Point of sale finance doesn’t have a catchy name. But that hasn’t stopped it taking the world by storm.
Giving consumers the chance to purchase things on credit and pay for them in instalments isn’t a new thing. But the application of technology to this established retail strategy has been revolutionary, accelerating adoption across markets and giving retailers a powerful tool for driving sales.
How (and why) it works
Picture the scene…
You have recently moved house and you need to buy a new sofa to fit your humongous new living room. You find the perfect thing… but you can’t afford to pay for it right now. After all, you just bought a house! You are about to walk away when the retailer offers you the chance to buy the sofa on credit and pay for it via instalments over the coming months, subject to a modest interest charge. You accept, and within 48 hours you’re sitting on your plush new sofa wondering at the wonder of point-of-sale finance!
The benefits of POS finance are threefold:
- Increase sales conversions.
- Increase average order values.
- Create great customer experiences.
By reducing friction at point-of-sale, consumer finance facilitates business. No wonder that retailers are chomping at the bit to integrate POS finance solutions with their ecommerce and bricks-and-mortar offerings.
How we got here
Back in the day, POS finance was inefficient and expensive - for consumers and retailers. It tended to be limited to one platform, either online, or offline - rarely both.
Applying for finance meant filling out paper forms in store and a lengthy approvals process. This tended to put people off. Later, when POS finance moved online, the process remained time-consuming, as retailers simply didn’t have access to cost-efficient third-party platforms that were able to handle identify verification and check multiple lenders for credit availability in a matter of seconds.
New kids on the block
Now, a host of ground-breaking tech platforms are enabling retailers to offer a truly cross-platform POS finance solution to their customers. This improves customer retention by making it easier to buy products. It also drives referrals, as satisfied customers recommend brands to their friends.
The market is booming, as evidenced by the $700M+ raised by retail lending platforms across 14 deals since 2017. Established names in the payment space like Square and Klarna are jostling for position with ambitious upstarts.
Divido is one such challenger. The company, founded in 2014 by Anders Hallsten, Christer Holloman and Fredrik Borgquist, tore up the rulebook and started from scratch to create a POS finance offering that works across platforms and integrates across markets too. This solves a very real problem for global brands in particular, who want to offer POS finance to customers but find it difficult to do across multiple different jurisdictions.
Deko is another start-up making waves in the consumer finance space. Their focus is on conversion- improving user journeys in order to drive better outcomes for customers, lenders and merchants. The platform must be doing something right, as it’s being used by top tier brands such as Samsung, Mothercare, Game and PurpleBricks.
The primacy of choice
Ultimately, we live in an age defined by choice
Consumers now demand multiple options when paying for products online or in store. Retailers that acknowledge this truth stand to benefit via increase sales. And technology has made it easy for them to make it easy for their customers.
At the same time, traditional credit cards are becoming less popular with millennials, since they are so opaque. 3 in 5 millennials carry credit card balances month to month, while 45% don’t know the interest rate on their card. So, it’s inevitable that retailers will adapt in order to make it easier for young people to shop with them.
The world has changed, and POS is a “half trillion pound global industry ripe for disruption”. POS finance platforms are helping customers, retailers and lenders to navigate the new reality, one defined by choice, convenience, and affordability. If they can get it right, everyone will benefit.
Shieldpay protects both buyer and seller in any transaction so that you can deal with anyone, anywhere with total confidence.
How do we do it? We verify the identity of both sides, funds are held securely in the Shieldpay vault and only released when both sides agree they’re happy. If anything doesn’t go to plan, we help out with any disputes.
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