Winning with Financing: A Merchant's Guide to Better Choices

Welcome back to The Gateway to Growth

In our last edition, we encouraged you to consider offering checkout options beyond just credit cards and full payments—especially for those big-ticket items. But this raises a crucial follow-up question: are customers financially savvy enough to make the best choice for themselves? And in a world where financial knowledge isn’t always universal, how do you strike the right balance between closing sales and being transparent?

Welcome to the WeGetFinancing Financial Literacy Lecture (first and only edition), where we’ll explore how to guide your customers through their financing options with clarity and confidence, all while keeping your business's reputation intact.

Are You Choosing the Right Financing Solutions for Your Customers?

When it comes to offering financing, it’s not just about giving your customers a “Buy Now, Pay Later” option and calling it a day. The right financing decision can be the difference between a smooth transaction and a customer experience that leaves them feeling like they’ve been hit by a financial freight train. So how confident are you that you're making the best choices for both your business and your customers?

True financial empowerment involves not just understanding basic financial concepts but also recognizing how these concepts apply in real-world scenarios. For merchants, this means navigating a complex interplay of customer needs, lender options, and the broader economic environment.?

Financial Literacy: More Than Just a Buzzword

In the complex transaction between customers, lenders, and merchants, financial literacy is key. It encompasses understanding essential concepts like risk diversification, numeracy, inflation, and interest rates. Surprisingly, about 43% of U.S. adults are financially illiterate. That’s nearly half of your potential customers who might not know a good financing deal from a bad one. Merchants must contend with this reality because when customers lack financial literacy, they often rely heavily on a retailer to guide them toward the best financing options.

Think of it like this: if someone doesn’t know the difference between a 0% APR and a 5% APR, they might end up paying for that lack of knowledge with their hard-earned cash. Recent issues with lenders like Snap and Acima, which faced lawsuits from the Consumer Financial Protection Bureau (CFPB) for problematic practices, highlight just how costly financial ignorance can be. Many customers were left paying high interest rates or dealing with confusing terms simply because they didn’t fully understand what they were signing up for. As a merchant, you’re in a prime spot to either help them out or, unintentionally, steer them into a financial fiasco.

Addressing the Root of the Problem

Efforts to improve financial literacy in the U.S. have made progress. Over 80% of states now have personal finance education standards in schools, a significant increase from 42% in 1998. Yet, many adults today received their education before these improvements were made, leaving a large segment of the population without the financial knowledge they need.

This educational gap is compounded by the fact that only about 37% of K-12 teachers have taken financial courses themselves, and only 20% feel confident teaching financial literacy topics. It’s a bit like learning to cook from someone who’s never been in the kitchen. This ongoing issue means that while schools are working to improve financial education, the ability to effectively instill financial wisdom in future generations remains a challenge.

For merchants, this creates a difficult situation: you’re expected to offer clear, fair financing options, but your customers might not even know what they’re looking at.?

The Merchant’s Financial Tightrope

Here’s where it gets tricky: your choice of lenders impacts your reputation. You might think that providing your customers with the option to apply for a loan is enough. But the truth is—if your customers don’t fully understand their financing choices, they’re likely to blame you if things go awry. As a merchant, the ripple effects of financial illiteracy can lead to several challenges:

1. Customer Dissatisfaction: If customers feel misled or unsatisfied with their financing choices, they may blame your business for not providing better options. This dissatisfaction can harm your brand’s reputation and erode customer trust.
2. Reputational Risk: Merchants who work with lenders offering high-interest rates or hidden fees can face backlash if customers feel they were not given clear and honest information. This “guilt by association” can damage your reputation and make it harder to retain loyal customers.
3. Increased Complexity: Navigating the multitude of financing options available can be overwhelming. Without a clear understanding of the implications of each option, merchants may struggle to provide the best solutions for their customers, potentially leading to lost sales or strained customer relationships.

The Merchant's Dilemma: Trusting Lenders vs. Customers

So, how do you navigate this? Many merchants place their trust in lenders to provide the best possible terms for their customers. However, this trust can sometimes be misplaced. If your customers find themselves tangled up in hidden fees or confusing terms, they won't just be disappointed—they might blame you.?

This situation underscores the need for merchants to be proactive and informed about the financing solutions they offer. But keeping up with the intricacies and nuances of the fintech world is a full-time job in itself- one that many merchants don’t have the time to take on. With financial literacy gaps affecting both consumers and retailers, it’s crucial to partner with a provider that understands these challenges and can offer solutions tailored to your specific needs.

How WeGetFinancing Can Make a Difference

At WeGetFinancing, we recognize the complexities involved in choosing the right financing solutions and are here to be the experts you didn’t know you needed. Our mission is to make sure you’re offering your customers the best financing offers available– with no heavy lifting on your end. Here’s how we can support you:

1. Brand Agnostic Approach: We are not tied to any single lender, allowing us to offer unbiased recommendations and switch lenders if necessary to ensure the best fit for your customers.
2. Flexible Solutions: With access to a variety of lenders, we can adapt our offerings to align with your customers’ financial situations, ensuring they receive fair financing.
3. Expert Guidance: Our technology provides your customers with a transparent view of all financing options available to them- enabling them to make informed decisions. The more informed your customer is, the more customer satisfaction they experience.

Empowering Your Business Through Better Financing

In a world full of confusing financial jargon, having the right partner can make all the difference. With WeGetFinancing, you get the benefit of expert guidance and flexible solutions, ensuring that your customers walk away happy and your reputation remains intact.

So, next time you’re faced with a decision about financing options, remember: you don’t have to go it alone. With the right support, you can turn those tricky choices into opportunities for success.

Here’s to making financing decisions that are smart, strategic, and a little bit easier to navigate!

Newsletter curated by Carissa Civitello, Operations Manager at WeGetFinancing.

For more information on WeGetFinancing and what it can add to your business, please visit our new website.

Missed our last edition? Get caught up by reading Choosing Wisely: Consumer Financing's Edge over Credit Cards.