Point of sale finance refers to finance options available to a consumer, provided by, or on behalf of, a retailer on the shop floor when purchasing a desired product.
Research from Divido found that 96% of UK shoppers see cost as an influential factor when making a purchase with a value more than £250. High one-off payments can discourage customers from completing a purchase,
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Choosing point of sale finance enables consumers to spread the cost of their purchase over a pre-arranged period of time. By offering point of sale finance services, retailers benefit from increased conversion rates and an increase in the average order value of customers.
Point of sale finance is growing in popularity, with many retailers now offering such a service in-store when completing a purchase. Coupled with this, the ‘FinTech revolution’ has helped drive the growth of point of sale finance, with emerging banks and technology firms appealing to younger consumers through a range of attractive finance options.
Online Finance
The e-commerce industry has skyrocketed in recent years, now accounting for approximately 20% of total sales in the UK. Quick to jump on the online gravy train, retailers and financial firms have developed innovative digital offerings, making it easier than ever for consumers to do their shopping online.
To help drive sales through digital channels, merchants have also developed finance products, helping consumers to spread the cost of their purchase over a longer period of time. Artificial intelligence technology has enabled instantaneous customer credit checks, while more flexible finance options have also helped to boost online conversion rates.
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By GlobalDataPayPal launched its online Credit offering in the UK in 2016, integrating its payments system with participating retailers. Eligible customers can spread the cost of buying anything from a smartphone to a city bike, with promotional interest rates starting from 0% and instalment offers available for up to 24 months.
Motor Finance
The three main routes of financing a car are: hire purchase (HP), where a loan is secured against the car and consumers will pay a deposit of around 10%; personal contract purchase (PCP), where consumers get a loan for the difference between its current price and the predicted value of the car at the end of the agreement; and personal contract hire (PCH), where consumers return the car at the end of the agreement, having paid a fixed monthly amount to the dealer.
A recent FICO surveyed revealed that 56% of consumers purchasing a car in the UK still secure their finance loan at the point of sale. However greater accessibility of information and better finance options has resulted in an increasing number of customers shifting to online platforms.
Innovation in the showroom is now a necessity to meet the growing technological preferences of consumers, according to a study from JD Power. The study, which surveyed over 6,500 consumers, found that customers are increasingly turning to more technological methods when scheduling and communicating with dealers.
Tablets proved popular among consumers, with satisfaction higher when dealers incorporate tablet usage in their service process. Overall satisfaction is highest when tablets are used to provide cost estimates, show a menu of options, and conduct multi-point inspections.
“Customers in younger generations are certainly affecting industry-wide behaviours when it comes to service experience expectations, and this will become more notable as they begin to represent a larger portion of the service business,” said Josh Halliburton, vice president and head of European operations at JD Power.
