As retailers continue to look for ways to better serve their customers, many have emphasized point-of-sale (POS) credit offers as an avenue to flexible financing. In turn, the checkout counter has become more than just a point of transaction; it is a moment where customers make important financial decisions.
Offering financing to customers has helped retailers close more sales. However, in the current interest-rate environment, customers’ ability to be approved for primary financing is not a given. Merchants have responded by using second-look financing programs to service their customers with less-than-perfect credit, otherwise known as non-prime consumers. By providing this targeted financing solution at the point of sale, retailers can increase acceptance rates and more effectively cater to their customers’ diverse needs.
In May of 2024, Concora Credit partnered with The Olinger Group to survey attitudes and behaviors toward these alternative financing offers at the point of sale among non-prime consumers.
It focused on the following three aspects:
- Overall awareness of an alternative offer
- Influential factors or barriers considered before applying for a retail credit card
- Willingness to accept an alternative offer
The survey responses indicate a strong desire for credit among non-prime consumers. They look for new credit opportunities to help manage their finances, cover unexpected expenses, and improve their credit scores. They view credit as a valuable tool that, when used responsibly, can be a path to financial freedom. The strong interest in obtaining more credit is a good indicator that the non-prime consumer would be interested in point-of-sale credit offers.
Despite this, there is a significant lack of awareness regarding the availability of alternative credit offers, which leads to hesitancy among non-prime consumers when applying for credit at the point of sale. Only 10% of respondents indicated they knew about second-look financing. However, once informed, they exhibited positive perceptions and a greater willingness to apply for a point-of-sale offer. For respondents, knowing there was a credit solution specific to their credit profile helped ease fears and made them more confident in their ability to be approved. This underscores the necessity for increased transparency about alternative credit options a merchant has on offer.
For most people with non-prime credit, the offers they receive are quite different from the primary ones. With fewer credit options available, they tend to be less selective and more driven by the need to access credit. They see credit differently, focusing on how it can help ease their everyday lives. Retailers need to understand this when crafting their credit product offerings. They should focus on the most valuable rewards, discounts, or payment plans relevant to their non-prime customer. By addressing these specific needs and emphasizing practical benefits, second-look credit offers can benefit merchants and consumers.
Download the report to delve into the survey findings and gain actionable insights into better utilizing a second-look financing program.
