Instant financing gains online support

An online ecommerce survey conducted by Klarna Inc. revealed that 64 percent of U.S. retailers polled consider online financing through their stores an important component for driving new and increased sales online. Forty-six percent indicated this option would decrease cart abandonment, which remains a major challenge for online merchants today.

"Instant financing is clearly recognized by online merchants as a means to attract consumers by providing additional freedom, flexibility and buying power," said Klarna North America CEO Jim Lofgren. "The speed and simplicity with which consumers can apply and be approved for instant financing is widely believed to convert more sales."

Considered an alternative to credit cards, instant financing offers a revolving line of credit that customers apply for within a merchant's online checkout and, once approved, allows customers to spread payments over time, usually with low APR financing offers. According to a Bankrate LLC 2016 survey, this option is especially appealing to millennials, less than one third of whom carry credit cards.

Mirroring consumer interest

One year after Klarna released a similar survey to consumers regarding their views about instant financing, results from the two surveys were found to be strikingly similar.

In the initial survey, Klarna discovered that 75 percent of consumers prefer merchants that offer instant financing, 47 percent would like to be presented with this option while shopping online, 39 percent would spend more on purchases given this option, and 28 percent would be very likely or completely likely to switch merchants to use this option for making online purchases.

"Our survey of U.S. online merchants provides an intriguing look into the 'sell side' of the instant financing equation, and we've found similar patterns in terms of the growing awareness, acceptance and integration of this alternative payment option," Lofgren noted.

In addition to instant financing being cited as an important consideration for boosting merchant revenues, online retailers also rated the top three most important features of POS financing as simplicity of online application, speed of approval and keeping consumers on their sites during the approval process.

Editorial Note:

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