Digitization is no longer a new topic, but many German, medium-sized companies are still in their infancy when it comes to their technology. The challenge today is no longer just to be found online. In order to reach young generations, you have to offer modern shopping experiences. The more choices, the better. This is also shown by findings on the preferred financing of purchases. Here are the modern finance trends.
Consumer finance studies
The Viennese financial technology company credi2 did in his study “Consumer financing rethought” conducted a survey on consumer finance in June 2021. Their goal was to find out if and to what extent
- Consumer credit,
- Buy now, pay later und
- Pay per use Modelle
are in demand among Germans and Austrians.
Overall, the society represented in the study wishes more flexibility at the checkout. They want to take advantage of the best offer based on their current needs. That’s the one Financing in installments and another time to book this from Additional services such as repairs.
In store and online is the concept of Buy now, pay later (BNPL) a decisive criterion for the completion of a purchase. Over 70 percent of those questioned between the ages of 18 and 34 would avail themselves of this type of financing.
Was ist Buy now, pay later?
Buy now, pay later is basically a long-established financing strategy: the installment payment.At BNPL, the customer buys a product at the checkout, whether analog or virtual, and then pays it off in installments including interest.
With this, the buyers take out a loan. Often they don’t care which credit company is behind it. The terms of the loan are also not always taken into account. Every third customer, however, states that they have made the experience that the purchase loans of this type are cheaper than comparable installments at their house bank.
The financing of products in installments is made especially desired for products with high acquisition costs. This gives the customer more freedom to buy the purchases of his choice exactly when he needs them instead of saving on them.
Payment method providers take advantage of the fact that they relieve the customer of all loan applications. Anyone planning to spend a large amount no longer goes to their bank, but settles the conditions directly with the seller of the desired product.
Payment service providers are the trendsetters
Anyone who uses a payment service provider to process online payments will have already noticed this trend. Services like PayPal and Klarna offer to convert the payments made through them in online shops into an installment purchase. This increasingly common implementation of the system is a clear sign of consumer demandto stagger their financing in this way.
What is pay per use?
Pay per use is used when purchasing machinesif the buyer cannot estimate directly how intensively he will actually use the device. So he avoids the expense of high acquisition costs and only pays for the use of the itemthat he actually delivers. If, for example, one imagines the pay per use purchase of a printer, the customer does not pay for the device, but for each sheet and the proportionate use of cartridges for a print.
The manufacturer remains the owner of the machine here. This usually works with a financing partner with whom he shares the investment risk and the payment by the customer. Part of many pay per use contracts are down payments or repurchase obligations if the customer wants to buy the machine or hand it over in full.
How much the customer has to pay is determined from his credit rating in comparison to the purchase price, the estimated intensity of use and an agreed minimum period of use. This type of purchase is therefore similar to a subscription.
In the application for private customers, we find the model in addition to printers, for example for items such as water dispensers, coffee machines or e-bikes.
Conclusion – these are the financing trends
By offering a variety of financing methods, sellers enable their customers to choose freely how to deal with their transactions. This enables customers to make purchases that would not otherwise be possible. This is also an advantage for the seller, who keeps such a segment of low-income customers as a possible source of income.
The range of financing options and additional offers such as subscriptions and repairs are now a decisive factor in the selection of retail and online shops, especially for younger generations. Here, the maximum freedom and convenience for customers is an important step towards successful customer loyalty.