What is POS financing?
Point of sale financing is when the merchant offers their customers a consumer financing solution at the point of purchase, in order to assist them in buying the product or service.
POS financing is a type of consumer finance and refers to open loop credit cards, closed loop store cards and installment loans.
POS loans have been around for a long time, for example when buying large items of furniture, and car loans. However, POS lending has expanded in recent times, due to technological advances that have made installment loan options available immediately online and on mobile phones, providing clear repayment terms before the loan is taken out.
These advances have also made it easier for point-of-sale finance to be offered by all sectors of retailer.
How can I offer POS financing?
These are the stages to offering your customers POS financing:
- Ensure there is a need for customer finance in your business. Are customers looking at products that they can’t purchase at the full price upfront?
- Once you have worked out which point-of-sale lending platform suits your needs, ensure that you advertise to your customers that consumer finance is available.
- Customers ideally should be able to apply for financing in store, online and using their mobile phone.
- The customer should be able to find out almost immediately whether they are eligible for a POS loan.
- Your customer receives the product instantly and you the retailer will receive the funds straight away. The customer will have a repayment schedule from the loan provider.
- Be aware that you are likely to have to pay a small fee per transaction as you would need to with a credit card.
See also POS Lending.