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Pos lending

POS lending (or point of sale lending) is a form of embedded finance. It allows merchants to provide credit at the checkout (A.K.A. the point of sale) for consumer purchases. POS lending is also known as checkout finance, retail finance, and instalments as a service. Its most well known iterations is Short-term Interest-free Credit – a credit product similar to Buy Now, Pay Later but for larger ticket items. It is generally fee-free for purchases spread up to two or three years unless a payment is missed. POS lending also includes interest-bearing credit solutions for periods up to ten years. POS lenders usually begin to charge interest to consumer 

POS lending providers charge merchants to use their platform for interest-free credit. Fees are between 2% and 8% per transaction with a monthly subscription (or SaaS fee) and a one-off set up cost.

Merchants may still be charged for using the service for interest bearing products, though it is likely much of this fee will be waved as the consumer pays the interest.

What are the benefits of offering POS lending?

POS lending providers a number of benefits to merchants.

Boost sales of luxury items

Point of sale lending reduces the impact of big purchases by spreading the cost. Expensive purchases like engagement rings, boilers, or electronics can be split into small affordable amounts without a deposit, which makes the items more attainable.

Improved customer experience

POS lending boosts customer satisfaction by creating an enhanced checkout experience. Money management, flexibility, and convenience are amongst the top benefits for customers. This will in turn build loyalty for your business.

Credit checks

Hard credit checks provide a necessary level of friction during the credit application. It also allows for longer repayment periods as the lender can accurately assess whether the customer is able to repay their loan. 

New pool of customers

Customers who may not otherwise have been in the position to make a purchase are able to by spreading the cost with POS lending. This attracts a new set of customers to your business. The earlier POS lending is advertised in the customer journey, the higher chance your business has of attracting a larger pool of customers.

Get paid immediately

You are paid in full by the credit provider at the point of sale. The lender then collects instalment payments from the customer. Lenders therefore shoulder all of the financial risk for the transaction, so you 

The bottom line

Point of sale lending is a great way to bolster sales for your business. It’s a fantastic alternative to Buy Now, Pay Later that provides low-to-no cost regulated credit.

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