In today’s market, consumer financing is a must-have option for merchants in any industry. Being able to increase your consumers’ buying power is an obvious win, and the stats prove it to be a slam dunk. In fact, businesses that offer some variety of POS financing see a 20-30% increase in conversion and a 30-50% increase in average ticket size.

For many merchants, the question isn’t why they should implement consumer financing but how. The first step of figuring out how to offer financing is to decide which options are available to merchants, whether through third-party lenders or fintechs.

To make it easier to single out a quality partner, we will discuss the best customer financing programs for merchants to offer their consumers, which include:

• Klarna
• Affirm
• Skeps

Klarna

Klarna is one of the first players to popularize POS financing and buy now, pay later (BNPL) payment plans. For this reason, they have developed significant brand recognition, and merchants and consumers alike trust their services when they run across them.

Klarna operates as both a lender and a fintech software platform. This means they created the app and checkout tool and are the ones that review the credit applications and provide the funds. This has its benefits and drawbacks, increasing approval speed over traditional financing but limiting the number and quality of applicants they are able to accept.

Pros

✔ Reputable, recognizable brand

✔ Variety of financing options

✔ Fast approvals

Cons

✘ Limited by their own credit requirements

✘ Takes consumers off-page

✘ Hefty late fees

Affirm

Affirm is another lender + fintech combination, meaning they offer both the funds and the platform just like Klarna. As a result, some will conflate the two as being essentially the same service, but Affirm does provide a couple of differentiating factors that set it apart.

One of these is their “Adaptive Checkout” system, offering multiple financing options on one page, making it easier for consumers to compare the terms of each before they choose which they would like to use.

As a whole, Affirm’s software quality does hold the edge over Klarna, though their name recognition isn’t quite as longstanding. They also don’t charge any late fees, which consumers may take kindly to if they are doing their research before making a purchase. However, one drawback is that some of Affirm’s long-term financing options carry interest rates of up to 30% annually.

Pros

✔ Intuitive software

✔ No late fees

✔ Terms as long as 48 months

Cons

✘ Limited by their own credit requirements

✘ Interest rates as high as 30% on long-term financing

✘ $17,500 limit

Skeps

Skeps takes one massive step in innovating the POS financing experience. Instead of operating as both the lender and the fintech platform provider, Skeps focuses on software development and connects merchants and service providers with an entire network of quality lenders. This allows for much more flexibility regarding what purchases are accepted and which consumers are as well.

In order to keep approvals near-instant, we use a simultaneous lender matching process that checks every application against all relevant lending partners at once, ensuring that consumers are always presented with the best possible offer right away.

Our software is omnichannel, meaning it can be used on almost any website, app, billing system, or in your brick and mortar store. It is also infinitely customizable, focusing on keeping consumers on-page and engaged in the purchase process.

Pros

✔ Large network of lending sources

✔ Instant approvals

✔ Widest variety of financing options

Cons

✘ Less recognizable brand

✘ No native user base

✘ Funding doesn’t come from Skeps

Leverage the Best Customer Financing Programs With Skeps

Skeps offers a comprehensive, end-to-end consumer financing program that helps businesses modernize their entire payment process. We go above and beyond one-click payment, also offering a one-click application process for several different types of consumer financing, including:

• BNPL
• Consumer loans and leases
• Branded credit cards

If you’re looking to partner with a forward-thinking fintech company that will keep consumers' eyes on the purchase while offering best-in-class financing, Skeps is the perfect fit.