Point of Purchase Financing
Online shopping is the prevalent method for purchasing
everything including electronics, garments, furniture, kitchen
products or services. As a result, many e-commerce platforms and
brands offer easy financing options to attract more customers.
Point of purchase financing has been a popular payment method in
use for several years.
Buy Now Pay Later
(BNPL) is a similar payment method typically offered for smaller
purchases. KredX offers instant payment options to your business
buyers at the point of purchase, which increases your overall
The following sections will cover everything to know about this
What Is Point of Purchase Financing?
Point of Sale (POS) or
point of purchase financing is a broad term
that refers to flexible payments in instalments. Retailers and
shopkeepers typically offer this payment mode for big-ticket
purchases like home appliances, furniture, home renovation, etc.
They usually partner with third-party lenders and integrate
their financial services upon checkout.
POS financing typically comes with less stringent eligibility
criteria than other financing methods. Many lenders offer 0%
Annual Percentage Rate (APR) for a certain duration. Some allow
customers to buy specific goods up to a certain credit limit,
depending on their eligibility.
How Does Point Of Purchase Financing Work?
POS lending is offered by traditional banks, credit unions,
e-commerce platforms or non-banking financial companies.
Retailers partner with these institutions to offer POS financing
options on their websites for certain products and services. The
APR is usually 0% though some lenders may charge interest for
less qualified borrowers.
Customers need to fulfil certain conditions like having
sufficient income or credit scores to avail Point of purchase
financing. Some merchants allow customers to apply for a
one-time instalment loan upon checkout. Others require them to
sign up and choose a payment plan to use this service.
Once the buyer accepts the terms and conditions, the lender
approves the loan. Afterwards, he/she can interact with the
lender, who will pay the retail outlet or website for any
purchase. Then, he/she can repay the amount in instalments as
per the loan’s terms.
Approved customers can choose a repayment tenure of 3, 6 or 12
months, depending on the lender and budget. They can repay the
amount on the lender’s website or mobile app. If he/she fails to
make timely payments, some POS providers can charge a penalty.
Benefits of Point Of Purchase Financing
The following are some of the benefits for businesses offering
- Increased customer base:
Traditional financing options like credit cards and personal
loans can be offered to a limited number of customers. In
contrast, anyone can access a company's products/services via
point of purchase financing.
- Sales growth:
One of the most important aspects of easy customer credit is
the opportunity for increased sales growth. Many customers
lack the funds necessary for a large lump sum payment but can
repay in instalments.
- Higher order value:
Offering Point of purchase finance options benefits retails by
increasing conversion levels and reducing cart abandonment
rates. It also makes it easy for customers to afford
big-ticket purchases. For example, a student with a tight
budget can afford an expensive laptop with POS financing.
- Increased revenue without risks:
Vendors who offer this facility can increase their sales by as
much as 33%. They only have to pay an upfront fee to get these
benefits risk-free. The lender takes all the risks of defaults
and other risks once the loan is approved.
- Positive customer experience:
POS facilities can improve a brand's image among customers as
it motivates more people to make a purchase. When a firm
increases its client's purchasing power, it can benefit from
Challenges Of Point Of Purchase Financing
There are numerous challenges to the growth of POS facilities in
India. Some of these are:
Many retailers in India are not well equipped with today’s
technologies and the internet.
Lending institutions that do not offer flexible repayment
options may risk losing customers to a different provider.
POS providers in the country cannot share data with third
parties without their clients’ consent, which could lead to
duplicate KYC records.
Moreover, many point of purchase financing providers do not
follow stringent KYC norms and onboarding protocols.
How to Access Point of Purchase Financing?
Most retailers partner with a financial institution to offer
Point of Sale facilities. Clients of such businesses have to
create an account with the lender to be able to select this
option at checkout. Lenders require them to provide basic
details like the company's name, address and date of
incorporation and may sometimes run soft credit checks.
instant credit to businesses
at the point of purchase with its Buy Now Pay Later (BNPL)
services. With it, your B2B clients, including retailers,
dealers and distributors, can get immediate financing. To apply
for this facility, fill out the registration form and sign the
point of purchase financing is a convenient
tool for businesses to generate more income by allowing their
clients to pay in instalments. For small business owners, it can
increase their credit limits and ease of transactions, which
would help them grow rapidly.
The following are some of the benefits of POS
financing for consumers:
It is a transparent payment system with no
They usually do not have to pay any interest.
These credit facilities can be processed
Closed-ended credit is a type of credit, wherein
the total loan amount along with the interest must
be repaid in full within a stipulated date.
However, this credit facility can be used only at
certain outlets. Customers can repay these
unsecured loans in equal numbers of instalments.
Most customers use POS financing when making
big-ticket purchases, such as buying furniture,
electronics, etc. Shoppers without an established
credit history can also use this facility as they
come with less stringent requirements?
A business owner needs to consider these factors
before offering POS:
- Fees to pay per transaction
If your clients require financing to buy
- Where they can apply for financing
- POS eligibility criteria
- Repayment schedule