Point of Sale Financing: Why and How to Provide it?

Introduction to Point of Sale financing

Point of Sale Financing is a step in which consumers are offered big and hefty items on lease or credit. It is usually executed as the last step in the consumer’s retailing experience. It is at the checkout counter that you are given the Point of sale contacting options that can immensely help you.

Point of sale financing is an option provided to consumers to help them out with big purchases. When you are about to buy hefty and big items, you are provided with this Point of sale contacting options so that you could afford the item without the burden to pay it off all at once.

Point of Sale financing comes up with many options that can be utilized by the consumers according to their preference and ease. Some people use credit cards with low APR rates and some use personal loans to waive off the entire amount. There are retail processes, digital processes that point of sale financing provides.

Point of sale financing options could be foraged on as a later option as it requires quite a lot of thinking and consideration.POS financing is an umbrella term that provides a myriad of choices for the consumers that make them flexible and are comfortable.

Shoppers can apply for a one-time installment loan at checkout which helps to pay for their purchase in monthly installments and some might sign up for paying through a payment gateway that is partnered with a retail company that provides them with different plans to choose from.

Point of sale financing ever since its advent has become an immense part of our shopping events. It had emerged to be a favorite option especially among the young who can now buy items that they usually cannot afford at a one-time down payment.

Who provides the POS Financing options?

Point of sale financing options is usually provided by merchants with sales in big and hefty items like furniture, electronics, automobile repairs. From the perspective of the merchants, they keep this option open so that there are more and more people wanting the products and not being discouraged by the immediate availability of money. There is high transaction value for their sales and enterprise.

When to use Point of sale financing?

With its prevalence, more and more and more shoppers and merchants are opting for POS financing options. But when should you consider using this option?

1. For a one-time payment: When you buy big items like furniture or cots and you wish to pay it off and not use your credit cards, Point of sale financing options are the best to go for. You need to plan on buying these hefty items beforehand.

2. Credit scores are low: For using your credit cards for any payment there are certain guidelines and eligibility requirements that you need to clear for approval. So if at all you have low credit scores, then Point of sale financing options can be a great choice for you. This sole reason has taken this option of financing to new highs.

3. Availability at low rates of interest: Until and unless you have 0% APR credit cards, POS options are available at a much lower interest rate which is one reason for its prevalence in present times. Especially during the promotional period, they are available at zero percent rates of interest which is highly beneficial for both merchants and consumers.

Benefits and advantages of Point of Sale financing options

1. Approval for credits: This is the main advantage of point of sale financing options. When you normally approve for credits it is a longer process, but the approval process in POS is much easier and simple. There is not a billion of paperwork you need to get done to get approved in contrast to personal loans provided by banks and other institutions.

2. Credit scores: Usually loans bring down your entire credit scores but with the Point of sale contacting options, there is no lowering down of credit scores as long as you keep paying your installments promptly.

3. For huge purchases: When you are purchasing big-ticket items, which have non-recurring payments, POS is the best option as it provides finds to help to complete the entire purchase.

4. Better sales: as more and more consumers can now afford high-end items, there are more conversion rates and that is proportional to better and more sales. Since the process of point of sale financing is easier and comfortable, it makes it an option to opt for even though you might not be able to afford it otherwise.

5. Risk distribution: As the risk of repayment is shared by the merchants and financial solution provider, there is an amount of betterment.

6. Customer satisfaction: As options for consumers are much easier and flexible this rises the customer satisfaction levels. When all other providers are not this accepting, but the process of POS is easier and easy, it sure attracts more and more people and makes them feel better.

Disadvantages and cons of the Point of sale financing solutions

1. High rates: This one can be cumbersome as the rates when pushes too high limits can add to more price range of the item than its original price.

2. Inconvenient Return Policy: The point of sale financing may have to still be paid even if the item is to be returned and only a small amount of money could be refunded.

3. Non-approval of credit: Even though it is not a regular practice, this can very much happen and then there will be an uncomfortable silence as to how to waive the item now.

4. Cost of setting the POS system: The POS system is integrated later on into the system and that can pretty much avail some amount of money from the merchant or the owner's pockets.

How Does Point-of-sale Financing Work?

POS loans are often offered with 0% APR for a preset repayment period, and sometimes there is an interest of 20% availed from customers who are not very qualified for the Point of sale financing options.

Even though the process of point of sale financing is much more convenient and simple than applying for personal loans, there is a certain amount of checking which is done beforehand so that you are credited as a trustworthy candidate for the financing option.

Customers once approved are convenient to choose from any period of repayment that they want making it a very flexible option for them. It can be three or six months according to the financial provider and also the item that you have purchased.

All your payments are monitored and you are sending messages and notifications way ahead of time to keep you in a loop for the payment dates and do not forget. It is usually done using mobiles and websites.

How to provide Point of sale financing options?

Usually, at the check-out counters of the retail shops, you will be asked if you are buying the item on cash or other options. When you opt for point of sale finance, they will redirect you towards a financing company that they had partnered with, who will be provided with your options. There is like the basic formality of filling the details and subsequent approval of the consumer by the same and finally check out of the item is complete.

When you create an account with the point of sale financing company, you will be asked to choose from various repayment duration, several payment plans and finally, the process will be complete in a smooth and streamlined way.

Substitutes for Point of sale financing options

Even amidst all its glory, there are times when point of sale financing options are not exactly your best options. There are alternatives to this choice available in the market. They can be the 0% APR credit cards or even personal loans.

0% APR Credit Card

A 0% APR credit card is a very revolutionary step in the industry where you have a credit card that allows you to lend money at 0% APR rates for a particular time frame, usually the promotional period.

Once the period ends, you are supposed to pay the interest that was discussed and accepted at the initial step. This card facility can be availed even on a much-needed basis making the card option even fend well when it comes to any type of purchase.

Personal Loan

This is the most traditional way of borrowing or lending that exists in today’s time and age. These are provided by banks and other institutions and are usually at a very high price range. This makes it a great option when you are planning to buy something big-ticket or huge and not the most viable option for small purchases.

The process of approval for the personal loans in itself is not a simple and smooth one. You need to be qualified in a way to be able to get approved for the personal loans, making it not an accessible option for everyone.

Point of sale financing provides more than one payment option for the customers according to their comfort and needs. It is this freedom of choice that has made this option come off as the most prevalent one as of now. The comfort in being able to buy an item and pay for it in smaller amounts over time makes it easier.

POS’s prime goal is to provide a smooth and streamlined channel for easy checkouts and payment gateways. When this is properly installed and made use of, it is equally beneficial for both the customers and the merchants or owners.

It is the ease and comfort associated with the financing options that it has emerged as the crowd favorite. The way it is available for everyone and not just for qualified customers like personal loans make it more comfortable to choose from and the process is easy and better. 

Allison Janney