Imagine you are longing to buy your favorite electronic device or a gift for your spouse that has been on your wish list. But, the only thing stopping you is the pressure of paying a huge figure. Credit card bills and their interest can be a pinch for your pocket. But thanks to the Point of Sale financing because it has made shopping way easier.
What is POS Financing?
Point of Sale (POS) simply means the point of the store or retail outlet where the transaction takes place. Therefore, POS financing refers to a trouble-free method of payment in which a person can avail a loan from the merchant at the Point of Sale during the billing process to pay their shopping bill.
The most convenient feature of POS financing is that it offers loans in installments. As a result, people do not feel the financial burden of the payment. Moreover, many moneylenders provide a 0% annual percentage rate of interest.
POS financing loans can be availed in person at a store that offers such convenience or can also be availed in the case of online shopping. For online shopping, it can be done during the payment procedure in the end without leaving the website of the store.
Why is POS Financing a good idea?
It is very easy to get such a loan without hassle. Unlike banks, where getting a green signal for sanctioning a loan is very complicated and subjected to various steps. POS financing happens right at the checkout without going through numerous application and processing stages.
The loan is to be paid off in installments that range over some time of three, six, nine, or twelve months. The period may be bigger than twelve months for loans involving large amounts.
For example, if a person buys something for 200 USD in May, then they may pay 50 USD at the Point of sale and then go on to avail a loan for 150 USD. For repaying the 150 USD loans, they are to pay the first installment of 50 USD in the following month of June, the second installment of 50 USD in July, and finally, the third loan installment of 50 USD in August.
If someone fails to pay an installment on time, they may or may not be levied with a late fee. The above situation is just one of the many instances of how POS financing usually works. POS financing is also widespread in the service sector, apart from buying commodities and other products.
The following are some reasons as to why Point of Sale financing is so popular among consumers these days.
The convenience of getting a short-term loan is the biggest reason why people opt for POS finance loans. One can avoid standing in long queues to get a loan. Not only is it convenient but also transparent. There are no hidden costs attached with the price.
No Financial Pressure:
Owing to the fact that the payment is a flexible and over-the-time process, it does not let one feel the pressure of letting go of a huge amount at one go. It is often seen during the Christmas holidays or the Diwali festivities. Many people cannot afford to buy things because of financial pressure. In situations like these, POS financing comes to the rescue.
Easy Sanction Of Loans:
Unlike banks, it is easy to get loans as per the POS financing norms. There are not any pre-requisites needed for availing of a POS loan. No extra documents are to be produced, apart from basic identity documents.
Zero or Low-Interest Rate:
POS financing is a good idea when the interest rate is 0 percent or has lower rates than conventional sources like banks. One should always check the rate of interest before opting for the loan because sometimes the rates may be as high as 30 percent.
How does Point of Sale financing work for small businesses?
Providing a payment option via Point of Sale financing has become a viable option for large businesses and small businesses. However, large businesses can provide POS financing easily without thinking twice.
Small business owners may have second thoughts if they should also offer it to their customers or not. But, it successfully boosts the business. POS financing takes place smoothly between the business owner, lender, and customer. It works for small businesses in the following manner:
1) Appeals to potential customers:
Small businesses can expand their customer base by providing additional payment options apart from only cash payments. The provision of POS financing reflects the fact that the business actually cares about the customers.
2) Expansion in business and sales:
With POS financing, there is a high possibility of increasing sales. As payment is no longer a barrier, people are not hesitant to purchase the products and avail services. The customer tends to shop without restrictions when there is no constant vigilance for money.
3) Expansion of network:
Small businesses can promote themselves to far-off places with the help of POS financing. It attracts customers even from other regions. Not only spatially, but also small businesses can reach people of different age groups. Usually, young or minor customers are not eligible for a credit card. This is where POS financing can reach out to them.
4) Strengthens customer-company relations:
It is more natural for healthy customer-company relations to flourish with easy payment options. It builds trust between both parties, resulting in a positive relationship. Paying credit cards may result in a fraudulent incident at times, but it does not happen with POCS financing.
Having a third-party POS financing platform for your business
It is worth the effort to partner with a third-party POS financing platform to increase the customer base for your business. As per the business’ needs, the financing company will create an appropriate POS platform and also take care of the platform’s maintenance.
Having a POS credit option makes the purchase and payment option very smooth. Further, it becomes easy to keep track of all the savings and expenditures. Another advantage of having a third-party POS financing authority is that they get to cancel out on people who may not be eligible to pay back the loan.
It is not easy to develop a system of POS financing platform on your own knowledge and abilities. It requires trained professional human resources to do so. This is why it is vital to have a third-party POS financing platform, especially for small businesses.