CEO Tim Harris spoke to DevPro Journal about all e-merchants have to gain when developers incorporate a digial revolving credit financing offering into their payment platforms. As posted on 10/25/22.
As we head toward a new year, it’s a good time for developers to ask themselves how the websites they are building can benefit from more flexible and profitable payment processes. Emerging digital financing and checkout solutions offer innovative options for e-commerce merchants and their customers, generating new ways to increase recurring revenue and to build brand loyalty. Here are three website enhancements to consider that will add significant incremental value to today’s popular e-commerce platforms:
Implement a cardless digital revolving credit option
Providing consumers with a flexible, instantly available revolving line of credit has tremendous benefits for e-merchants. Offering this type of financing can mean the difference between financing a single transaction with a customer, or creating a lifetime relationship. Buy Now Pay Later (BNPL) options for e-commerce sites have gained popularity in recent years—however, that model has faced challenges with rising interest rates and increased regulatory scrutiny. BNPL solutions offer fixed installment loan payments that don’t always meet the budgetary needs of purchasers, potentially leading to financial strain or causing cart abandonment issues.
Rather than selecting a traditional BNPL installment loan option, e-commerce merchants might consider a digital revolving credit solution, which can be seamlessly embedded into a shopping cart. A cardless revolving account lets shoppers open a line of credit that can be used repeatedly. The repayment schedule for revolving credit is flexible compared to BNPL installment loan payments, allowing the customers to structure payments to meet their budgets. It also leads to lower defaults, which translates to fewer lost customers.
But what’s most attractive about a cardless revolving open line of credit is that it engenders long-term relationships with e-commerce brands, creating opportunities for repeat business and extending customer lifetime value (LTV). It fosters customer loyalty, as opposed to installment loan-based plans, which close out the short-term loan once the final installment is paid. BNPL payment options let the customer relationship with the merchant end, whereas digital revolving credit can let the relationship flourish indefinitely.
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Another advantage of a digital revolving credit option is that it lends itself to subscription-based purchases. E-commerce sites that add this capability can build a base of reliable, recurring purchases with a community of customers that create ongoing revenue streams. Subscription plans are well-suited to regularly purchased items in product categories such as apparel, skincare, cosmetics, pet supplies, school supplies, or sporting goods.
Provide Flexible Capabilities
An e-commerce site will generate more revenue if it provides its customers with more versatile scheduled payment capabilities. The ability to flexibly set monthly balance payments helps to decrease shopping cart abandonment and increase average order value.
A natural extension of payment flexibility might include the ability to split payments across more than one payment method, increasing conversion rates for merchants. For example, sophisticated shopping cart capabilities would allow customers to put part of a purchase on a credit card and finance the rest through the site’s digital revolving credit offering. This would better accommodate a shopper who has reached a credit limit with one of their existing accounts.
Ideally, developers should be able to implement these capabilities on popular e-commerce platform shopping carts through a seamless API. Many of these capabilities can be attained through advanced checkout solutions that, when combined with a flexible digital revolving financing solution, can dramatically improve the online purchasing experience. Developers will increase their competitive advantage by delivering more profitable, sustainable, and customer-friendly solutions to their online merchant customers.