Unlocking Profitability: The Strategic Role of Point of Sale (POS) Credit in Retail Growth

In today's competitive retail landscape, particularly in sectors with high-ticket items like electronics, home furnishings, home improvements and renewables, identifying strategies to increase revenue and improve profitability is essential. Over the years, I’ve been deeply involved in developing and refining POS credit strategies for retailers of all sizes and it has consistently proven to be one of the most effective tools for driving sustainable growth.

Through extensive experience structuring credit strategies, I’ve seen first-hand how embedded finance, particularly POS credit, can shift the profitability landscape for retailers. This article explores how businesses large and small can capitalise on POS credit, not just to boost sales but to create long-term financial advantages.

1. POS Credit: More Than Just a Sales Uplift

During my time working with retailers to develop their credit strategy, I’ve seen a paradigm shift in how POS credit is perceived. Historically, it’s been seen as a tool to simply increase Average Order Value (AOV) and accelerate purchasing. However, in my experience, the current benefits extend far beyond a one-time sales uplift. In sectors where consumers are highly price-sensitive, we’ve consistently seen AOV increase by 30-50% when credit options are available, fundamentally altering purchasing behaviour.

In my experience, providing flexible financing options is no longer just a competitive advantage—it’s a necessity. Almost half of UK consumers would defer or skip a major purchase without access to credit, meaning retailers without robust POS finance options are leaving revenue on the table. The key insight here is that credit customers are not just higher-value—they are often more loyal, resulting in greater long-term value.

2. Liquidity Engine: Enhancing Cash Flow Efficiency

A critical aspect of POS credit that I’ve focused on throughout my career is its capacity to enhance liquidity. By partnering with lenders, retailers can receive payments the moment the customer has received the goods, allowing businesses to reinvest quickly. This is particularly important in businesses operating on slim margins. For example, immediate liquidity from POS credit enables a faster inventory cycle, reduced reliance on alternative financing, and provides more room to manoeuvre in high-growth areas like eCommerce.

In sectors where operational efficiency is crucial, the ability to reinvest quickly in stock or marketing is a significant advantage. Optimising cash flow through POS credit can cut inventory cycles by 20-30%, reduce dependency on external credit by 15-25%, and create financial breathing room for strategic reinvestment.

3. OEM Contributions: Minimising Retailer Costs

One of the most effective tactics I’ve employed to reduce the cost of offering credit is leveraging contributions from Original Equipment Manufacturers (OEMs) and key suppliers. In competitive markets, many suppliers are willing to subsidise interest-free financing or other promotional credit offers as part of their own promotional ad marketing efforts. In my experience working with national online boiler retailers for example, negotiating these contributions has been a game changer, allowing retailers to shift the financial burden away from their own balance sheets.

This strategy was particularly successful during high-volume promotional periods like Black Friday or major product launches. Aligning OEM contributions with credit promotions created a “virtuous cycle”—OEMs benefited from increased exposure, retailers reduced their financing costs, and lenders achieved higher volumes, which often led to better terms.

4. Unseen Profits: Commission and APR Structures

While working across multiple credit strategies, one underutilised revenue stream is the commission structure many retailers can secure from lenders in certain circumstances. In sectors with average APRs of 13% +, retailers can on occasion and depending on size, negotiate commissions as a % of the total loan value. This not only offsets operational costs but also creates a new revenue stream tied directly to the volume of credit agreements closed.

By working with lenders to maximise these commission structures, retailers can unlock significant additional profits—transforming credit from a cost centre to a scalable revenue generator.

5. Driving Customer Loyalty Through Credit

One of the most overlooked aspects of POS credit is its ability to enhance customer loyalty. In my work with consumer finance strategies, I’ve consistently observed that customers who finance purchases are far more likely to return for future transactions. This has been particularly true in sectors like home improvements, where repeat business and service plans are key revenue drivers.

By integrating credit into a broader customer loyalty strategy—such as offering exclusive financing terms for returning customers or providing loyalty points for financed purchases—retailers can significantly improve Customer Lifetime Value (CLV) and reduce churn. In the businesses I’ve worked with, this has been a vital part of transforming a transactional relationship into a long-term, profitable one.

To Summarise...

In my experience, POS credit is far more than just a tool to drive short-term sales. It represents a strategic opportunity to enhance liquidity, minimise costs, unlock hidden revenue streams, and build lasting customer relationships. For retailers looking to optimise profitability, POS credit is not merely an option—it’s a critical element of their financial strategy. For businesses looking to navigate today’s complex retail environment, the challenge is clear: implement the right credit solutions, align them with broader business objectives, and leverage partnerships to their fullest extent. Those who do will not only see immediate financial gains but position themselves for long-term success in an increasingly competitive marketplace.