Point-of-sale (POS) financing has taken the consumer shopping experience by storm, offering shoppers the flexibility to pay in installments – and often with no interest. According to a July 2020 survey by Ascent, 55.8% of American consumers have used one of these services.
But there’s a twist. The capabilities of B2B eCommerce combined with new expectations from buyers, have brought POS financing’s savvy convenience to the wholesale business.
What Is Point-of-Sale Financing?
Point-of-sale financing is a flexible and convenient POS payment option allowing customers to pay for a purchase in installments with 0% interest. POS financing is also commonly referred to as Buy Now, Pay Later (BNPL).
Third party financing companies – usually fintech companies like Afterpay and Klarna – are the actual lenders. So businesses receive payment as they would with any other orders, while customers have more lenient payment terms and pay the money directly back to the lender, according to previously-established terms.
How It Works
- The customer visits their shopping cart and sees a financing option is available. They click on the link to either set up a new account or log into an existing account. It’s a quick and easy process that keeps them within the realm of the transaction to avoid losing sales or creating confusion.
- The customer sees their payment schedule with the total order amount broken down into installments to be paid on certain dates. The first installment is due at the time of purchase.
- The customer agrees to the payment plan, pays with a payment method linked to their POS financing account and completes the transaction. They have access to their purchase immediately, as if they’d just paid for the entire order at once.
Customers love their convenience and flexibility. It’s also much easier to get approved for financing than it is to be approved for most credit cards. There’s also less risk, as any missed payments or late payments quickly flag customer’s accounts; account issues can lead to the permanent loss of privileges.
Shoppers can pay their entire balances in advance or change their payment methods, any step of the way. Meanwhile, third-party lending companies send consistent reminders to help customers stay on top of their due dates.
The Benefits of POS Financing
Why sellers love POS financing:
- Savvy shoppers expect flexible payment options
- It doesn’t pose a risk to the seller
- It has the power to increase average order value (AOV)
- It can improve shopping cart conversion rates
- POS financing companies often promote the businesses that use their services, attracting new customers
Why shoppers love POS financing:
- It increases their buying power with payments spread out over weeks or several months
- It can be easy to get approved (many do not use credit scores for approval, making it a viable option for shoppers who don’t have a credit history)
- Interest is either low or nonexistent
- They pay no fees unless payments are late
- Payment due dates are transparent and easy to manage
With so many advantages, it’s no surprise point-of-sale financing has finally worked its way into the wholesale business.
POS Financing for Wholesale Businesses
Wholesale eCommerce companies like NuORDER are getting savvier about payment services. It’s now possible to offer clients financing options at checkout, in addition to more traditional offerings such as the ability to accept credit card payments and keep a history of your transactions.
Here’s how BNPL and instant financing are transforming the business.
Buy Now, Pay Later for Business: More and more wholesale platforms have pay-later POS financing integrations. Unlike consumer-facing options, the wholesale version is often only available at a low interest rate. Still, they share many of the same advantages; most notably, merchants enjoy better cash flow management and improved buying power. It encourages retailers to give new brands a chance while increasing the odds of boosting AOV. Using wholesale software can make the process easier for all parties.
Instant Financing: However, BNPL isn’t the only POS financing option for businesses. Some wholesale eCommerce companies are cutting out the middleman to offer flexible credit and financing options at checkout. For example, brands selling on NuORDER may accept credit card payments, offer split payments and set up flexible payment terms. The platform can even be used to enforce those payment terms. For example, let’s say you have a brand and your terms state you’ll get paid once your goods have shipped. You could set up “charge upon shipment” in NuORDER to automatically charge the retailer as the goods leave your manufacturer.
B2B eCommerce is expected to be as seamless and flexible as shopping a B2C site. Consider using point-of-sale financing to bring ease to the payment process, increase sales growth and help retailers run their businesses with greater agility.
NuORDER is a B2B eCommerce platform and marketplace, connecting retailers and brands and streamlining the wholesale process for virtual, hybrid and in-person market appointments. The NuORDER platform offers a seamless and collaborative way to do business with interactive and customizable solutions, easy POS payments, real-time inventory insights, comprehensive data and more for increasingly informed buying decisions.