Do retailers need FCA approval to offer interest free credit?

Offering interest free credit can be a great way to keep customers happy by allowing them to spread the cost of their purchases over several months, at no additional cost to themselves.

 

These win-win deals are also great for retailers, who can use them to increase sales, cross-sell opportunities and boost average basket values.

 

Because they’re technically lending money, businesses usually need to be approved by the Financial Conduct Authority (FCA) if they want to provide credit agreements to customers.

 

The gov.uk website is clear that “any business offering credit or financing to customer must be authorised by FCA, not just credit specialist companies.”

 

But some interest free credit plans don’t need FCA authorisation. Firms offering ‘instalment credit agreements’ of the type provided by DivideBuy, for example, don’t need authorisation as these credit plans are:

  • Repayable in no more than 12 instalments over no more than 12 months
  • Used to finance specific goods or services
  • For a fixed amount

 

DivideBuy itself – under our registered company name, Rematch Credit Limited – is authorised by the FCA, but there is no need for DivideBuy retailers to apply for approval. As soon as you have signed up and integrated our interest free credit platform with your website, you are good to go!

 

Do retailers need any special training?

We’re often asked whether you need any specialist training to use the DivideBuy platform to provide interest free credit agreements to your customers.

 

The simple answers is: no! Although credit agreements and customer credit checks can, in theory, be complicated, DivideBuy makes the whole process incredibly simple and quick.

 

  1. Our credit agreements are much simpler. With DivideBuy, there’s no APR or hidden charges for you and your customers to get your head around. Repayments are worked out simply by dividing the total purchase cost over a number of instalments.

 

  1. Our approvals process is managed automatically using an AI credit decision engine, which means that you won’t need to worry about whether to offer a customer credit or not – we do it all for you.

 

Approvals are easy to understand too. Shoppers can be approved straight away, approved subject to a deposit being paid, or approved with the agreement of a guarantor.

 

Offering a range of approvals like this maximises the opportunities for retailers to accept more credit agreements to increase conversions and basket values.

 

And best of all, all payments are guaranteed, so there’s no risk of a payment default for retailers.

 

For more information about how interest-free credit options could work with your website, contact the specialist team at DivideBuy today. We’re specialists in point-of-sale finance that helps your customers spread the cost of their purchases – and gives them another reason to come back to your website.

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