Point-of-sale financing is a rapidly growing market, as more and more customers look to take advantage of consumer credit to purchase merchandise and access valuable services. But for many customers, the financing options available to them were unattractive, with terms and conditions that let a large number of people fall through the cracks.
PayFina was created because its founders knew that there was technology available that could make the POS financing experience much more inclusive and satisfying for customers — all that was missing was a company that was capable of connecting people with these great new innovations in consumer finance.
Today, we’d like to take a look back at our origins and tell the story of how PayFina came to be.
So let’s start at the very beginning.
The Consumer Credit Gap
Coming from the retail and financial industries, PayFina’s founders had a lot of first-hand experience with the consumer financing world. They saw that the large growth in demand for consumer financing was not being met by the current financing companies, particularly for customers that fell outside their target customer profile.
They noticed that most of the existing financing solutions either catered to consumers with high credit scores that qualified for prime financing rates, or subprime credit which carried unattractive rates and terms. For customers in the middle — not quite eligible for the best rates, but not willing to accept the burdensome terms of “no credit needed” alternatives, there were hardly any appealing options for POS financing.
That’s a big market! According to Experian, 40% of consumers have FICO® scores less than 700, and 18% of americans have a subprime credit score. That represents a significant group of underserved consumers who might not qualify for traditional, prime-credit financing options.
PayFina’s team identified this as the “credit gap.” Customers with near-prime credit that fall into this gap were often pushed into expensive products that offered a single, high rate program for all approvals. Too often, discouraged customers chose to decline the financing, resulting in the merchant losing a sale.
To solve this problem, PayFina created a responsible new program that empowers both consumers and merchants with better financing options — providing consumers the financing they need, when they need it, and at financing terms that are appropriate for their unique situation. No longer will near-prime consumers be pushed into “no credit needed” financing options with effective rates of 200%+, or — worse yet — be forced to turn to title loans and payday advances with APRs that can exceed 400%.
A Technological Breakthrough
The key to delivering quality financing offerings to customers with good, challenged, and poor credit is building a customized individual credit profile for each consumer. Using breakthroughs in data technology, PayFina built a new system that automatically draws on a wide range of available data — including alternative data sources — to accurately assess each individual borrower’s risk profile. This new consumer-centered approach allows PayFina to deliver quick approval decisions, high approval rates, and financing terms that are much more attractive than the current alternatives.
Using this breakthrough system, PayFina approves customers with good, challenged, and poor credit, offering customized rates that are more attractive than the costlier alternatives that are currently available to many consumers.
Putting the Customer at the Center
There is more to consumer financing than just a single purchase. Consumers need a financing option that knows they are more than their credit score. Beyond attractive financing terms, they also want an opportunity to improve their financial well-being.
In order to truly break new ground in POS financing, PayFina goes above and beyond by putting the customer at the center of their offerings. In addition to providing a groundbreaking underwriting and pricing model, PayFina also developed solutions to provide consumers with the best financing experience. This includes:
• Offering a 100-day early payoff promotion
• Rewarding repeat customers with better financing terms
• Empowering consumers with tools to improve their credit and overall financial wellness
Happy Customers, Happy Merchants
Merchants know that high approval rates are important, but acceptance rates from customers is what really drives revenue growth. To complete the sale, customers need to find the financing terms compelling enough to move forward. When customers are happy, it drives repeat business, increases revenue, and boosts customer satisfaction — which means merchants are happy too.
PayFina delivers big benefits for merchants, such as:
- High approval rates and greater acceptance rates that lead to increased sales
- A one-stop solution that delivers responsible financing across the entire credit spectrum
- APRs as low as 26.9% for good credit
- Increased customer satisfaction, which leads to repeat business.
Consumer Credit that Works for Everyone
PayFina’s founders have an extensive background in running retail chains and building consumer finance businesses. This wealth of experience has made them understand that credit must work for everyone. That includes consumers, merchants, and the financing company. PayFina is excited to introduce a better, more affordable, and transparent point-of-sale financing program that meets the underserved financing needs of non-prime credit customers.
PayFina is proud of our origins, and we’re excited to serve customers and merchants for years to come. Interested in learning more about how PayFina helps merchants grow their business? Check out this article on the unique benefits PayFina offers. Or if you’re ready to get started you can enroll your business today!