Sustainability trends in retail
September 2023
It seems like a long time ago, when the cashier or salesperson would ask you ‘Cash, cheque or credit card’? The world of payments has come a long way.
Now most of us don’t even carry a wallet. All our banking and payment methods are easily accessed through our phones or watches.
As a business you work hard to create an effortless process for your customer to buy from you. Offering frictionless payment options is part of this process.
So how do you minimise any friction, especially when the customer may not quite have enough money at the register to pay for their purchase?
POS finance is one option, to help customers pay for bigger purchases upfront and pay them off over time.
POS finance is consumer finance offered on purchases made on-premise.
The customer is given finance to purchase products or services over a set term. Some payment options include making a set payment per month over a certain term, some require the payment of a minimum amount at the end of each month and others require paying the full amount owed at the end of a set time. Fees and/or interest may apply to these loans.
There are also credit card issuers offering interest-free finance for longer periods than the standard purchases made on the card.
Different payment providers offer different payment terms and conditions and it’s worthwhile considering these carefully.
To the consumer, POS finance helps customers cover the cost of big purchases such as sofas, dining tables, computers or a home gym. Or perhaps unexpected or emergency purchases such as replacing a broken tooth with a dental crown or buying a new fridge when the old one suddenly breaks down two days before Christmas (speaking from experience here!).
It can be a financially savvy way to borrow money, especially if using the no fee, no interest POS finance providers as opposed to standard credit cards. With credit card issuances expected to fall 21.2% in 2020-21, it’s a great option for your customers that don’t own a credit card or don’t like the steep costs associated with them.
For your business, it can be a worthwhile payment option to offer your customers, especially for customers who may not have access to funds to buy the goods upfront or want to budget better.
Chosen wisely, POS finance can be a great sales tool.
If you are shopping around for POS finance providers, what do you need to be on lookout for? Not every POS finance provider offers such a good deal for both the retailer or the store owner as well as for their customer.
Here’s our checklist of what to consider when choosing a POS finance provider -
Before signing with a POS finance provider always ask for a detailed breakdown of all merchant fees and charges.
Like credit cards, merchant fees can vary greatly so it is important to understand what you will be charged and if your business can afford them. Go through your entire product range and check there is enough wriggle room in your margin to wear this cost.
POS finance providers may offer a sliding scale of merchant fees for different loan amounts or durations – standard practice is the higher the loan amount or the longer the loan period, the higher the merchant fees.
Merchant fees, if not considered fully, can erode profit margins. Margins may already be tight in your business, so you don’t need another big hit to them.
Remember, you may be able to negotiate your merchant fees as part of your contract, by forecasting the volume of business through finance.
Check the type and amount of fees being charged to your customers by the POS finance provider. Your customers may not be willing to sign up for finance if the fees are too high.
Even though your business will not have to pay them, high customer fees may impact the perception your customers have of your business. If they have been confronted with hidden fees in particular, customers tend to be cautious with future purchases.
In 2020, around six million people used selected Buy Now Pay Later services in Australia and New Zealand. Hence, they are aware and may even have been caught out personally by some providers charging high and unexpected fees for interest-free loans.
Investigate the interest charges of POS finance for your customers. And be aware of providers that only have an initial interest-free period, but start charging steep interest and/or fees after that. Shoppers today are savvy and know when you aren’t offering them what’s best for them.
Choose an POS finance provider that offers zero interest like our POS finance.
Ensure your finance provider can embed their finance easily into your POS system. This makes for seamless transactions between sales and finance. This is crucial especially during busy periods such as Christmas or big sale days.
You also want a simple, and quick application process for your customers. You don’t want them bogged down with ID checks and paperwork in-store or over the phone – anything that may stall or lose your sale.
Straight-forward, easy to understand contracts and terms and conditions are the best for your customer, so they are fully aware of the finance they are signing up for. Again, your store’s reputation may be bound to your POS finance provider, so choose wisely.
Look for finance that provides a range of options, customised for your business, product range and the needs of your customers.
Offers that include the ability to pay a deposit up front, pick and choose a plan that suits the customer and the purchase, including payment frequency and loan duration, giving the customer the ability to create finance that works for them.
From a business perspective, look for a fintech provider that can flex and adapt its POS finance offering as your business grows and evolves.
Have you considered co-branded finance? etika offers this to help you extend your brand through the payments process!
Choosing the right POS finance provider can bring success to your business – increase sales, improve profitability and improve brand loyalty and customer relationships.
Let’s talk about the power of POS finance for your store or clinic.
Our Partnership team is ready to show how easily sales are made using our POS finance.
Call us now on 1300 FAIRER (324 737) or contact us at sales.au@etika.com
Our office hours are Monday to Friday from 8am to 5pm (AEST).
