Provide Consumer Financing Options to Your Customers

Feb 22, 2018

Whether you refer to it as consumer financing, installment plans, flexible financing, or buy now, pay later plans, this type of financing is beneficial for businesses of all sizes and industries. Consumer financing allows businesses, even smaller, online only merchants to expand their customer base, build their reputations, and grow their profits.

Passing on offering consumer financing for your customers is an opportunity you can’t afford to miss. Find out more about consumer financing and how it can benefit your business.

Understanding Consumer Financing

There are all types of consumer financing options. Some of the more common financing options for customers are offered at larger bricks-and-mortar stores. Some plans offer shoppers interest-free payments for a specified period of time in exchange for spending a certain amount of money and others allow customers to pay for a product in installments so that they have more time to pay off an expensive purchase. With more people shopping online for big and small purchases, consumer financing has opened up for these customers, as well.

Financing options entice browsers who may shy away from purchases because they don’t want to spend a large sum of money at one time or simply can’t afford the price. Instead of paying up front for an item, allows them to pay for it in more affordable monthly payments. Customers get their merchandise that day or as soon as they can be shipped to their homes.

Whether a merchant offers its own financing or has a financing company handle it, it’s a simple process. Financing doesn’t require unique software or special hardware. After a customer finds an item in an online store that he/she wants to purchase, the person can apply for financing from their home computers, tablets, or smartphones. Within seconds, the person learns whether they are approved. If they are approved, they are given the financing, as well as an interest rate.

4 Advantages of Offering Consumer Financing

There are quite a few benefits to any business, including smaller businesses, offering financing options to its customers.

  1. Payments Process Faster: Once a financing application is approved, payments process quickly. This takes some of the pressure off merchants that are waiting to see if they get paid for the sale. If you have a third party handle the financing, you get paid in full right away, but the lender continues to collect the monthly payments for your customers. This is an extra bonus for you because it gives you more money on hand to pay for operational expenses or purchase more inventory.
  2. Individual Sales Increase: If customers don’t have to spend a large sum of money at once, they will be more inclined to buy more. Knowing the payments will be stretched out in smaller increments over a longer period of time will give them the confidence to either upgrade to a more expensive item or buy multiple items.
  3. Customer Loyalty Grows and Strengthens: By giving a customer an opportunity to finance a purchase, you are giving yourself an opportunity to build trust and earn a lifetime customer. Satisfied customers will tell others about quality service and perks, like financing. One happy customer can result in countless referrals.
  4. Promote Lower Costs: Marketing the latest smartphone at the price of $25 per month is much more attractive to consumers than the full-cost $1,000 price tag. Those smaller numbers, which are valid when financing is an option, will lure customers to products they never would have considered if they had to front the entire amount the day they bought the items.

When It’s Time to Find a Customer Financing Provider

Now, that you recognize the many benefits to offering customers financing options, you are probably wondering how you find a provider that works best for you. Do your research and be aware of a few things.

Like with many other lending or financial relationships, smaller and midsized businesses should avoid long-term contracts and automatic renewals and terms should not include minimum sales requirements. Also, your business should not be penalized if the customer that accepts the financing fails to make payments in full. This protects your revenue from being negatively impacted.

Additionally, the standard cut that financing providers should take from each financed sale should be less than 5%. If it’s higher than that, you should check out some other options.

Finally, customer experience is important. If signing up and getting approved for financing is a headache, your customers aren’t going to follow through with it. It should be quick and convenient. If it doesn’t seem like a seamless process, keep looking.

Last Thoughts

Consumer financing options not only boost sales and broaden customer bases for businesses, customers embrace them. Give the customers what they want and give your monthly revenues the boosts they need.

When it’s time to find a consumer financing provider to partner with, consider (EMB). As a trusted, reliable merchant services provider, we work to offer consumer financing and payments solutions to all types of businesses.

Let us help you get a high risk merchant account 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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