per cent of purchases were made on POS finance, as shoppers spread the cost of anything from a new sofa to gym equipment.

 

Payment platforms like DivideBuy are designed to help retailers tap into this growing phenomenon. As a point-of-sale credit provider, we partner with retailers by integrating with websites and other payment points to offer more ways to pay, boosting click-to-sale conversions and average basket values.

 

Crucially, however, we’re not a buy now, pay later provider – and there are some key differences between our interest-free credit platform and a regular buy now, pay later facility. So, how are we different?

 

How is interest free credit from DivideBuy different from buy now, pay later

Working with businesses across almost every sector imaginable, including estate agents, electronics suppliers, flooring companies, hair and beauty businesses, sports equipment retailers and even gazebo suppliers, we offer interest-free finance at the checkout, so you can give your customers more choice – and more convenience – when it’s time to pay.

 

But isn’t that how buy now, pay later works? Well, not quite. As an interest free credit provider, we take an initial payment upfront when a customer places their order. The rest is spread out over an agreed timeframe, with no hidden fees or additional charges. Buy now, pay later providers defer all payment to a later date, and while payments can also be spread out, the fee structure isn’t always clear.

 

Providers of buy now, pay later credit can choose when to add interest and other fees, and at what level – usually anywhere between 19.9% and 34.9%. If a purchase isn’t paid off in full by the pay later date, customers may quickly find themselves liable for minimum monthly repayments, interest and fees, which might also be backdated.

 

These unclear fee structures can result in financial problems and penalties.

 

In contrast, our interest-free credit facility is a completely transparent credit instalment alternative to the more regular buy now, pay later finance. No fees. No interest. No hidden charges – just a very clear schedule of regular payment amounts.

 

Let’s say a customer has their heart set on an exercise bike that costs £500. With DivideBuy, rather than handing over £500 in one go, they split the cost over several smaller monthly repayments to suit their budget. So, if the item is £500, they might choose five payments of £100, for example. An important point to remember is that the price of the item is the exact price they pay, no matter how many repayments they choose to make.

 

We’re a responsible lender and offer a range of options for customers to spread the cost of purchases, even if they’ve been refused credit before. Shoppers’ ability to repay credit is judged on their current situation, not their past credit. We have three different acceptance routes: some customers are accepted straightaway with monthly repayments; some may pay a deposit – which reduces their monthly instalments – and others are accepted subject to guarantor approval. There are no hidden charges or interest, and there is no penalty for early repayment, either.

 

How to offer interest free credit to customers with DivideBuy

Point-of-sale finance is the fastest growing online payment method in the UK – now twice as popular as bank transfers. By partnering with a payment platform like DivideBuy, retailers can cash in on this growing market of consumers who are motivated to shop in a way that best suits their budget.

 

Our credit technology integrates wherever you take payments, whether it’s in store, online or via a phone system. Buyers are offered the option to spread the cost of their purchases over several months with interest-free credit. If they agree, a credit search is performed to assess affordability.

 

Affordability checks take the form of a soft search and a decision is returned in about a minute, so your customers aren’t kept waiting. We don’t rely on third-party lenders either, which means our acceptance rates are higher, and our sales conversion increases are 70% on average.

 

If the customer’s credit score is low, we may sometimes ask for a guarantor. If so, we contact them via email and send them a link to complete their details. Or the guarantor can call our customer service team directly.

 

As we provide the interest-free finance ourselves – there’s no middleman – we take on all the full fraud and credit risk, while making sure that both buyers and retailers are fully protected. Our customer portal collects orders in a single place and shoppers can manage their purchases, choose their payment method and use the online chat function to talk to our customer service team.

 

These are just some of the huge benefits to integrating our interest-free credit platform into the customer payment process, both for retailers and shoppers. If you’d like to find out more, speak to our friendly team and book your own demo today.

Page last updated: 03 September 2021

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