Retail finance specialist Pay4Later is tackling delays faced by retailers planning to offer credit with the first service allowing companies to provide interest-free finance to their customers, without a Consumer Credit Licence. The Financial Conduct Authority, which regulates over 50,000 firms offering consumer credit, advises decisions on applications for licences needed so companies can provide credit can take up to six months.
These delays are putting retailers off applying and leading to lost sales. Research by Pay4Later* reveals that shops are missing out on over £400 million a month in sales because they cannot offer financing to help customers spread the cost of large purchases.
Its new service enables retailers to offer interest-free credit over 6, 9 or 12 months. There’s no setup fee and a CCL is no longer required, which means firms can be operating within a week of signing up.
Retailers can use the service as a stand-alone or as an interim measure until they have their own licence. Pay4Later believes it is particularly suitable for SME retailers.
Pay4Late works with a group of lenders including Close Brothers, RateSetter, Shawbrook and Omni Capital, to provide a secure online service with credit applications taking less 10 seconds to complete. Applications involve ‘soft’ credit searches so customers’ credit ratings are not affected.
Scott Law, CEO of Pay4Later said: “Regulation is vital in the consumer credit market to ensure all lending is responsible but complying with regulations can be time consuming for retailers who are looking to increase sales. We’re delighted that the FCA has introduced these exemptions for interest free loans as it’s clear retailers who can offer finance packages to customers are really benefiting, particularly for bigger ticket items. Our data shows that sales can rise by up to 40 per cent and order values by 300 per cent.”
Over 1,000 retailers use the Pay4Later platform, and they include World Stores, The Watch Shop, Shop To, Victorian Plumbing and 77 Diamonds.
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