How to Reduce Friction in Point-of-Sale Loans

Whether online or in-store, lending is being influenced by the ease of e-commerce. From one-click purchasing on Amazon to easy ordering through phone apps, customers have been trained to expect a fast, frictionless check-out experience. When it comes to online lending, their expectations are no different.
Customers are all too willing to walk away from a purchase. According to Baymard Institute, the average online shopping cart abandonment rate is 69.23 percent. And 40 percent of respondents said they’ve abandoned an online lending form based on login services provider, Signicat’s survey.
In order to stay competitive in that environment, online lenders need to provide an experience for customers that mimics the best online shopping experiences — friendly, easy, fast. And that applies online and at the point of sale in brick-and-mortar shops.
A seamless online lending experience
For online point-of-sale lenders, customer expectation is a key driver. Even the slightest amount of frustration on the customer’s end could cause them to close out the window and end the transaction entirely.
Because Affirm partners with retailers to provide loans for large purchases at the moment of sale, they need a decisioning process that integrates seamlessly into their retail partners’ checkout process without adding much additional friction. This means asking for less information up front and automating as much of the process as possible. However, this also opens up a number of doors for fraudsters to attack through. To lend confidently under these circumstances, companies rely on identity verification tools like Ekata Identity Check API to make layered identity decisions so they can focus on what they do best – lightning fast underwriting decisions.
Fast in-store financing
Point-of-sale loans for in-store purchases aren’t new, but the advent of iPads and other tablets has made them easier than ever. But for in-store lenders, providing a frictionless financing experience at check-out is just as critical as online. The goal is for customers to walk out the door with their new couch or refrigerator in the least amount of time — not to walk out the door forever.
Achieving fast, friendly in-store financing requires a streamlined application, and the fewer clicks and the least amount of typing, the better. Second, it requires the ability to verify customer identity quickly, without sending anyone home to grab a copy of their utility bill. This requires trusting the identity verification tools they use to do their job.
Meeting the challenges of point-of-sale lending
While customer experience is important, identity fraud is on the rise. And point-of-sale lenders have two big challenges in walking that balance — particularly for in-store sales. First, the IP signal they receive will be tied to that iPad that the store owns. Second, because the customer is right in front of you, email is often not asked for as a means of communication.
These two signals are simply too important to just ignore. Here’s how PoS lenders can make use of them:

  1. Make sure you ask for email in your app, as this is a key data point that can help prevent fraudulent applications.
  2. Even though the IP may not be the customer’s, it can still provide a clue. Ekata Identity Check API returns data about IP distance from billing address, which can raise red flags. For example, few people will buy a couch only to drive it 500+ miles back to their house.

Don’t run the risk of losing customers due to excess friction in the checkout process. Learn how Ekata’s Identity Check API can help you create rules-based systems to quickly fund your best customers while reducing fraud, whether online or in-store.

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