Lack of consumer financing costing retailers £25bn
Written by Peter Walker
Retailers could be losing out on over £25 billion in potential sales by not offering a range of consumer finance options, according to Duologi research.
The specialist lending platform surveyed 1,000 UK consumers, finding that 78 per cent would consider financing through point of sale (PoS) in the future – around 39 million UK adults.
Of these, the average amount that each would be willing to borrow is £620, representing a potential £25 billion sales opportunity for merchants that implement this type of payment into their business model.
Just over a third (34 per cent) of people said they would be more likely to spend with a business that offers PoS finance options. Customers also stated that PoS finance options would be a key factor in deciding where to shop, with 20 per cent stating that if a company did not offer flexible finance options, they would be more likely to go elsewhere.
Duologi’s research also found finance options can help to boost brand loyalty, with 28 per cent of respondents saying they would be more likely to return to a merchant that allowed them to borrow funds in this way. A further 26 per cent of people would be likely to spend more than originally planned if they found they could access credit from a merchant.
Duologi co-chief executive Gary Little suggested consumers are now more willing and able to borrow funds than ever before, and as such, are demanding increasingly competitive credit options from lenders.
“FinTech businesses are driving a transformation in the market,” he continued. “Whereas previous incarnations of consumer finance offerings may have been plagued by lengthy application processes or slow procedures, new platforms 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.”
Examples of FinTech financing options have been popping up this year – from Verifone’s deal with e-commerce payment firm Mash to roll out a ‘pay later’ solution, to Klarna partnering with various retailers for use of its Slice it tool, which cuts costs into monthly instalments.