How bricks and mortar retailers can learn from online payments
In recent years, a significant shift has taken place within the retail landscape. For the first time, research indicates that customers consider the payment journey to be the most crucial aspect of their shopping experience.
With the advent of fintech, this shift is not limited to just online shopping, but it is also revolutionising the in-store experience. Fintech has become an integral part of the retail industry, enabling merchants to adapt to the uncertainties of today’s market. One of the key innovations within the fintech space is checkout finance, which empowers customers to pay with flexibility. This helps them to not only take advantage of deals that were previously out of reach, but also better manage their cash flow overall.
The emergence and growth of checkout finance
The rise of checkout finance can be attributed to several factors. First and foremost, customers have increasingly sought out options that allow them to spread the cost of their purchases over time. Traditional credit options’ applications are often tedious and time-consuming, requiring lengthy forms, whereas today’s checkout finance provides instant approval in many cases, and a seamless buying experience.
In addition, the ongoing reality of the macroeconomic crisis has led 69% of customers to change their non-essential spending habits in the past six months, proving that more agility is needed when purchasing items. Shoppers don’t just rely on Buy Now Pay Later (BNPL) for buying fast fashion or luxury goods. Instead, checkout finance products offer consumers a way to alleviate financial pressure from their shopping. It allows them to make larger purchases without straining their finances, enabling them to spread the cost over manageable monthly payments, which is especially appealing to those who value affordability and convenience. This financing method also comes with competitive interest rates or even zero interest options, lending a hand to customers in an ever-changing market.
What does checkout finance mean for retailers?
Retailers also stand to gain from implementing checkout finance solutions, both in-store and online. Research has shown that customers are more likely to make a purchase if they have the option to finance it at the checkout. Therefore, through offering this service and consciously choosing – and promoting – the right provider, retailers can easily attract more customers and generate higher sales revenue. They can also benefit from higher average order values and increased customer loyalty, as shoppers are more likely to return to stores that offer flexible and trustworthy payment options.
While checkout finance initially gained prominence in the online shopping space, it is now making its way into brick-and-mortar stores. Customers expect the same convenience and flexibility they experience online when shopping in physical stores. Retailers should look to meet these customer expectations and provide a seamless experience across all channels. They can leverage insights gained from online consumer behaviour and apply them to the in-store experience, replicating shopping patterns that easily resonate with customers.
The difference between BNPL and checkout finance
It is important to differentiate between checkout finance and BNPL services. Checkout finance is a more comprehensive term for the varying types of deferred payment options, from traditional instalment finance agreements to more modern digital revolving credit accounts. Whilst BNPL, which is perhaps best described as the ‘Pay in X’ model, is a specific type of deferred payment service that has grown popular in recent years in conjunction with eCommerce growth. It is typically suited to smaller basket sizes and as a result, is often unregulated. However, the key distinction lies in this specificity of repayment length and structure. Understanding that BNPL is a particular type of checkout finance, and not necessarily the most appropriate option for a lot of consumers, is essential for retailers in choosing the best flexible payment option for their business.
Final thoughts
Checkout finance has emerged as a game-changer in the retail industry. Customers now expect flexible payment options when making purchases, whether online or in-store. By providing checkout finance solutions, retailers can meet these expectations, drive sales, and foster customer loyalty. As the retail landscape continues to evolve, being aware of customers’ behaviour and preferences will be crucial for merchants to thrive in an increasingly competitive market.