For retailers, winning over consumers in an on-demand economy means finding innovative ways to give shoppers what they want, when they want it.
This has led a growing number of US retailers to consider following the example of companies such as Walmart and TJ Maxx, which allow their customers to pay for their goods in monthly instalments. A long clip part of the consumer culture in countries like Brazil, Turkey, Argentina, Greece, Mexico, and Israel, installment payments are relatively new to the American scene. This makes it all the more difficult for merchants looking to navigate the payments landscape to find solutions that meet both their business needs and customer expectations.
Given the potential pitfalls of different payment solutions, here are some ways to ensure that offering flexible payments is a win-win situation.
Assess budget needs
From a consumer’s perspective, it’s not hard to see the value proposition of installment payments. They allow shoppers to spread out the cost of their purchases, making it easier to fit expenses into their budget. When retailers offer consumers payment options that better match their financial needs, consumers spend more.
But while flexible payments can boost your bottom line, you also need to consider the budget implications of different solutions. You need to consider the acquisition and installation costs of various solutions, as well as potential payment processing fees that can erode margins. If your business has a large international customer base, choosing a solution that supports multiple currencies and can work across borders is essential. This will allow you to avoid exchange rates and, above all, not having to implement different payment solutions for each country in which your business operates.
Avoid unnecessary complexity and risk
Some alternative payment solutions involve the financing provider running the credit approval process. This requires customers to apply for funding and requires data transfers that may put your business at risk of exposure under privacy regulations such as the European Data Protection Rule and the California Privacy Act. consumer privacy.
Solutions that rely on traditional credit card processing provide an easier and more efficient route to funding while mitigating credit and data privacy risks. These options will only approve a purchase if the buyer has a sufficient credit or debit balance, while minimizing the collection and transfer of sensitive customer data.
Get paid on time
Make sure you know the payment terms of the different alternative payment methods.
Some flexible payment providers don’t pay you the cost of the purchase until the customer has made all installment payments – an arrangement that could easily eat into your margins. By adopting only solutions that guarantee on-time payments, you can avoid financial hassles and protect your income.
As fintech innovation advances at a breakneck pace, new providers are emerging to meet the market need for greater payment flexibility. As more retailers realize that flexible payment options can help appeal to budget-conscious consumers and increase customer loyalty, this momentum has the potential to fuel the growth of installment payments in the United States. . Knowing what questions to ask and what risks to avoid can help you select payment solutions that benefit both your business and the customer.