Power tool financing is offered by hardware stores to help consumers buy upgraded tools or add high-margin accessories to their purchases for large home projects. Customer financing is important to offer because the larger chains you compete with have their own financing programs. Financing can increase the number of purchases made and the average order size.
Blispay, who sponsored this article, offers a customer financing solution for B2C hardware stores who operate brick and mortar and/or e-commerce channels. If you currently accept Visa payments there are no additional POS costs and you can offer financing in as quick as 3 days. Customers can make purchases online or in your store, and purchases over $199 will qualify for a promotion that enables them to pay it off over time.
Power Tool Financing Options
|Who’s it Right For|
|B2C hardware chains who operate retail stores and ecommerce websites that want to offer customer financing.|
|Store Cards||Stores who can afford a specialty card program and don’t mind updating their POS.|
Hardware chains with mainly B2B customers that want to offer financing for large equipment.
|Layaway Program||Stores with strong cash flows that don’t need to be paid right away for large purchases.|
1. Blispay Customer Financing
Blispay customer financing is the best solution we’ve found for hardware stores who have B2C customers because of the ease and speed of setup. The solution allows customers to take advantage of more time to pay with special financing on large purchases, which can help them buy the upgraded model they really want or to add the accessories they actually need.
If you currently accept Visa payments there are no additional costs for your business, and you can offer financing in as quick as a few days. Blispay is not a good fit for B2B customers because they only offer consumer financing. Blispay doesn’t have a minimum purchase amount, but purchases of $199+ qualify for no payments and no interest if paid in full within 6 months.
It’s a great option to help you compete with big box stores that offer their own financing solution. Your customers can use Blispay online or in your store; it’s the most flexible and versatile B2C power tool financing solution we’ve seen.
2. Store Cards
You can partner with a bank or other lending partner who specializes in offering retail credit solutions. Typically one of the solutions they’ll offer is a store card that is branded and can only be used in your store. This is a more expensive option than Blispay but it offers some personal branding benefits by putting your company logo on the card.
These store cards are built individually for you and will need either a new POS system for your store or a software upgrade before you can accept payments. Installing a new POS can be expensive and time-consuming and a store card financing solution takes 30+ days to set up.
3. Equipment Financing
Many B2B customers take out equipment loans from banks or financing companies to purchase large equipment. These loans are used to purchase large pieces of equipment with long shelf lives.
Equipment financing is typically a solution mainly for small businesses in which Blispay isn’t a fit because they don’t offer B2B financing solutions. It’s great for larger equipment purchases costing more than $10k or for title equipment and is the most common financing used in equipment dealerships.
4. Layaway Program
Layaway is a financing solution that you can offer where the customer pays off their large purchase over a period of time while you reserve the tool for them. Customers may need a layaway option as an alternative to using credit cards if they have poor credit or don’t have a large enough credit line.
Layaways typically require the customer to put 10-20% of the cost of the power tool down as good faith that they’re going to pay it off, plus interest. You get to name the terms of this financing option because you essentially act as the lender. This isn’t a good solution if your business cash flow is tight or if you want to receive the full payment up front.
While any of these power tool financing options might be a good fit for your situation, we believe the best solution for most small and medium hardware store is Blispay. It’s great for small, medium, and even large hardware chains that are looking to offer customer financing quickly without incurring additional point of sale costs. For these reasons, we’ll primarily focus on Blispay throughout the rest of the article.
How to Offer Power Tool Financing in 5 Steps
Offering customer financing in your hardware store has a very similar process, regardless of type. The major differences are going to depend on the point of sale equipment needed and the merchant fees you’ll be charged. Blispay offers the easiest solution because if you currently accept Visa payments you can accept Blispay.
The 5 steps to offering power tool financing are:
1. Apply With a Financing Company
The first step is to find a financing company that works for your specific needs. For example, some customer financing options will only fund in-store purchases, which won’t work for you if you want to offer financing to online shoppers. Other financing solutions have minimums or maximums that can limit customer flexibility.
Many financing companies will have lengthy application processes that require you to submit documentation about your business, such as a P&L or Balance Sheet. Big banks like Wells Fargo or Synchrony have good financing programs, but they can be time-consuming to get started, taking as long as 30 days or more.
With Blispay, on the other hand, you’ll just need to fill out a brief online survey and a representative will be in touch with the details of the program and to answer any questions you may have. If you both feel like a partnership is worthwhile, all you’ll have to do is sign a simple merchant agreement. Merchants have completed the entire application process in as little as 1 hour.
2. Make Your Payment System Compliant
In order to process customer transactions, you’ll typically have to accept the financing payment at your point of sale (POS). For some power tool financing solutions like branded store cards, this could mean purchasing and installing new point of sale systems, implementing a new software system, putting new accounting procedures in place, and hours spent training your employees.
Replacing a POS system can be costly and take weeks to complete. You’ll pay between $1,000 and $5,000 per terminal, just for the hardware. For example, if you own a chain of 10 stores with 5 POS stations per store it could cost at least $50K to switch, and that’s before factoring in any software or installation costs. The software could cost you an additional $1K – $2.5K per station, and you’ll likely be charged hourly for the actual installation.
It’s much easier and more affordable to work with Blispay’s customer financing solution. All you need in order to accept Blispay payments is the ability to accept Visa cards. If you currently take Visa, then you won’t have to change anything related to your point of sale. This is a very cost-effective solution in comparison to other options that force you to overhaul your entire POS system.
3. Advertise Your Power Tool Financing Option
It’s important to ensure your customers know about your financing offer. Put the financing details on big signs throughout your store and have a sign at each point of sale station for your customers to see when they check out. You should also advertise online that you now have a new power tool financing option available.
Employees don’t need to have much involvement in the financing process with Blispay. For example, if a customer comes in and wants a new 15 amp fixed based router he may only think he can immediately afford the 12 amp model. All your employee has to do is mention the financing offer and show him where to apply online, and he could be walking out with the model he wants within minutes.
The goal is to make sure that every single customer who walks into your store or browses your products online knows exactly what your financing program is and how they can sign up for it. Many financing companies like Blispay will offer marketing materials for e-commerce and physical stores like signs and pamphlets to help you in this effort.
4. Help Your Customers Apply
Once you have a customer interested in power tool financing, you’ll show them how to apply. This process might vary depending on your financing company, but typically requires some sort of application followed by a quick approval or denial of the applicant.
With Blispay, the entire application process takes place on your customer’s smartphone or personal computer. It’s a simple process that involves filling out an application with some basic personal information and it only takes a few minutes. You’ll just simply need to direct them to the web address (which Blispay will provide) where they can apply online, and can even include the information in your marketing materials.
5. Accept Customer Payments
Once your customer has been approved for financing you can accept their payment directly at your POS. How quickly you’re able to accept payments, and how you accept them, will vary by financing company. Typically, you should be able to type a card number or credit account number into your POS and allow your customers to make a purchase on credit.
Customers approved for Blispay will be shown a digital version of their Blispay card that you can use to type into your POS terminal if they’re in your store, or that they can type into your existing checkout form if they’re on your website. After, they’ll be mailed a physical card that they can use for future purchases.
Benefits of Offering Power Tool Financing
There are many benefits to offering Blispay’s customer financing product at your hardware stores, from increasing your total sales and average basket size to gaining repeat customers. Your customers will benefit by spreading out large purchases over 6 months, and it will benefit your store in a number of ways.
1. Increases Your Average Sale Amount
Blispay has seen average sales for customers using their financing products increase by as much as 150% in some stores than customers who don’t use Blispay financing. As more customers finance purchases with higher AOV’s, your overall sales will likely increase as well.
Customers are very likely to spend more money with you in the future if you offer them financing. In fact, 66% of consumers make at least one additional purchase of $500+ in the future with a store that offers financing. That’s money that should go to increasing your total sales instead of losing that revenue to a competitor like Home Depot who offers customer financing.
Let’s say, for example, that a customer is building a dining room table and needs a new table saw. Offering a financing option could help her upgrade from the basic model selling for $300 to the high-end version they really want at $600. That same customer could also add accessories to the purchase, further increasing the basket size. This, over time, will increase your average sales amount as more and more customers look to finance larger purchases and/or become repeat customers.
2. Increases Customer Loyalty
Customers might shop somewhere else if they get a financing offer from one of your competitors. A recent survey shows that 42% of consumers are more willing to shop at a retail location that offers customer financing. The number increases to 55% for millennials. It’s becoming more important to offer customer financing in your store if you want to compete.
Blispay doesn’t have a minimum purchase amount and purchases of $199+ can qualify for a no payments, no interest promotion if paid in full within 6 months. Offering this to your customers can enhance the customer experience by fulfilling their needs. Not having to look elsewhere for financing gives the customer a chance to purchase a table saw or a cordless nailer in the future.
3. Fast Approval Process
One of the great things about Blispay’s customer financing option is that your customers can get approved quickly, right inside your store. You can offer financing and your customers may be approved to purchase power tools within minutes. This helps you get extra sales and your customers get out of the store and started on their project.
4. Free For You to Offer
With Blispay’s customer financing option, there are no monthly fees and you’ll incur zero additional merchant fees. It’s a cost-effective solution with plenty of upside for your business. What’s more, it’s free and simple to advertise the availability of financing with Blispay; all you have to do is put up signage in your store and messaging on your website.
5. Improves Customer Satisfaction
When doing a home-based project, your customers likely want the highest quality tools. Sometimes they don’t have the cash on hand to pay for it, even if they can afford it. Spreading out payments over 6 months helps them pull the trigger on equipment they want but might not buy otherwise.
Additionally, if you’re using Blispay’s customer financing, your repeat customers are rewarded with 2% cash back on future purchases made at your store or your e-commerce site.
6. Helps You Compete With Big Box Retailers
You’re likely competing with big box retailers like Lowes or Home Depot in at least some of your hardware store locations. These stores offer their own financing programs that can draw customers away from your store if you don’t offer something. Some customers expect a financing option and others will need it in order to make large purchases.
Blispay offers the easiest and most affordable customer financing option for hardware store chains. If you currently accept Visa card payments then you could be approved and ready to offer customer financing within 1 business day. It can help you retain your customers and increase their average purchase size every time they’re doing a project, and it won’t cost you any additional fees to offer it.
Blispay Power Tool Financing Rates, Terms, & Qualifications
The costs and terms of customer financing vary by financing company. Some will require you to purchase new POS systems and many will charge a small fee of 1 – 5% for each financed sale. Blispay costs you nothing in addition to the processing fees you already incur to accept Visa credit cards, and you can get it set up in as quick as 3 days.
Blispay Power Tool Financing at a Glance
|Time for Merchants to Qualify||As little as 1 day|
|Merchant Fees||No additional fees beyond your standard credit card processing fees|
|Employee Training Required||Minimal|
|Type of Borrower||Prime or Prime Plus|
|Card Details||No payments and no interest on all purchases over $199 if paid in full within 6 months|
|Time for Customers to Qualify||A few minutes|
Customers typically use Blispay because of how easy it is to sign up and use. Prime borrowers can qualify by filling out a short application directly on their phone right in your store or online on your e-commerce site. They’ll receive a quick credit decision and if approved, they’ll be ready to finance their purchase. Each approved customer will get 6 months of special financing, but will have to pay accrued interest if they don’t fully pay it off within 6 months.
According to Blispay’s CEO, Greg Lisiewski:
“Blispay is the only financing product that works for businesses who conduct sales through both e-commerce and brick and mortar channels, simplifying start-up costs, operations, and customer understanding.
If you accept Visa credit cards than you already accept Blispay and may have even received Blispay financed purchases in the past. It doesn’t cost anything extra to have a customer finance a purchase with Blispay. All you have to do is promote that it’s an available option, and some of our merchants are seeing an AOV for Blispay purchases that are 35%-150% higher than non-Blispay purchases.”
Blispay is as close as you can get to a plug and play customer financing option. You can apply today and start accepting Blispay card payments as quickly as tomorrow. Customers who pay with Blispay can spend an average of 35% more in stores than customers who pay with other methods. There are no additional merchant fees.
The Bottom Line
Power tool financing gives your customers the opportunity to make large or additional purchases and can help you compete with big box stores like Lowes or Home Depot. Your customers expect a financing option, and offering one can increase your average store sales and customer retention.
Blispay helps you offer power tool financing to your customers in your store and online. You can accept Blispay payments just like you would any other Visa card purchase. It’s easy to setup and simple to maintain. You can apply today and be up and running in as quick as 3 days without paying any additional merchant fees.