Point-of-Sale Credit Seen as a Major Alternative to Credit Cards

Apr 22, 2019

There was a market starving for credit, and fintech companies saw the potential. Both shoppers and merchants have embraced it.

Affirm’s recent announcement of its partnership with retail giant, Walmart, helped show many that point of sale credit is closer to becoming a mainstream payment option and an alternative to credit cards.

The Numbers Don’t Lie

Fintechs, like Affirm, have recognized that the millennial generation, those between the ages of 23 and 38, would rather pay for purchases with installment loans instead of credit cards.

After seeing their families and friends struggle through the financial crisis and mounting credit card debt, millennials have warmed up to alternative ways to pay, like point of sale credit.

For example, in 2013, fintechs accounted for 5% of U.S. personal lending, according to TransUnion, the credit-reporting company. In 2018, they controlled 38%, which is a bigger share than the other typical players, like banks and traditional lenders.

How Point-of-Sale Credit Works

This type of financing is offered to customers when they approach the checkout area, in the hopes of enticing people to buy more or buy things they didn’t think they could afford.

These loans are consumer-friendly because eligible borrowers are approved on the spot, and financing can be used immediately.

Also, point-of-sale credit is easy to set up. For example, while perusing mattresses and figuring out how soon it can be delivered, you can check your smartphone to see if you qualify for a loan to pay for it over installments.

How Affirm Was a Breakthrough Moment for Others

When Affirm announced in February its partnership with Walmart, it was the company’s first venture with a bricks-and-mortar retailer. Shoppers have access to the financing option on Walmart’s ecommerce cite, as well as in the retailer’s 4,000 stores nationwide.

It already had signed up more than 2,000 merchants to accept its consumer point-of-sale lending solution.

Described as a buy now, pay later financing option, Affirm’s point-of-sale credit allows approved users repay purchase amounts with monthly installments over three-, six-, or 12-month periods. Unlike credit cards, the interest it charges is displayed in actual dollars instead of percentages. Considered a more transparent option, this type of financing helps borrowers budget better.

When a shopper wants to take advantage of the financing at a store, the user receives a barcode on his/her mobile device to scan at the point-of-sale.

Affirm also already offers a different type of loan that lets consumers borrow to buy a product or service from any merchant not just its partners. App users who are approved for loans are given a temporary credit card numbers that are used at the stores of their choices.

Point-of-Sale Credit Is a Growth Business

Now that a major chain is on board with Affirm, other merchants and fintech companies are paying attention. Point-of-sale credit is a way to get consumers to make more purchases or more expensive purchases, as well as a way to bypass expensive credit card interchange fees.

Now that Affirm has proven that this type of partnership has a lot of potential, expect many other fintechs to start looking out for other major bricks-and-mortar retailers.

The Final Say on Point of Sale Lending

Point-of-sale lending not only serves shoppers better, but it also has advantages for merchants. Giving consumers another way to pay provides merchants with another way to reach shoppers who do not have credit cards or the means to make significant purchases at the point of sale. This type of funding often leads to dramatic improvements in sales because it occurs when people are ready to pay.

If you want to reap the benefits that point of sale credit financing offers, then turn to eMerchantBroker.com (EMB). EMB offers customizable, no-credit-check options based on clients’ cash-flow needs, margins, and risk tolerance.

Point of sale credit is a great opportunity for businesses of all sizes and industries. By offering financing to your customers, you can boost your sales, improve customer loyalty, and build repeat customer bases. Apply online today.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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