Financing has long been part of retail, and it’s changing thanks to new technology and changing consumer desires.
Indeed, financing is moving to the point of sale, and Mastercard offers a good example of that trend.
After all, hesitation and deeper consideration can lead to fewer products in baskets, abandoned carts and lost sales in the world of payments and commerce. The trick is to get that consumer past the finish line (or through the door, or over the fence, depending on the preferred cliché), and to not only make the sale, but to win that shopper’s loyalty – and maybe even get them to throw a few more things into those baskets along the way.
Point-of-sale (POS) financing can help achieve those goals, according to its proponents, including Blake Rosenthal, executive vice president of acceptance solutions at Mastercard. Last year, the payments card network acquired POS financing provider Vyze for an undisclosed sum.
Overall, POS financing represents a “large and growing opportunity, driven by providing consumers more choice” when it comes to payments, she told Webster – indeed, according to an Accenture figure cited by Mastercard, the industry stands as a $1.8 trillion opportunity. “It’s a large and growing [area], but it’s not tremendously crowded now. There’s a lot of white space,” noted Rosenthal.
Securing a major presence in the POS financing space sooner rather than later was not the only factor that motivated Mastercard to buy Vyze. The company, Rosenthal explained, “complements the way we play in the ecosystem.” Vyze is not a lender, but more of a digital commerce and payments matchmaker, bringing together lenders and merchants, and enabling them to offer installment loans to consumers buying those merchants’ products. “If you are a merchant today, you may have connections with two or three lenders,” she said. “With Vyze, you connect with all the lenders on the platform.”
Travel is another area for this type of retail and payments innovation.
Think about it: From the family vacation to Disney World to a best friend’s destination wedding to the retired couple’s once-in-a-lifetime bucket list getaway, there are all kinds of reasons consumers want or need to travel. And while the motivations for hitting the road can vary, there is one single economic reality for most of those trips: They are usually large financial expenditures.
Whether going on the trip of a lifetime or faced with emergency travel, the sticker shock of the journey’s price tag can leave consumers scrambling to minimize costs by flying in the middle of the night, or packing all their clothes into a carry-on to avoid baggage fees. Often, it means the trip can’t happen at all.
In these situations, UATP CEO Ralph Kaiser noted in a conversation with PYMNTS and Uplift CEO Brian Barth, it becomes particularly important to offer a variety of payment methods at checkout, including alternative methods like installment financing.
“There is a reckoning among players that they have to do this, and they actually want to do this,” he said. “But a lot of these airlines and hotels are working with legacy systems that are very much like mainframes – so this is going to take innovation and the ability to partner with technology players.”
Players like Uplift – which, in Kaiser’s words, “have done really well in meeting a critical need for the financing of travel payments.”
And beyond meeting a need, Barth noted, the best outcome is when the airline can drive revenue by offering a manageable payments schedule that spreads out the cost of the trip over time, enabling customers to travel more and driving additional revenue to the airline.
As payments continue to advance, expect more financing options for retail consumers.