Consumers Open Opportunities for POS, Pre-Purchase Financing

As inflation persists, so does sticker shock.

For merchants seeking to close the sale, financing offered at the point of sale — before the purchase is made — can help boost revenues.

PYMNTS Intelligence found that when shoppers think about what to buy, more than 60% said price is a factor in that choice. More than 40% of consumers said sales, promotions and discounts had an important impact on determining what — and where — to buy.

The read-across here is that promotions, which can include targeted POS financing offers, can steer consumers to a certain merchant and help ensure they buy what they want, perhaps instead of trading down or substituting another choice.

Paying Over Time Has Its Appeal

Separate PYMNTS Intelligence research showed that split-payment or installment plans, such as buy now, pay later (BNPL), have caught the public’s imagination. Seventy-eight percent of consumers said they plan to enhance their use of installment plans, while 39% of acquirers said they will do the same. There’s already some experience out in the field, as 60% of shoppers queried by PYMNTS said they had used those options in the past year.

General-purpose card installment plans were the most popular options, used by 45% of consumers choosing to pay over time, and merchant card installment plans and BNPL options were used by more than one-third of individuals. The appeal of stretching payments out has its appeal across income brackets, as 64% of shoppers who earn more than $100,000 annually paid via installments in the last 12 months, as did 61% of those who earn between $50,000 and $100,000 annually.

Offering the plans promptly is critical, as 30% of merchants said they believe consumers want to know about these options before deciding what to buy. A relatively scant 4% of merchants indicated that they had been offering a bank-issued card installment plan before checkout. A bit more than one-third of merchants offer BNPL options before checkout, which indicates that a majority do not — and thus there’s room for improvement.

Data and embedded finance can offer tailored payment options that are personalized in ways that fit the individual’s financial considerations, Versatile Credit CEO Ed O’Donnell told PYMNTS in February.

“Technology’s been the great equalizer for small- and medium-sized businesses [SMBs] and also the enterprise clients that we deal with,” he said.

Offering embedded payment options that are in the mix before, during and even at the point of checkout has boosted returns on investment for forward-thinking companies, from sectors as diverse as retail to home improvement, he added.

“You’ve established a relationship not only from a buying/selling perspective, but you’ve got a credit relationship as well that can be tapped into when [consumers] need something else,” O’Donnell said.