With new point-of-sale credit services becoming more popular, banks and retailers must find a way to benefit from a swiftly growing market to avoid losing income and market share.

Point-of-sale (PoS) credit finance products and services have been used in different forms for a long time, but in recent years this market has changed significantly. New services such as Klarna, Clearpay, and PayPal Credit are being used by more consumers in thousands of retail outlets across the UK and online. They provide a mix of low- and zero-interest credit options, supported in some cases by manufacturers paying the cost of the credit offered.
Adoption of these services remains low, but the speed at which consumers are signing up for them means the £10 billion PoS credit market is growing at more than 15 percent per year according to Kearney’s research.

Consumers like these services in part because they are already used to making convenient, instant payments when buying goods online. Financially savvy consumers in all income brackets are also attracted to zero percent interest deals, which may tempt them to spend more than if the credit was unavailable.

Our findings show that a growing number of consumers, particularly younger consumers, are happy to use a well-crafted PoS credit proposition that provides ease of use, value for money, and transparency over charges. This market could offer huge commercial opportunities to financial services companies and retailers. If they fail to grasp that opportunity, other players will step in instead, to capture the income, transaction data, and customer relationships this market will create (see figure 1).