‘Cash or Card?’: Why More Financing Choices Drive Consumers’ Decisions on Which Retailers to Shop

The customer experience is paramount to the success of today’s retailers. This includes enhancing in-store inventory, delivery services and even the personalization of customer service. However, when it’s time to check out, how do payment options factor into that customer experience?

A recent study of more than 4,700 consumers from Bread Financial indicates payment choices — including retail store credit cards, bank branded credit cards and buy now, pay later (BNPL) — at checkout have become a major factor in pleasing shoppers and closing a sale. Long gone are the days where retailers can only say, “Cash or card?”; it’s time to add alternative payment options to their repertoire if they want to improve the customer experience and realize stronger brand affinity and sales.

The Shopper’s Search for Buying Power

Offering multiple financing options expands buying power and gives customers more motivation to buy. For example, the survey found that:

  • 90% of respondents said it was “somewhat” to “very” important that their favorite retailer accepts or offers their preferred type of financing;
  • More than two-thirds (67%) confirmed they have shopped with a retailer because they offered the type of financing they wanted; and
  • 78% of respondents said they have bought more from a specific retailer because their financing option of choice made a purchase more attainable.

The study also suggests that as the spend amount goes up, it becomes even more important to the consumer that their preferred financing method is available. When it came to purchases of less than $500, 43% of consumers said it was “very important” that retailers offered financing options for that purchase. That percentage rose to 59% when customers were asked about purchases north of $4,000, demonstrating how multiple choices becomes more important for shoppers as the purchase size increases.


Is it Great Service or Great Financing Options?

It goes without saying that great service is important. But how do payment options factor into the overall customer experience? Believe it or not, retailers offering consumers’ preferred payment types edged out a good service experience (59% to 57%) when considering what factors made consumers more likely to purchase from a retailer.

Let’s consider a hypothetical: A retail staff member is pleasant to a customer, works to understand their needs, helps them carefully select the items they want to purchase, and then, after all that effort, isn’t able to complete the sale because the customer doesn’t see buying options that fit their financial preferences or circumstances. The shopper leaves without the items and the salesperson loses the sale.

This is a real possibility, as 43% of consumers say they’ve abandoned a purchase because the retailer or brand didn’t offer or accept the type of financing they preferred, translating to lost sales. Great customer service is only valuable when it’s paired with the right payment options.

Retailers Should Meet Their Customers Where They Are

In today’s marketplace, consumers have more payment and financing options available to them than ever before. They can choose options from cash to credit to BNPL to give themselves the flexibility they need in their budget. In fact, seven in 10 consumers already use financing tools beyond bank-branded cards for their purchases.

With customers actively engaged across multiple payment and financing options, savvy retailers should look beyond the basics to better meet their customers’ needs. As the data shows, the differentiator in those decisions could be the financing options retailers provide. By expanding, retailers give customers the control, flexibility and access they need.

Dennis McCarthy joined Bread Financial in February 2021 as SVP, Chief Client Officer. In his role, McCarthy is responsible for the company’s credit products as well as its team of client partner professionals, spearheading investment strategies and business plans to drive growth, profitability and long-term relationships while delivering on key business performance metrics. Prior to joining Bread Financial he worked at MBNA/Bank of America, Barclays and Citi.  He is a financial services executive with 30+ years of experience and a successful track record in developing and retaining strategic partnerships, leading investment decisions for long-term growth and profitability and successfully managing significant financial and partner portfolios across a variety of consumer and small business payment products and programs. McCarthy has his Bachelor’s degree from the University of Delaware and is a former Board of Trustees member and current active supporter of the Leukemia & Lymphoma Society of Delaware.

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