Suppose you think of a situation where the businesses provide the buying power to their customers themselves. This is the case for POS finance. The situation may seem hypothetical, but it’s true. Businesses around the world are investing in this method to grow their customer base and revenue as well. The popularity of Point-to-Sale (POS) finance has grown in consumers, especially online consumers.
Studies have shown 76% of the consumers are more likely to make a retail purchase if simple and seamless POS finance is available to them. The article will provide you with more details regarding POS financing and its benefits to businesses worldwide.
POS Finance – The concept
The concept of Point-to-sales finance is not new; it is something that is being practised for quite some time. In this financing method, the consumers engaged in a buying process are provided with instant loans at the moment of sales; hence the name is derived from this action. This type of financing is gaining popularity in the presence of online shopping. A fixed deposit plan can be used to secure a POS financing loan, which can be used to purchase goods or services. When people prefer online shopping, business owners or third-party lenders provide a line of credit to their customers during the pandemic time.
Benefits of POS finance
The benefits of POS financing are for all the three parties involved in the purchase, the consumer, the business owner, and the third-party lenders. The business owners would have to invest much in the sales process. The third-party lender gets a steady stream of leads without any marketing, and ultimately the consumers get better access to products and services.
Here are some of the benefits from the business owner’s perspective:
1. Drive Sales
It’s a proven fact that POS finance activities drive sales. The pay later schemes under this financing let the buyer enjoy services and products even without paying upfront. Some studies have shown that merchants with PayPal or Bill me later have seen a 32% increase in sales. The statistics for offline sales are unclear at the moment, but one can anticipate that results would be pretty much the same here.
2. Increase the Order Value
The financing influence not only influences the total sales but it increases the order value also. The best SIP to invest in for POS financing depends on your risk appetite and investment horizon. Order Value is defined as the average amount the business owner earns from a single sales transaction. This is done by increasing the buying capacity of the consumer. The consumer will then try to buy more goods at a single purchase, mainly if the terms and policies restrict them to make a second purchase till the first one is fully paid back.
3. Attract more customers
POS financing helps you to attract more customers to your business. It encourages customer loyalty and attracts new customers at the same time. There are two ways how POS financing achieves this:
● Enhance the reputation of the company
POS financing influences a company’s reputation to a great extent. This aspect of POS financing is often overlooked, but the customers view the brands that provide them with this mode of payment as more understanding or compassionate. The rise of PayTech has led to new financing options for businesses and consumers, such as BNPL (buy now, pay later) and P2P lending. They feel the company is helping the average customers fulfil their need, which generates goodwill and motivates many customers to stay loyal to the brand. The customers often overlook the negative experience they sometimes face due to this payment mode.
● Improves the Customer Reach
POS financing also helps businesses reach a more extensive base of consumers irrespective of the demographic, apart from enhancing the company’s reputation. To make it more clear, if the usual target customers of the company are upper class due to the high price of goods and services, offering the middle-class POS services will help them enjoy the products or services offered by the company.
4. Improvement in Cash Flow
This is an advantage for businesses working in collaboration with third-party lenders for POS financing. Working with third-party lenders saves the business from making huge investments and efforts the collection process requires. Institutions are looking to partner up with businesses, as working with merchants allows them to get new clients with minimum efforts. A Bajaj Finance FD can be used as collateral for a loan, which can help you to secure financing for a major purchase. The partnered firm will ensure quick payment and back you up with a due or unpaid payment, making the clash flow uninterrupted and improved to your business.
5. Engaging Average Customers
As a final benefit, the more merchants offer this payment system; they encourage healthy competition in the process. This motivates the market leaders to lower down the interest rates and provide more flexible payment options that can ultimately serve the average consumer. The customer buying power is improved, and he or she returns to do business with you, creating a healthy cycle.
Conclusion
The POS finance increases the buying capacity of the consumers, resulting in an improved financial state as well. It may be handled by the merchants themselves or by a third-party lender. All the parties involved in the financial process benefit, but the most significant benefit is for the business.