A study done by the Deloitte Center for Financial Services appears to indicate that 84% of all consumer financial transactions initiated through digital payments were default payments. Relevant to customer financing default payments of digital payment transactions are the main method of payment for online shopping utilizing mobile apps and mobile wallets. If you are a small business owner, you probably know that default payments on eCommerce sites as well as mobile apps/wallets are only expected to increase over the next several years, if the current trends continue.
According to the above-mentioned study, payments made on websites using default payment options accounted for 74% of all such payments. If you are a small business owner and thinking of offering financing for your customers, you probably know that discretionary payments are a preeminent form of payment and this is only expected to increase.
Also noteworthy, is that of the 84% of transactions previously mentioned and designated as default payments, approximately 30% were non-discretionary. So about 54% of default payments are discretionary (that is, not used for such things as rental payments, utility payments, car payments, mortgage payments, etc.).
To the small business owner interested in extending customer financing to increase sales, this is a very optimistic figure (54%) and implies that depending on their ability and willingness to make monthly payments consumers have a significant percentage of their budget available to make consumer purchases, the payments of which are primarily made on online marketplace sites as well as websites.
This is all the more reason why offering payment plans to your customers makes good business sense.
Customer financing has kept pace with technology and the growth in digital commerce continues to transform consumer payment methods. Providing financing for your customers is a win-win, in which both your customers and you benefit greatly.
Customer financing can position you to close sales which you might otherwise not be able to do. You can provide flexible monthly payments to your customers, reduce late payment problems and collect your payments on time rather than wasting time and energy pursuing your customers in an attempt to get them to make their monthly payments in a timely fashion. By offering financing to your customers you can enhance your cash flow by increasing your sales and thereby significantly increasing your profitability.
One study indicates that up to thirty percent of consumers would have likely passed on big-ticket items if they had not been offered a six-month payment plan. Payment options will increase revenue especially in regard to expensive services or products.
Monthly payment plans can permit consumers to pay for things they very much want, but couldn’t otherwise afford, without maxing out their credit card(s) or paying a large single cash payment with money they just don’t have.
Offering payment options to your customer will not only increase the average purchase value but can mean the difference between a customer purchasing a product or service, or simply not doing so. Customer financing gives the small business owner a competitive advantage in the market place and will increase your cash flow and profitability.
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