Offering finance to customers can be a strategic move for businesses looking to increase sales and reduce cart abandonment. There are two main ways to do this: using a multi-lender platform or managing the process in-house. Each has its own set of benefits and challenges. Let’s explore them in detail so you can decide which option best suits your business needs.
Option 1: Offering Finance to Customers Through a Multi-Lender Platform
One of the most efficient ways to offer finance is through a multi-lender platform like Dopple. These platforms connect your customers with multiple lenders, which increases the chances of approval. Here’s why this method works well for many businesses:
Ease of Integration: Multi-lender platforms are designed to be easy to integrate into your existing checkout system. This means you don’t need to build anything from scratch - just plug in the platform, and you’re ready to go.
Higher Approval Rates: By offering a variety of lenders, you give your customers more options, making it more likely their applications will be approved. This can lead to higher average order values as customers feel confident purchasing more items when they have finance options.
Reduced Cart Abandonment: Cart abandonment is a common issue in e-commerce. Studies show that around 77% of UK mobile users abandon their shopping carts at checkout Oberlo. By giving customers flexible payment options, you address one of the main reasons they leave their carts - affordability.
Pros:
Increased approval rates with multiple lenders
Minimal setup and easy integration
Lower cart abandonment rates
Cons:
Limited control over the finance process as it’s managed by the platform
Option 2: Offering Finance to Customers Through In-House Financing
For businesses with more resources and expertise, in-house financing offers full control. This approach allows you to manage the entire credit process, from assessing applications to collecting payments. However, it comes with several considerations:
Regulatory Compliance: In the UK, the Financial Conduct Authority (FCA) regulates businesses that offer credit. If you choose this route, you must ensure compliance with their regulations, including affordability checks, transparent terms, and fair lending practices. Non-compliance can lead to penalties, so understanding these rules is crucial.
Administrative Overhead: Managing finance internally means handling all customer data, conducting credit checks, and managing collections. This can be resource-intensive, and unless your business has a dedicated team for this, it might become overwhelming.
Pros:
Full control over customer financing
Ability to customise finance terms to fit your business model
Cons:
High administrative and regulatory responsibility
Requires knowledge of FCA regulations and compliance
Legal Requirements for Offering Finance in the UK
Any business offering finance in the UK must be authorised by the FCA. This applies whether you choose a multi-lender platform or manage the process in-house. To comply, businesses must:
Ensure transparency in terms and conditions
Conduct affordability assessments
Provide clear information about interest rates and repayment options
Platforms like Dopple are already FCA-compliant, simplifying this process for businesses. By using such a platform, you can minimise the compliance burden while still offering finance options.
Choosing the Right Option for Your Business
The decision between using a multi-lender platform or managing finance in-house depends on your business’s capabilities and resources:
Multi-Lender Platform: Ideal for businesses seeking a straightforward, compliant solution without heavy administrative duties. Dopple’s platform, for example, provides multiple lender options, reduces cart abandonment, and integrates seamlessly with most e-commerce systems.
In-House Financing: Suitable for businesses that have the resources to manage credit operations independently and want full control. This option allows for customisation but requires a comprehensive understanding of legal regulations and a commitment to administrative work.
Dopple: Simplifying the Finance Process for Your Business
If managing finance internally seems too complex, Dopple’s multi-lender platform can offer a simple, effective solution. It’s designed to handle compliance requirements and increase approval rates, helping businesses provide a better checkout experience without the need for extensive setup.
Offering finance doesn’t have to be complicated. If you’re interested in learning more about how Dopple can help, reach out today to explore how this solution can work for you.
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