UK businesses could be missing out on up to £25bn in sales by not offering flexible payment options at the point of sale. More than three-quarters of consumers would consider purchasing through POS finance in the future – around 39 million UK adults, according to Duologi. Douglas Blakey reports
Consumers are now more willing and able to borrow funds than ever before. With so many retailers very publicly struggling, they can ill afford not to offer flexible payment options at the point of sale.
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Consumer spending is likely to favour merchants that offer POS finance options – helping to boost sales and reputation in a number of key ways. There is, accordingly, an enormous opportunity for UK businesses to boost bottom lines – one that many may not even realise they are missing out on. But what is the level of the market opportunity?
A report commissioned by specialist lending platform Duologi examines the current state of the consumer credit market, and attitudes towards POS finance. The report, entitled Finding the Right Balance, examines a number of sectors from retailers to health providers and travel operators.
Its key findings are:
- More than three-quarters (78%) of consumers would consider purchasing through POS finance in the future – around 39 million UK adults;
- Of these, the average amount that each would be willing to borrow if £260 ($804), representing a potential £25bn opportunity for merchants that implement this payment type into their business model;
- Almost a third
- (29%) of people would be willing and able to borrow between £1,000 and £5,000, with 27% saying they would be most likely to need around £500–1,000 in credit to make a purchase, and
- Over a third (34%) of people said they would be more likely to spend with a business that offers POS finance options.
With fierce competition throughout every sector as the UK economy fluctuates in confidence, this potential to boost traffic – both online and in-store – could be critical to a brand’s survival. Customers also stated that POS finance options would be a key factor in deciding where to shop; 20% of people said that if a company did not offer flexible finance options, they would be more likely to go elsewhere.
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By GlobalDataMoreover, finance options can help to boost brand loyalty, with more than a quarter (28%) of people saying they would be more likely to return to a merchant that allowed them to borrow funds in this way.
A further 26% would be likely to spend more than originally planned if they found they could access a good amount of credit from a merchant.
0% Finance
The report finds, unsurprisingly, that 0% finance is the biggest selling point for consumers when buying on credit. Around 75% of people said this is an important consideration if they were to buy on credit. This figure rises to 81% for people who earn more than £40,000.
Flexibility or multichannel spending is vital, with 46% of people saying POS finance should be available both online and in-store.
A range of industries stand to benefit from offering POS finance options: 42% of consumers think the retail industry could do more to offer POS finance options.
According to Duologi, some 20% of people no longer trust in a loan from a bank. Such scepticism is especially prevalent among the millennial generation – with the figure rising to 24% among 25–34-year-olds.
With banks increasingly concerned about levels of personal unsecured debt, and consumer mistrust towards banks so high, there is potential for a step change in consumer credit.
Over half (56%) of the survey sample reported a bad experience of high-interest rates when applying for credit, while 28% have not been provided with full transparency when it comes to their loan.
Many lenders are also falling short in terms of user experience, as 24% people believe their credit application process was too slow. One in five (20%) also stated that the lending decision took too long, and a further 26% were unable to decipher their application, as it was full of confusing financial jargon.
The report finds that only 6% of people would ask a merchant if they offered finance options. So despite a general willingness to spend on credit, consumer awareness levels are very low with regards to its availability.
The report concludes that merchants of all kinds can benefit from offering finance options. They should also work hard to promote them as a key point of difference.
Duologi co-CEO Gary Little says: “Fintech businesses are driving a transformation in the market. Whereas previous incarnations of consumer finance offerings may have been plagued by lengthy application processes or slow procedures, new platforms – built on powerful technology – are making this kind of transaction just as simple as paying on credit card, but with the flexibility to repay the cost in a way that suits customers’ needs.”
