It is the time of the year when we go shopping to buy for the several occasions including Christmas and New Year. We have our eyes on premium items that include electronic appliances, luxury goods, home products and as we move towards the cash counter we come across several modern payment modes. Not just this, you may also be asked to open up a new credit card along with the purchase.
According to a survey- ‘Citizens Bank Point of Sale Survey’ around 66 percent of the customers avoid opening up a new credit card just for a big purchase. The reasons for this are that they already have one or more credit cards and are not willing to open one more. Hence the customers require alternative option rather than opening up a credit card to make a large purchase at an in-store or an online store.
The results of a recent research sponsored by the Citizens Bank showed that in cases where the customers have easy access to financing options while making purchases, the customers are more likely to make a positive purchase.
More than 76 percent of U.S. consumers make a purchase if they are provided with an easy and seamless payment gateway and options. The entire application and approval process happens online today and adds to the customers experience and conversion. Customers today prefer buying luxurious items on a fixed monthly installment plan and hence a monthly plan shall be more effective than a credit card facility. Since a credit card is always more of a liability, customers prefer an EMI option. In fact, most of the survey respondents stated that a major decision driver for them while buying an expensive product is that they are clear about how a purchase will be paid off. More than 62 percent consumers prefer the mode of payment that has fixed monthly plans with clear instructions.
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Transparency and Trust is Key
Trust is necessary specifically in a lending institution and so is it an important consideration made by customers during purchase. The traditional lenders are considered more trustworthy for the consumers. With the rising concerns over personal data security on digital platforms, the customers believe on those traditional lenders that have established their name over the years as a trustworthy institution complying with latest industry standards and regulations. Such lenders are recognized names in the industry and have worked in developing good repo with the consumer advocacy groups.
Suggestions for Retailers
As per the report the current status of retail financing, taken over by co-branded credit cards, leaves room for enhancement in the customer experience. In the survey it was found that less than 43 percent of the consumers said they're prone to advise this financing experience for those big purchases. It also provides for new avenues for the retailers and the OEMs who can test the new and advanced payment methods and can offer modern plans for large ticket items to promote the sales.