How POS Lending Increases Revenues
In February 2018, American Banker said point-of-sale (POS) lending was “hot.” It’s not any less hot now than it was then.
With FICO scores at an all-time high, American consumers are poised to be approved for more loans. POS lender Affirm conducted a survey in 2016 and found that 87% of consumers ages 22 to 24 would pay for large purchases with POS installment loans. Affirm provides loans to retail customers at the point of sale with no risk to retailers.
Affirm is not the only company that does so. Swedish firm Klarna has a “Buy Now Pay Later” service that now has a U.S. presence. Other companies have entered the space or planning to. It’s likely that POS lending could become one of the largest consumer lending segments in banking.
How POS Lending Drives Sales
Point-of-sale lending is good for retailers. With services like Affirm, retailers can sell more merchandise, get paid for it in short order, and help consumers improve their credit scores for future borrowing. Affirm gives the customer a flexible payment plan from 3 to 36 months and settles with the retailer within one business day. Retailers are seeing a conversion of 20% or more after partnering with the firm.
POS lending allows consumers a way to get the merchandise they want today and pay for it over time. And the terms are better than bank terms. With that kind of a deal, retailers are sure to sell more merchandise and increase their revenues.
Integrate Your POS With Your Payments Processor
Your POS solution should be flexible and powerful enough that you can integrate with your payments processor. Being able to accept credit cards and debit cards is not enough. With new tech services like Stripe, Square, and Affirm entering the market for retailers, you’ve got to be able to appeal to every type of customer and every type of financial transaction. When you’re that flexible, you’ll be the retailer of choice and enjoy a better relationship with your customers. That will lead to more sales and more profits.
No matter what retail sector you serve, POS lending is a technology whose time has come.