Instant financing is an easy-to-use, revolving line of credit that consumers apply for within a merchant’s online checkout. It allows consumers to spread purchases over time with low APR financing offers, and provides an alternative to credit and debit cards when paying for an online purchase.
Why do consumers care so much about it? “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.”
The online study was fielded between April 10 and 13, 2017 by Researchscape International on behalf of Klarna North America. The survey of 2,024 consumers, ages 18 and older, was designed to better understand the behaviors and attitudes of consumers towards instant financing. Consumers were quota-sampled using 32 different cells (gender by age by region) to closely match the overall national population.
In terms of how instant financing might impact their spending while shopping online, 39% of consumers indicated they would spend more money on a purchase if they had the option of instant financing.
Other key findings of the survey include:
- 47% would like to be presented with an instant financing option while shopping online
- 28% have used instant financing while 68 percent have not and 4 percent were not sure if they had
Although consumers want instant financing options online, they also want the experience to be easy.
Smartphone owners, 88% of consumers who responded, were asked about the ease and willingness to enter certain types of personal information when applying for instant financing. Among the information seen to be “too much trouble” to enter were Social Security number and bank account numbers (51% each), and credit card numbers (40%). On the other hand, just over a tenth of consumers found it to be too much trouble to enter an email address (11%), birthday (12%) or spouse’s name (12%).
Consumers also want to the experience to be fast, which is a common pain point today. A majority (52%) expect to wait three or more minutes to be approved for instant financing. 28% would expect to wait two minutes and just 20% would expect to wait under a minute. Klarna’s approval process typically provides an approval in under a minute with only simple, top-of-mind information required.
“American consumers want choice and to be in control of how they pay for their online purchases,” said Lofgren. “When it comes to instant financing, Klarna is prepared with the most seamless and quickest instant approval process in the industry requiring just a few fields of information and all while remaining on our merchant partners’ sites.”
Interested in adding instant financing to your online checkout and how it can drive your conversion? Learn more!