In a world where budgets are squeezed and baskets abandoned, checkout finance can be a real dial-mover for merchants.
This flexible payment option gives customers the ability to manage their money in a way that suits them. Faced with a large upfront payment or the ability to spread the cost of a significant purchase over a number of years, savvy shoppers are increasingly opting for the latter. For merchants, that means a boost in conversion rates, bigger baskets, and better sales.
Its popularity had exploded over the last few years as a result, helped along by the rise of eCommerce and cost-of-living. Checkout finance is most commonly used by younger, digitally native consumers who shop online regularly. Gen Z have relatively low salaries on average, so checkout finance is a useful tool to help them to continue purchasing the things that matter to them during this period of high inflation.
That said, there are other demographics who are now turning to checkout finance. The older generation, for example, are increasingly accessing it as a way to support their budgeting. If merchants are to maximise the potential of their checkout finance programmes, it’s crucial they understand the needs of their older customers.
Tapping into the older generation
Our research has revealed that older people represent the most significant growth opportunity for checkout finance providers. Around two-fifths of consumers over the age of 50 have made a purchase using this method in the last three years. For comparison, 73% of Gen-Z have used it.
One could argue that older consumers are against the idea of checkout finance. But that’s not the case. 40% of those over 60 agreed that checkout finance could help to manage their finances, and 37% said they would be comfortable paying via this method. This signals an opportunity to increase adoption amongst these consumers and support them with their finances.
To be successful, merchants must first earn the trust of older generations. Those that have not grown up with technology are naturally more sceptical, particularly when it comes to finances and personal information. Businesses should look to actively educate their older customers to earn their trust.
That means making them aware of the benefits of checkout finance, and communicating the repayment terms clearly to help them make an informed decision. Transparency is key.
Responsible lending
The new Consumer Duty will ensure firms take a closer look at the customer journey, to revisit pain points and put themselves in their customer’s shoes. Merchants should use this as an opportunity to truly understand their customer needs. A focus on delivering better customer outcomes will help to deliver better commercial outcomes.
And that starts with choosing a checkout finance platform with responsible lending practices, one that can help to train their teams on the ethics of checkout finance. Merchants are far more likely to gain the trust of the older generation this way. The greater the trust, the higher the conversion rates, the bigger the baskets, and the greater the sales.
To remain competitive at a time of economic difficulty, merchants can support their business by supporting their customers.
