Retail credit has been a popular payment option with consumers for some time. However, during the pandemic it transformed from a niche financial solution into something that many shoppers now demand and actively search for when choosing where to spend, particularly when shopping online.
Offering customers the option to spread the cost of their purchases through ‘buy now pay later’ loans, or interest free or interest bearing credit has many benefits for retailers. Conversion rates can quickly grow, as more high value ticket price products are available to a wider audience. Choosing the right retail credit platform can also increase the chances of consumer credit approval, making for a much better customer experience.
If you’re thinking about diversifying your payments options, it’s important to understand consumer credit laws and how you can keep compliant. Here are some simple tips:
Since 2014, the Financial Conduct Authority (FCA) has regulated many types of consumer credit, and the rules have been updated in 2021 following Brexit and wider industrial changes.
According to consumer credit legislation, most types of credit require authorisation from the FCA in order to stay compliant, but there are some exceptions. For example, businesses offering goods in four or less installments from a year from the date of sale don’t often require a licence. Keep up to date with the regulations on the Government website.
Failing to seek proper authorisation could result in a large fine for your company, affecting your cash flow, reputation and business credit rating – so always do your due diligence before setting up a new consumer payment option.
Be clear with consumers
Like any other highly regulated industry, maintaining clear and transparent communication with customers is key.
Customer consent must be gained before any person can be entered into the lending lifecycle – our retail credit solutions automatically request this before starting the process. Secure forms also collect customer data needed to make the applications quick, efficient and compliant, such as preferred product, loan duration, loan amount and preferred finance terms.
Details on the items purchased and any relevant cover or warranty amounts can also be provided, giving customer confidence that all information on the application is provided, with no hidden surprises.
Alongside the FCA’s regulation, any UK business that contacts and stores customer information is also subject to GDPR compliance. Consent must be gained before they’re entered into any future marketing communications, which is also incorporated into our product as standard.
Keep data secure
In order to make a successful and compliant application in line with consumer credit laws, you’ll be collecting large volumes of personal data on your customers. Everything from their salary to their credit history and home address over the past three years will be stored on your system, so you’ll need to be able to prove that you’re responsible for all the data.
Our retail credit platform’s dashboard makes this information available in a format that’s easy to search, and supports good auditing practices. Paper trails can easily be logged in one secure portal.
Offering the option for consumer credit is a simple way to keep up with the changing market demands, but it’s important to ensure you’re following the required legislation to protect the reputation of your business. Choosing an experienced partner can make the process simple, improving the experience for shoppers and keeping you compliant.
Learn more about our solutions for retail credit here.