How To Raise Your Afterpay Limit: All You Need To Know
by Chris Hopkins, on Sep 8, 2020 12:05:43 PM
Buy Now Pay Later consumer financing solutions are taking Australia by storm. Let's face it who doesn't love the convenience of being able to package bigger purchases into smaller monthly payments.
For consumers Afterpay style financing increases purchasing power and makes buying higher cost items affordable. For businesses, offering finance can increase sales by up to 32% and increase the average spend by as much as 75%.
With over 10,000 SME’s in Australia and New Zealand offering their customers a ‘buy now pay later’ finance option it makes sense that if your business is not offering the same — then maybe you should consider it.
But is a Buy Now, Pay Later financing the right solution for your business?
Today we explore the world of Buy Now Pay Later finance, give you a quick look at the pros and cons of this solution and take a look at an alternative option that could be a much better fit for both your product and/or service offering and the needs of your customers. So let's dive in.
What is "buy now pay later" finance?
Interest-free finance, commonly referred to as "buy now pay later", has become an increasingly popular way for shoppers to pay for purchases. Platforms such as Afterpay, Zip, Fastpay, Openpay, (there are currently eleven interest free finance companies to choose from), allow your customer to break down the cost of the purchase into a series of smaller payments over a set period of time, without having to pay interest.
On the surface this sounds like a great solution and for retailers who sell mid priced goods and services there is no doubting that Afterpay and its competitors provide a great financing solution for customers. However there are some traps for both businesses looking to offer this type of finance and their customers.
Interest free financing isn’t like a traditional financing options and there are merchant costs involved and it's important to understand what you're getting into before you apply.
We will outline how Afterpay works, as an example of many interest free financing solutions, the costs involved and how it works. We will stack it up against our solution so you can make a better decision for your business.
How does Afterpay work?
The appeal for customers to NOT pay for their goods straight up is compelling. All they have to do is sign up to the platform and two weeks after they made a purchase, they start making payments. Generally, payments are made in four chunks every two weeks.
Purchases over $500 have terms of approval, normally the customer will need to make the first quarter payment upfront.
65% said the ability to make smaller payments influenced them to make purchases they wouldn’t normally make – Mozo.com.au
How much does Afterpay cost?
There are costs involved by using a "buy now pay later" finance option for your customers. The customers are charged a fee if they are late with payments.
Afterpay charges merchants a 30¢ fixed transaction fee plus a commission on the sales value ranging from 3 per cent to 7 per cent – much higher than the cost of taking payments from credit cards, which range from 0.6 per cent for large merchants to 1.5 per cent for smaller ones.
All "buy now pay later" finance companies have a merchant fee ranging from 2-7%.
Unlike credit card financing, merchants cannot transfer the fees on to their customers. This is something to take into consideration when making your decision to offer finance.
The Financial Review recently reported on the increasing conflict merchants are having with the Reserve Bank to force "buy now pay later" providers to change their policy.
There are limits to offering a "buy now pay later" option
All "buy now pay later" providers have limits to how much a person can spend to enter into a plan, currently this amount is up to $1500. Afterpay recently raised their amount to $2000 and while this may sound attractive, qualifying for a 4 x $500 payment plan is easier said than done.
So what do you do if your business has products or services that exceed these amounts, what is your option?
One of the best solutions for businesses that offer larger ticket items is to explore the aggregator finance option.
What is Aggregator finance?
Ausloans Finance Group offer a service to SME’s allowing your customer to apply for finance to buy your product or service and enter a payment plan with one of 40+ lenders. The service is called Zink and it's simple for both businesses and customers to use.
Zink is fast gaining traction with the business community and was recently named as a finalist in the National Broker Awards for financing platform of the year and innovator of the year.
The Zink platform provides 3 solutions.
Zink for business provides businesses and retailers with a point of sale customer financing solution that makes offering big ticket finance easy.
Ideal for retailers, contractors, trades and services and boutique dealerships without inhouse brokers, Zink is perfect for financing of products and / or services upwards of $5000.
How does Zink aggregator financing for SME's work?
Watch the two minute video below to see how Zink aggregator finance can help you grow your business.
Benefits of Zink aggregator customer finance for business
Ausloans Zink aggregator finance solution delivers many advantages to both consumers and business.
Benefits for your customers
- Convenient point of sale finance
- Easy online application
- Access to 40+ lenders
- Lightning fast finance approval
- Top brokers delivering best finance solutions
Benefits for your business
- Fast application process. Offer lightning fast finance approval from a pool of over 40 lenders with some of the most competitive interest rates in the market.
- No Fees. There are no merchant fees for offering aggregator finance to your customers. All fees relating to any finance that is taken for your customers are between them and the lender.
- No Limits. When partnering with a aggregator finance provider there are no limits to how much your customer can borrow — giving your business that flexibility to offer a finance solution.
- Earn Commissions. With Zink we reward you for your business and offer attractive referral commissions on all financed sales that settle. Adding another income stream puts more money in your pocket. With commissions starting at $200 per settled loan these bonuses can add up fast.
- Powerful marketing resources. Save time and money on marketing. Get free access to our powerful suite of done-for-you marketing resources including, website banners, social media posts, emails and more
There is no denying that offering finance options at the point of sale increases both sales and the average order value of a sale. Businesses who opt for financing options on average see a 20% to 30% increase in sales. The exciting part for big ticket sellers is that this increased sales trend is not limited to small to mid priced item financing.
Ay Ausloans, Zink POS financing for big ticket items is helping a broad cross section of businesses, including dealerships, home improvement contractors, and financial and business service providers increase sales, improve cash flow and deliver gret outcomes for customers.
So what are you waiting for click the banner below to register your interest in Ausloans Zink POS financing for big ticket sellers and start increasing your sales today.