As consumers shift to digital payment methods like credit cards and digital wallets, buy now, pay later (BNPL) and other point-of-sale (POS) financing options continue to grow in popularity.1
According to a recent survey, approximately 42% of shoppers said they expect to apply for a BNPL loan within the next six months — and that includes 13% of people who expect to use BNPL at least three times in that same period.2 Meanwhile, the average BNPL loan amount is $132.2
So, what is POS financing, and how can retailers leverage it to enhance customer experience and increase sales?
In this guide, discover the basics of POS financing.
POS financing — which includes BNPL and other flexible installment loans — may help empower consumers to conveniently make purchases and spread payments over time. It occurs at the point of sale, which is typically in person at a checkout counter or online via a checkout webpage.
Generally, POS financing allows customers to complete a transaction without traditional payment methods like cash or credit cards. This not only caters to the rising demand for flexible payment choices but also helps facilitate immediate access to high-value items that may have otherwise been out of reach.
Compared to traditional financing — which involves obtaining loans or credit before making a purchase — POS financing allows consumers to complete a transaction in real time. Shoppers can usually apply and get approved without prior credit approval or a pre-established line of credit.
From a retailer's perspective, POS financing can help drive sales, attract a broader customer base, and create a seamless, hassle-free shopping journey. Learn more about POS systems.
Here’s a general breakdown of POS financing from a customer’s perspective:
Learn more about offering installment options and how to add financing options to checkout pages.
There are several potential benefits to offering customer financing for both customers and businesses.
Customers can expect:
Businesses may experience:
POS financing may be a good choice for many different types of businesses, particularly those involving big-ticket items like furniture, electronics, and travel.
POS financing may involve potential drawbacks and considerations. Here are some examples:
Besides POS financing, there are alternative financing options that businesses and customers can consider. Examples include:
Learn more about business loan options and strategies for choosing a small business loan.
To implement POS financing, businesses can opt to collaborate with third-party BNPL providers, which offer ready-made solutions that can be seamlessly integrated into the checkout process.
No matter the provider, POS financing is designed to be a frictionless part of the customer journey, allowing shoppers to easily select and apply for financing if desired.
Keep in mind that while POS financing offers various advantages, it also presents challenges like regulatory compliance, customer education about financing terms, and responsive customer support.
Discover more about POS system integration.
Before implementing POS financing into your business, it’s important to understand your unique needs and your customers' preferences. While it may boost your sales and attract a broader customer base, it may also carry potential risks.
Learn more about PayPal POS Systems and PayPal Pay Later.
In partnership with three expert business owners, the PayPal Bootcamp includes practical checklists and a short video loaded with tips to help take your business to the next level.
We use cookies to improve your experience on our site. May we use marketing cookies to show you personalized ads? Manage all cookies