Offering free access to credit at the point of sale (POS) is a powerful business-generating tool for companies of all sizes. However, not all companies have the working capital available to offer in-house financing programs. Partnering with a third-party POS financing platform is an attractive solution but finding a partner with competitive rates and reasonable implementation costs can be a challenge.

What is POS financing?

Point-of-sale (POS) financing essentially refers to a merchant offering its customers financing to help them pay for products or services at the time of sale. This financing can come in the form of credit cards, unsecured loans, and lines of credit. Point-of-sale loans are increasingly popular because of lower rates and developments in expedited underwriting methods.

POS loans are nothing new. Various sectors, such as car dealers and orthodontic clinics have long offered flexible installment loans to customers. The good news is that advances in lending now make it possible for other sectors to offer instant credit decisions.

When done right, POS financing is a win-win for businesses and customers. Here are seven advantages companies can expect from investing in a POS financing platform.

Why offer financing?

• Boost your sales

Offering point of sale financing increases the buying power of your clients. Drive your sales by offering your customers instant loan preapprovals at no extra costs. According to a study carried out by Forrester, companies that implemented an online point-of-sale financing option saw a 32% increase in sales (source).

• Increase order value

POS financing will give your clients more time to pay, which will allow them to afford higher-quality products and services. In turn, it will increase your overall sales and your average order value (AOV).

The Forrester study mentioned above reported an average increase in order value of 75% in companies that offered POS financing. Improving your AOV without narrowing your margins could increase your profitability substantially. In the case of the companies that participated in the study, the average return on investment was 726%. The ROI can be even higher for companies who find a POS program that doesn’t charge fees to the business.

• Better customer experience

The goodwill generated by an effective point-of-sale program is an often-ignored benefit of investing in financing programs. A well implemented financing program can improve the purchasing experience and help to develop a long-term relationship with your customer. Create customer loyalty and a positive experience by making financing another of the services you offer.

• Improve cash flow

Slow pay is the bane of small businesses. A third-party point of sale credit application system can shorten the time between providing services and getting paid.

• Widen your customer base

A streamlined financing program can help remove friction for buyers who struggle to qualify for personal loans or who don’t have the time or inclination to apply for credit. POS financing gives them the option to purchase more expensive services and products.

Why partner with a POS loan platform?

• Lenders compete for your clients’ business

Emerging POS loan platforms, like SuperMoney, have turned the tables on lenders by getting them to compete for the business of consumers. Instead of filing multiple forms to find the best deal available, borrowers receive competing loan offers and can transparently compare the rates and fees of each offer at no additional cost.

• Lower fees

If you know anything about point-of-sale-financing, low fees are probably the last thing you associate with it. Discount rates, the fee lenders charge for providing “preferential” rates to customers are typically 10% of the loan amount. Implementation costs can run into the tens of thousands of dollars and lenders usually charge monthly maintenance fees regardless of how many loans you generate.

In contrast, the SuperMoney POS platform turns this business model on its head by making access to POS free for businesses and customers. You can now offer POS financing with 0% percent discount rates and $0 implementation costs.

Bottom line

The benefits of offering existing and potential customers a simple and fast financing program are obvious. Companies offering POS financing see an uptick in sales, an increase in average order value, and significant gains in their profitability.

The catch is that many POS financing providers charge hefty fees for setting up and managing these programs. POS lenders usually don’t charge additional fees to customers for their convenience. However, business owners get hit with “discount fees” of 10% to 20% of the loan amount.

Lenders justify these discount rates as a way to offset the cost of providing lower rates to customers. However, the truth is it’s just another commission lenders charge for their services.

The good news is that advances in financial technology services have made it possible for companies to offer instant credit decisions to customers at no additional cost. These turnkey financing programs offer all the benefits of an in-house financing credit system without the risk or implementation costs.


Miron Lulic is founder and CEO at SuperMoney, a leading financial services comparison platform. Millions of people trust SuperMoney to shop for financial products and transparently compare their options in real time.