THINGS TO KNOW ABOUT POINT OF SALE FINANCE

Point of Sale (PoS) financing in India has existed for some time now. With the growth of e-commerce and technical advancements in recent years, the number of PoS financing choices has increased exponentially. It is crucial to understand the point of sale meaning and how it assists businesses and their customers. The following article provides information on everything you need to know about PoS point of interest.

What is Point of Sale Financing?

A point of sale is where a consumer pays for goods or services purchased at a specific store. PoS financing occurs when a merchant or retailer offers a financial solution to their customers, typically as a line of credit loan. It may enable the purchaser to obtain a line of credit to fund a specific transaction. Alternatively, it may permit consumers to purchase things from a shop up to a predetermined credit limit and pay over time.

How Can Merchants Use Point of Sale Financing in India?

PoS financing can be seamlessly integrated into a customer’s checkout process, particularly while making an online purchase. The retailer can partner with a financial institution such as a bank or non-bank financial company (NBFC) like FlexiLoans. They can provide PoS financing to consumers at any point during their purchasing journey, from product discovery to checkout. Tenure of the payment and terms and conditions can be specified properly.

Once the consumer agrees to the terms and conditions, the lender approves the loan. The consumer then directly interacts with the lender regarding payments rather than the retailer. The lender is responsible for making the payments to the business. Retailers can also enable customers to apply for a point of sale loan in-store or by mobile phone.

Benefits of Point of Sale Financing

Offering your customers simple access to point of sale finance can transform your small business into a profit powerhouse. Big companies and retail chains are not unfamiliar with finance portals, as they frequently provide their in-house lines of credit. So, how can point of sale financing benefit your business?

1. Increased Revenue

By far, the most alluring aspect of giving consumer credit is the virtually endless opportunities for sales growth. By allowing customers to apply for a business loan on the spot with no additional fees and affordable payment plans, your business can seal the deal effortlessly and swiftly. Many customers lack the funds necessary to pay in full for expensive products, such as furniture or appliances. When a company permits the customer to acquire the product through the flexible “buy now, pay later” options, the customer is most likely to purchase the product or service on offer.

2. Increased Order Value on an Average

By allowing customers to break down their purchases into significantly smaller monthly payments, it encourages them to pick higher-value products. For instance, if a customer is shopping for a backpack on an INR 4,000 budget, but notices advertisements for reasonable shopping cart financing, they are more motivated to purchase more expensive backpacks than their original budget.

3. Increased Return Customers

What motivates a customer to make a purchase? Affordability, accountability, and efficacy. Restoring the consumer’s purchasing power goes a very long way toward ensuring repeat sales. Online and in-store point of sale financing contributes to a positive customer experience. They can apply for the loan immediately without enduring lengthy processes or prolonged delays at banks. Approval occurs immediately.

To top it off, customers receive complete information regarding their monthly payment obligations with no hidden fees. By partnering with a reputable point of sale finance provider, you can tap into your customers’ needs, making it easier for your business to develop long-lasting connections with your audience.

Three Factors to Think About Before You Apply for PoS Financing

Without a doubt, point of sale financing is advantageous when you lack the necessary cash upfront. However, as with any financing product, the PoS point of interest can affect your credit score.

Effect on Your Credit Rating

A hard credit inquiry may or may not be required for PoS loans. When you apply, check the fine print to determine whether the organization will obtain information about you from credit bureaus, which could affect your credit score.

Recurring Payment

Consider whether you can comfortably afford the loan’s monthly payment over the loan’s duration. An INR 5,000 purchase may cost INR 500 each month, but evaluate if you want to be on the hook for 10 months. This selection may change according to the item; INR 500 per month for a memory foam mattress may seem like a good deal, yet INR 500 per month for new shoes you didn’t need may be unnecessary.

Returns

If you wish to return an item, ensure to check the return policy before taking out a loan to pay for it. If shipping and/or restocking fees apply or if you are denied a complete refund, you may be forced to repay some or all of the loan. Additionally, determine whether there is a penalty for repaying the loan early, which you will have to do if you return the funded item.

Challenges with Point of Sale Financing

There are several obstacles to PoS financing India. Consider the following.

• Many retailers are unfamiliar with technology and the internet. As a result, they should be provided with sufficient technical and financial knowledge to facilitate the adoption of this kind of funding.
• If lending institutions become overly reliant on customer card swipes for payback, they risk losing customers to a different service provider.
• Not all PoS suppliers adhere to rigorous Know Your Customer (KYC) standards or onboarding processes before machine implementation. 
• Additionally, they may be prohibited from sharing personal data with third parties without the customer’s approval. These factors may contribute to the duplication of KYC processes used to sanction loans.

Who Qualifies for Point of Sale Finance?

If you have a low credit history and your business receives payment through PoS/EDC devices, then a PoS-based loan could be a solution to all your financing problems. This loan for business has easy procedure and eligibility standards, which include

• The applicant must be 21 years or above
• The business should have a minimum operational history of one year
• The applicant must have a registered PoS device and accept card payments
• The business must accept minimum card payments of about 50,000 rupees per month

Documents You Need for Point of Sale Finance

The list of obligatory documents required for loan against POS includes,

• KYC documents of applicant and organization
• Last 6 months current bank account statement in net banking to be served in PDF format
• Shop Establishment Certificate/GST Certificate

Conclusion

PoS loans are the right financing tools for businesses that generate a good share of income through credit/debit card payments. These short-term loans can help small business owners meet their working capital requirements by availing of credits conveniently and speedily. Furthermore, retailers can easily extend their credit limits by promoting cashless transactions. Even the flexible option of multiple repayments can aid small business owners to get rid of debt faster. Thus, procuring funds through PoS financing India can help business owners grow their businesses rapidly.