What is Retail Finance in relation to DivideBuy?

At DivideBuy, we are accelerating Retail Finance. But what is Retail Finance?

Retail finance is consumer credit at checkout without the need for a credit card or an external lender. It’s the incorporation of a credit system into a customer’s journey. Retail finance allows a customer to spread the cost of a purchase, making it both easier to afford and encourages the customer to purchase in the first place.

This cost is spread out either through store cards or through financing. This can be done by integrating with a third-party, like ourselves, who specialises in POS finance.

Retail finance options include interest-free credit, interest-bearing loans or ‘buy now, pay later’ arrangements. There is an increasing trend in customers who are selecting the option of interest-free credit over interest-bearing as they only ever pay the amount of the full purchase. Even in cases where customers are unable to (or chose not to purchase online), there is evidence that POS finance can drive significant revenue uplift both in-store and over the telephone.

Is Retail Finance right for my business?

Omni-channel retail is starting to be considered the norm. With 50% of consumers expected to be able to buy online or pick-up in-store, rather than trail the shelves. Not only are consumers preferring to purchase through these means, but the option is now almost expected from the current market.

There are different benefits to offering retail finance to your customers. As the credit is set up between ourselves as the credit providers and the consumer; retailers do not have to collect money back from customers. Other advantages include a reduction in cart abandonment, increase in product purchases/sales, improved customer retention and increased customer loyalty.

Interest free credit has accounted for 1.5% of all retail sales in the last year and is expected to grow to 2% in the coming year. As mentioned, the likelihood is that providing retail finance to customers will give your sales a significant boost. Another advantage found is that POS finance can give you the ability to divert potential customers from competitors who do not offer interest-free credit.

Retail finance tends to show the biggest gains when it comes to big-ticket items such as sofa suites, education and electronics. For example, something with monthly instalments of £100 over the course of a year looks more affordable to a customer than a once-off payment of £1,200. However, there is significant evidence to suggest that it isn’t just big-ticket items people are now spreading the cost of. More and more people are choosing to pay in instalments on smaller items to avoid a dip into their savings.

However, as a retailer, your first thought may be that working with such retailer finance lenders may cannibalise your margins. Research shows that conversion rates, upselling and customer loyalty all increase when the offer of interest-free credit is available.

In recent years, POS finance has sustained a growth reaching £1.8 billion, equating to a year-on-year growth of 9%.

Can I offer Retail Finance to my customers?

Contrary to popular belief, retail finance is not the preserve of any market niche.

At DivideBuy, we supply retailer finance solutions across all sectors, from home furnishings to training and education. Rather than needing your customer to seek external finance options, our structure allows them to complete an order directly through the checkout.

Today’s consumers aren’t a patient crowd. With smart technology at hand, the world’s become used to getting what they want, when they want it. With our unique in-house technology, our retail finance option can help cater to this expectation – it’s a win-win, and the customer gets their item comfortable in the knowledge they are spreading the cost monthly.

Why is DivideBuy the solution you’re looking for?

We’re entirely independent and are not reliant on brokers or 3rd party lenders. Our unique credit decision engine takes away the need for an underwriter and we are the sole lender of the credit we provide. For this reason, using ourselves as your retail finance option can increase your customer approval rates by 25-35%, removing their need to acquire external credit support to help complete a purchase.

Unlike other retail finance providers, our concept is simple. As a partner of DivideBuy, you are not required to hold an FCA licence to offer retail finance to your customers. This is because our interest-free credit option can be spread over 12 months, with a maximum number of instalments also being 12, which does not require a retailer to hold authorisation – potentially saving you thousands.

Furthermore, the main retail finance providers include retailers, broker platforms, finance companies and E-commerce platforms. DivideBuy supports our retailers (without the need for a 3rd-party broker) as a fintech company, integrating with the most popular UK E-commerce platforms. Sounding like we tick all the boxes? – That’s because we do.

Page last updated: 03 September 2021

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