POS finance has revolutionised online shopping in recent years. In fact, the number of people using POS finance having risen from 100,000 in mid-2016 to over 5.6 million today.
There are many reasons for this rapid uptake. As the world becomes more digitised, consumers have more choice than ever before – and they want quick, convenient ways to pay. Economic pressures from inflation, the rising price of fuel and supply chain constrictions are pushing up living costs, resulting in financial worries for people across the board. Even those on higher incomes are choosing to spread the cost of purchases in flexible ways with POS finance.
POS finance enables frictionless one-click shopping in-store, online, and through mobile apps. Ultimately, people get the freedom to buy in ways that suit them, with affordable repayment timeframes that help them take control of their finances. It’s become an easy and popular way to split the cost of previously unattainable purchases into smaller, more manageable chunks.
Dispelling the debt myths around POS lending
Amid this surge in the popularity of POS finance, debate rages around whether it really works in people’s best interests. Clickbait headlines blame interest free credit and other forms of checkout finance for bloating debt levels. POS finance providers and merchants are framed as promoting reckless spending with no thought to the impact on the individual. But these attitudes are often the result of a lack of awareness and confusion, with many people failing to fully grasp what POS finance is and what it offers.
In a bid to cut through the noise, I want to help demystify POS finance and change the perception of it as a scary and irresponsible debt-causing monster, to what it is in reality – a useful and flexible budgeting tool that can help people to manage their finances and make life more affordable.
It’s not just millennials who like POS credit
~Novel Serialisation: Heavens Fire~
Many news stories have accused POS lending as luring unsuspecting people into unmanageable debt, enticing them to spend far beyond their budgets.
One of the most misleading media narratives about POS finance is that it’s mainly millennials and Generation Zs, with rampant appetites for instant gratification, who are behind its growth – lured into impulse buying of the latest gadgets and Instagram-friendly fashion. These negative connotations are unfair. Yes, it’s true that a growing number of young people are using POS finance. But this is being driven by young people’s aversion to traditional interest-bearing lending products like credit cards. And what is often overlooked is that POS finance can help young people or those excluded by mainstream lenders to build their credit scores, promoting financial inclusion.
These misconceptions also ignore the reality that interest free credit is being used responsibly by people across all income brackets – including those with already-strong credit records who simply want more choice in how they pay. The flexibility of POS finance means it’s being used to pay for everything from sofas, home improvement projects, weddings, and even vets’ bills. Interest free credit, offered in a transparent, ethical and regulated way, can support people throughout their entire adult lifecycle, at different stages of their lives, empowering them to make informed, considered purchases.
The regulation of POS finance is a positive force for good
The image of POS finance has not been helped by some providers who have often implemented high interest charges and hidden fees, which work in the interest of the lender but not the individual. Not knowing which POS finance providers are regulated can be costly for consumers, especially when those providers hide behind baffling list of terms and conditions, which only add to confusion.
People should always ensure that their lender is regulated by entities like the Financial Conduct Authority (FCA) in the UK, which applies strict criteria to authorised lenders to ensure they’re abiding by responsible lending practices. At DivideBuy, we champion the need for regulation to protect the individual and support merchants who provide our solution. We ensure that our credit agreements are as clear and as transparent as possible, so that people know exactly what they’re signing up for, and how much they’ll be paying.
A rigorous credit approval process is critical
It is in nobody’s interests to offer interest free credit to people who can’t – or won’t – make repayments. That’s why it’s so important for POS finance providers to undertake rigorous due diligence on credit applicants, to help people make informed and considered purchasing choices based on affordability.
At DivideBuy, our entire ethos is about empowering people with flexible buying power. We look at the individual’s past and present circumstances to gain the clearest possible picture of their financial health. When we consider credit applications, we use Soft Search credit checks that won’t harm the applicant’s credit score. Our thorough affordability checks and highly efficient automated underwriting process means that we have a delinquency rate under 3% – which is far lower than competitors in this space.
In fact, I joined DivideBuy in 2022 precisely because I was so impressed by its people-first ethos, which is at the core of everything we do. Unlike other POS finance providers, our business model is not based on charging people late payment fees, but on helping people make informed purchasing decisions based on affordability, by offering installment repayments over longer periods, deposit weightings and payment holidays.
Responsible lending can build financial security
As with any other form of credit, there are benefits and risks to using POS finance. There does need to be individual accountability in how POS finance is used. However, when used correctly and responsibly, it can be an incredibly convenient and useful way of making life’s big purchases more manageable.
With so many myths surrounding POS finance, there is also a need for continual awareness and education to ensure that people can make informed decisions about what payment method or provider to use.
To deepen the trustworthiness of these solutions, it’s important for lenders like DivideBuy to drive the change we wish to see in our industry and ensure fair, ethical, accessible, fee-free lending practices. In doing so, we’re putting people first and ensuring responsible lending is at the heart of everything we do.
By Teresa Byrne, Chief Commercial Officer, DivideBuy
About Teresa Byrne
Teresa joined DivideBuy in December 2021, moving from her role as International Commercial Director at Barclaycard. As Chief Commercial Officer, Teresa is responsible for positioning DivideBuy as the go to option for interest free credit for customers and retailers across the globe and sharing the company’s vision for responsible lending which supports people during key milestones in their lives. She is also working with her team to continue DivideBuy’s dramatic growth which has been accelerated by the £300m investment the company received in September of 2021 by encouraging the onboarding of new retailers and creating educated, empowered customers.
Teresa has 20 years of experience in creating successful sales teams. As well as working for Barclaycard she spent three and a half years at Elavon, leading multiple enterprise teams and taking responsibility for the company’s international client portfolio. In her role for DivideBuy she is using the expertise she has gained from her involvement in both the financial services and retail sectors to build a team which will showcase DivideBuy’s unique lending platform.
About DivideBuy
Founded in 2014, DivideBuy aims to make life more affordable by transforming the point-of-sale (POS) finance industry through innovation and technology. Its eCommerce credit plugin integrates with shopping cart functionalities such as Shopify, Magento, WooCommerce and Craft Commerce to offer interest free credit through retail partners.
Currently in partnership with over 600 retailers, DivideBuy offers a fast 60-second application process and an immediate decision which means that customers can spread the cost of their purchases with no hidden charges. By offering an alternative payment method to customers, retailers can benefit with increased average basket values and reduced basket abandonment.
For more details, please visit www.dividebuy.co.uk.
