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Instant financing is becoming more attractive to American consumers who shop online, according to a new study, with 75% indicating that if they had to choose between an online retailer that was offering instant financing and one that did not, they would likely go with the one who made the offer. And 28% said that they would switch to a new retailer offering instant financing.
The study, commissioned by Klarna North American, a payments provider, specifically looked at how consumers felt about instant financing. What is instant financing? It is actually a revolving line of credit, which consumers can apply for when they get to a retailer's checkout area. Sometimes this is the form of a store credit card. Once approved the individual can take advantage of low APR offers and stretch out their payments over a period of time.
Klarna sees consumers interest in instant finance offers as a way for merchants to grow their businesses. "Instant financing is more than simply a convenience to consumers making online purchases," said Jim Lofgren, GM, Klarna North America.
"It gives them additional freedom, flexibility and buying power that they find very attractive and leads them to merchants that offer it. This survey indicates that instant financing has the potential to drive significant business to merchants," he said.
Instant financing and shopping trends
Would having access to instant financing impact how much money people are willing to spend when cyber shopping? For 39% the answer was yes, indicating that they would actually be willing to spend more money with a retailer if they made financing available. Yet on the flip side, 42% said that they would not spend any more money, and 19% weren't sure how it would affect their decision.
Just about half of people (47%) said that they would like retailers to make them aware of instant financing options while they are surfing the net. On the other hand, 28% said that they had already taken advantage of instant financing in the past, yet 68% had not.
Is it too much trouble?
When it came to being willing to give retailers sensitive information when applying for instant financing, 51% of smartphone users said it was "too much trouble" to key in their bank account number and Social Security number, while 40% said adding in their credit card numbers was "too much trouble."
But how much time did they think it would take to get approved for instant financing? More than half (52%) of people said that they believed that it would take three or more minutes to be approved, but 28% though it would only take 2 minutes, and 20% expected to wait less than a minute for an answer.
Researchscape International carried out this online study for Klarna North American from April 10 through April 13, 2017. They queried 2,024 consumers aged 18 and up.