By Philipp Buschmann, co-founder and CEO of AAZZUR
When the internet first came along, it transformed the way we shop almost overnight. Companies had to catch up fast as people flocked to online shopping. Even now, with online sales being critical for growth, some businesses are still reluctant to fully dive in. POS financing is a great solution—it makes big-ticket items more affordable for customers and helps businesses increase their sales. But it goes beyond just that; embedded finance is changing the game, offering businesses smarter, more integrated ways to offer these payment options and benefit everyone.
Boosting Sales by Lowering Barriers
One of the biggest reasons customers hesitate to make large purchases is the upfront cost. Even when they need or want a product, seeing a hefty price tag can create friction that slows down the decision to buy. POS financing can reduce this friction by allowing customers to spread payments over time.
For example, imagine someone shopping for a £1,000 laptop. Paying that in one go might make a customer think twice, but if they can break it into 12 payments of £83, it suddenly feels more achievable. H&M put this into practice by partnering with Klarna and saw a significant increase in sales when implementing BNPL. Offering this kind of financing has been shown to increase conversion rates by making purchases feel less burdensome. Essentially, businesses are removing the financial roadblocks that often hold customers back.
Attracting a Broader Audience
Not everyone has access to a high credit limit or the cash on hand to cover big expenses upfront and traditional credit cards or loans may not be the right fit for everyone. Cue POS financing. By offering flexible payment options at the checkout, businesses can attract a wider range of customers, including younger shoppers or those with limited credit history. A notable example of this offering is the Apple Card issued by Goldman Sachs. Users can finance purchases of Apple products, such as iPhones or Macs, with interest-free monthly instalments. It also features a Daily Cash rewards system, where customers earn cashback immediately after purchases.
This is particularly relevant as millennials and Gen Z consumers grow in spending power. These generations tend to prefer options that allow them to manage cash flow without relying on traditional credit cards, and POS financing aligns perfectly with those preferences.
Enhancing Customer Loyalty
Providing flexible payment options isn’t just about getting customers to complete a purchase today—it’s about building loyalty for tomorrow. When businesses make buying easier and more accessible, customers are more likely to return. A pioneer in BNPL, Afterpay allows customers to make purchases and pay in four interest-free instalments. Urban Outfitters incorporated Afterpay’s service into its checkout process, making it seamless for customers to choose a flexible payment option directly within the platform
Embedded finance makes the magic happen
While the advantages of POS financing are clear, its implementation can seem daunting for many businesses. That’s where our friend, embedded finance, comes into play. Embedded finance is all about diversification and making your business offer financial services without needing to become a bank.
Businesses don’t need to overhaul their entire sales infrastructure to offer POS financing. Instead, these solutions can be smoothly integrated into existing platforms, such as e-commerce sites or point-of-sale systems in physical stores.
Subscription-based financing is the quirky trend that has no signs of going out of fashion anytime soon. Companies like Peloton offer embedded financing at checkout, allowing customers to pay a monthly fee for both the equipment and membership, bundling the cost into a manageable subscription. This approach lowers the barrier to entry for high-end products.
Customisation for Business Needs
Embedded finance gives businesses the freedom to really customise their payment options to match what their customers need. It’s not a one-size-fits-all approach—you can offer short-term, interest-free plans for smaller purchases or go with longer-term options for bigger items, like furniture or appliances.
This level of flexibility makes a big difference in how customers experience your brand. When you offer payment plans that fit their budgets, it shows you get their situation and are willing to meet them where they’re at. For example, a fashion retailer might offer a 6-month plan, while a home improvement store could offer 12- or 24-month options for larger purchases. This kind of personalisation builds trust and loyalty because it feels like you’re working with them, not just selling to them.
With embedded finance – you call the shots and define the terms. Depending on the business model, you can choose terms and structures that suit your customers’ needs. This can involve offering short-term interest-free plans for smaller purchases or long-term payment options for more expensive items.
Reducing Risk for Businesses
One of the biggest concerns businesses have about offering financing is the risk involved. What if customers default on payments? Worry not. Embedded finance providers mitigate much of this risk by taking responsibility for the financing process. It typically handles credit checks, approval decisions, and collections, meaning that businesses get paid upfront, even if a customer defaults later. This makes POS financing a low-risk option for businesses to implement. The provider assumes the financial risk, and the company benefits from higher conversion rates and more satisfied customers without worrying about chasing payments or bearing the cost of defaults.
The Future is Embedded
Incorporating POS financing is no longer a “nice to have” feature—it’s becoming an expectation among customers, especially in sectors where high-ticket items are sold. Embedded finance makes it easier, faster, and less risky for businesses to offer these payment solutions, levelling the playing field for companies of all sizes.
The future of retail and e-commerce is bright and there is an abundance of opportunities businesses can take advantage of if they are bold enough. Embedded finance solutions are no longer a distant trend but a powerful tool that businesses can use to delight customers and drive success.
