Building Consumer Trust and Healthy Financial Habits Over the Holidays With Reputable POS Providers

According to research by PwC, overall spending will surge this holiday season to an average of $1,638 per shopper, a 7 percent increase from 2023 and a 15 percent increase from 2022.

While this is good news for a recovering economy, 34 percent of Americans went into debt over Christmas in 2023, with 67 percent of those using credit cards and 33 percent paying interest rates of 20 percent or higher.

With the financial burden of gifts, experiences, and hosting friends and family, going into debt at Christmas is unavoidable for many consumers. So how can retailers support consumer holiday spending needs while also safeguarding their customers’ financial health and building trust in their brand?

The solution lies in seamlessly offering more affordable and accessible credit options to customers from reputable lenders.

Building Trust Through Established Brands

With 70 percent of U.S. adults stating that they trust banks, compared to the only 37 percent who trust fintech organizations, it matters who retailers are partnering with for their point-of-sale (POS) financing programs. Furthermore, 40 percent of consumers have expressed a willingness to use a buy now, pay later (BNPL) service, as long as it’s provided by their primary bank. Retailers can build customer trust and loyalty by leveraging the solid reputation of banks and regulated lenders for their POS finance offerings.

Compared to BNPL providers and nonregulated lenders, banks operate within a strict regulatory framework, ensuring clear and transparent terms regarding interest rates, fees and repayment schedules, making them a trusted partner for consumer and business financing at the point of sale.

Empowering Customers With Financial Flexibility

It’s no longer enough to offer a standard financing option to every customer, no matter what they're purchasing. Today’s customers expect personalization in their buying journey, including for their payment and financing options. Different customers, product types and ticket sizes, and sectors require different financing options. Retailers that provide this level of personalization and flexibility can not only increase their customer financing adoption and approval rates, but can also close the sale, improve customer experience with their brand, and protect customers from unhealthy debt.

For example, if a customer with a good credit score wants to purchase a large-ticket item this holiday season, such as a new bike, they could be offered an installment loan to be repaid over a longer period of time. Let’s say that the same customer wanted to purchase a smaller-ticket item, such as a gaming headset, they could be offered a 0 percent interest split pay option.

Banks are able to support a wide range of long- and short-term financing products for a variety of consumer and business credit profiles, needs and use cases, including installment loans, lines of credit, working capital, deferred invoice and more. Today, banks also have the capability of offering the traditional BNPL split pay option through partnerships with fintechs, thereby offering personalized and flexible payment plans to suit diverse customer needs.

Since banks have huge balance sheets and a low cost of capital, they can provide the most competitive interest rates for financing on larger ticket purchases, which typically aren’t well-suited to a 0 percent interest split pay option. With the ability to embed loans directly from banks into their checkout and payment systems, merchants can draw in more customers and increase customer conversion rates and average order values with attractive financing offers from reputable lenders.

As shoppers intend to spend more this holiday season than last year, retailers have the opportunity to not only benefit from the increased demand for POS financing and BNPL, but also promote responsible financial decisions that increase customer lifetime value. By building customer trust through partnerships with reputable banks and lenders, retailers can offer personalized and ethical POS financing options that enable customers to feel secure in their holiday spending and enjoy a positive experience with the retailer’s brand.

Yaacov Martin is CEO of The Jifiti Group, a global technology company operating two industry-leading businesses — a white-labeled embedded lending platform for banks, lenders and merchants, and a digital gift card solution.