DOTLOGICS BLOG

February 27, 2018

Should Your Ecommerce Company Offer Customer Financing

Written byChristian Abbatecola

You woman shopping online, sitting next to multi-colored gift bags.
If you’ve been to a large brick and mortar store in recent years, there’s a good chance you’ve seen some heavy promotion for in-house, store-branded lines of credit. These store credit cards are offered as a means to help customers make larger purchases, either through no-interest financing or customer kickbacks like gift cards or similar rewards.

It’s a common tactic in the industry, with electronics stores such as Best Buy, clothing stores like Kohl’s, and department stores like Target all providing their own credit options. In fact, the store credit card is no longer limited to just the physical retail space; Ecommerce giant Amazon offers both a Visa “Rewards” card which gives customers who use it a percentage of their purchases back in the form of store credit, and a “Store Card” which offers 6-24 month financing on select items.

It’s an advantage that larger companies who can establish working relationships with big banks and creditors have held over smaller merchants for a long time, but the tides are shifting. Even small, startup Ecommerce companies can now offer their customers financing as payment processors such as PayPal have begun offering financing options too.

So now that you know access to these credit lines is easier to obtain than it has been in the past, you need to ask whether it’s worth integrating into your store. To that end, consider the following:

More Credit = More Money

A study commissioned by PayPal found that customers with access to no-interest credit lines spend more money. 40% of surveyed PayPal Credit users admitted to spending more online because of their credit line. Not only that, but Nielsen found such purchasers were spending up to 68% more per transaction than buyers who did not use Credit. The option to break up large payments over long stretches of time encouraged these users to spend significantly more than they would have otherwise.

Credit Access Leads to More Purchases

In addition to buying bigger ticket, more expensive items, Credit users also demonstrated a higher likelihood to make any purchase. 25% of those surveyed said they wouldn’t even have made their most recent purchase without access to their credit line. That means these customers were making more frequent online purchases thanks to their financing options.

You Get Paid Immediately

This isn’t true for every lender and every purchasing option, but in many cases the merchant receives the full purchase value from the lending institution within a few days. The credit line and subsequent financing exists as an agreement between the customer and the creditor, wherein the creditor pays the merchant upfront and the customer pays the creditor back over time. In other words, you can help your customers break up large purchases into more digestible chunks, without actually having to wait to get paid yourself.

Minimal Cost to You

There are a lot of lenders out there who are now able to work with small and mid-sized businesses to offer their customers these no-interest financing options. Some may charge higher fees or take too large a percentage of each purchase to be worth working with for your company, but others are surprisingly reasonable. In exploring your options, you’ll likely find lenders who are no more expensive to work with than the standard charges you’re already paying to accept ordinary credit cards.

If you’re already accepting PayPal, you can even use their PayPal Credit without incurring any new fees or charges. Other options such as BlisPay, a credit card backed by Visa, offer similarly competitive rates.

So Is Financing Right for Your Company?

All and all, there’s a pretty compelling case to be made for offering your customers financing. It can be done at surprisingly little cost to your business, it encourages visitors to spend more frequently, it encourages buyers to make larger purchases, and it takes away a competitive advantage retail giants used to have over smaller Ecommerce companies. All of this can help you drive sales and increase revenue.

The last question you need to ask yourself then, is whether financing will be attractive to your customers when they’re buying from your business. When exploring lending options, keep in mind that most of them have a minimum dollar amount that customers must spend before they have access to those lucrative no-interest financing options.


If your digital storefront has a lot of big-ticket items then this may be a no-brainer for your business, and financing could play a key role in your strategy to increase conversions. On the other hand, if you mostly deal in small purchases and low-cost items, then you’ll want think hard about whether your bulk orders are large enough and frequent enough for financing to be of value to you and your customers.
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