What is Consumer Financing

As the landscape for eCommerce broadens, so has the pool of goods available for sale through digital channels. More than just gadgets and groceries, people are making even bigger purchases online these days—sometimes involving price points in the thousands of dollars.

The problem with high-priced goods sold online is that not every purchase can be made outright by everyone. Buying a $5,000 piece of furniture is much different than checking out with $50 worth of houseware! Many consumers are either unable to make this sizable purchase outright or are rightfully reluctant to do so because placing a high dollar amount purchase on their credit card which may not have the available line. This is where consumer financing has become important.

Digital financing, in simplest terms

Point of sale financing is a quick solution to mid to high dollar value checkouts. Customers get the items they want, without immediately racking up a huge credit card bill. Instead, they’re instantly approved for financing that’s applied directly to their cart. Rather than spending big bucks outright, they’re able to pay back their purchase in affordable installments over time.

The concept isn’t novel—financing has always existed for big-ticket items like appliances, furniture, jewelry and more. What is new, is the instant financing available through checkout online. As retailers of high-priced goods take their commerce online, checkout financing is the easiest way for them to bring financing options to customers there.

Simplicity is key

One of the chief reasons consumer financing is making headway in eCommerce is because of its simplicity. In an age where more steps equal barriers to conversion, financing is integrated in the same way as other familiar checkout options like Apple Pay, Visa Checkout and Google Pay. It’s not seen as a barrier—simply another payment option. In fact, about 25% of purchases for mid to high ticket items are made through consumer financing at check out.

Financing at checkout also benefits from a streamlined credit application. Running a basic credit check is easier than ever, which means customers only need to provide their name, date of birth, phone number, email address, social security number, and monthly income figure. This takes about as much time as filling in credit card data for a regular purchase. Credit approvals (or denials) are generated in seconds, which leads to faster checkout.

Flexible options

Consumer financing takes many forms, which increases the chance of approval in some capacity for most shoppers. Someone with great credit may choose higher payments at a lower interest rate for a lower payback duration. Someone else with less than perfect credit may opt for more accommodating terms.

This variety and flexibility come from the diversity of lenders available. From traditional institutional lenders, all the way down to the “lease to own” offers, different risk tolerances, and capital loans enable more people to borrow. Instead of 20-25% approval rates through single-point lenders like credit card conglomerates and other consumer financing providers found on many of the leading eCommerce sites today, approval rates as high as 85% are possible through a diverse lender network! The result is the widespread enabling of high-dollar eCommerce purchases.

Consumer financing is fueling eCommerce growth

It’s abundantly clear that eCommerce is only growing. And, with high-value purchases starting to trend upward, it’s also clear that simpler financing options are in-demand. Giving consumers an instant, secure way to finance their items at checkout will only continue to fuel demand for these items and enable online purchases.

ChargeAfter is making it easier for customers to get the right financing terms at checkout, without the barriers of long-winded applications. Using a multi-lender network, we help online retailers enable quicker purchases of higher-value goods, without the burden of a huge upfront purchase. We’re the smart solution to eCommerce growth for companies relying on convenient consumer financing!