By now, you’ve probably heard of instant financing. At Klarna, we talk about it quite a bit – but who can blame us? When it comes to helping retailers offer innovative payment solutions that keep customers coming back, instant financing is the way of the future.
But for merchants really looking to nail their instant financing offer, you have to look beyond just allowing shoppers to pay for an item over time. With more merchants hopping aboard the instant financing train, the competition is only getting steeper.
Here’s a look at the features that make consumers happy. It’s time to think about how you can offer them, before the train leaves the station.
1. Eliminate the Need to Re-Apply for Credit
The first method to making instant financing work for your business, and your customers, is being able to offer an open-end line of credit. We at Klarna are big believers in once and done; it eliminates the need for shoppers to re-apply for financing when they return to your site, which they will, because you make shopping so darn easy.
Not making shoppers re-apply helps build brand loyalty and encourages shoppers to return for more. When a customer is confident they can afford an item, they’re more likely to return to the place where they know they’ll find a checkout option that meets their needs.
2. Flexible Payment Options
One of the most important elements of successful instant financing is transparency. Nobody likes to be bogged down in terms and conditions, and left wondering whether there are hidden fees they’re missing.
The key is multiple types of instant financing solutions that come with easy-to-understand payment terms. Our “Slice It” payment option enables shoppers to pay for purchases over time using the payment option that works best for them. Customers know within seconds if they’re approved and can quickly complete their purchase.
Payment terms should be flexible to meet the needs of your customers. Here are some examples:
Flexible month-to-month payments
This experience is similar to a traditional credit line where the customer decides which repayment schedule is best for them. With only a minimum monthly payment, shoppers can pay over time on their own terms, with no fixed term commitment.
Here you can provide the customer with an offer to purchase an item with a reduced APR. Fixed payments are made monthly, so the customer knows exactly what their financial obligation is. The APR varies in these cases based on what promotion is available at the time.
Promotional No-Interest Period
The final flexible payment option involves a fixed APR, but any interest would be avoided if paid in full during a promotional period. Customers can choose how much to pay each month, as long as they pay the minimum. They can also defer making interest payments until the promotional period is over.
3. Short Approval Time
Today’s shoppers want fast – after all, they’re shopping online. So while you’re offering a super cool new payment method that meets their needs, it should be quick and seamless to implement.
A clunky, slow checkout process is the easiest way to lose a customer. To keep shoppers happy, speed matters. The consumer demand for payment options is strong, but only when those options speed up the checkout process.
There are three populations for whom this is especially true: millennials, educated consumers and wealthy shoppers. In our latest study on consumer financing, in partnership with Researchscape, we found that 79% of millennial respondents expect to wait three minutes or less for financing approval. The study also highlighted that 87% of those surveyed with doctorate degrees expect to wait less than three minutes, while respondents with household incomes of $150,000+ expect to wait only one minute.
4. Keep Customers On Site
The last key feature of successful instant financing comes down to the application process. Instead of re-directing customers to a third-party site, merchants should rely on a solution that keeps shoppers on their own site.
‘Slice It’ lets customers stay put, so they can enjoy a quick, easy and transparent option that keeps them engaged with a brand.
Trust remains a core component of the online shopping experience, which extends to the payment process. Customers want the payment process to feel secure. Alternative financing options that redirect shoppers to third-party pages create a disconnect between the customer and the brand, and increases the chance of breaking any established trust.
Instant financing is only as cool as the experience it provides. With these four features in mind, retailers have the power to transform their shoppers’ time on site. Talk to a Klarna expert about how Slice It can give shoppers an experience that keeps them coming back.
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