Is a Line of Credit Now Essential for Online Retailers During COVID-19?

Calling these days "unprecedented times" is an understatement. Along with all the uncertainties, what we do know is that mobility restrictions are critical to public health, and this takes a tremendous toll on retail. Brick-and-mortar stores are closed, and there's a major shift towards e-commerce. Consider that e-commerce sales shot up by 40 percent in the U.S. after a state of emergency was declared on March 13, boosting verticals such as toys, sporting goods, and camping. This doesn’t mean that retailers will lose touch with their loyal customers, but they will need to focus on offering the same level of service online that customers have come to expect in-store.

The change is on the customer’s side as well. The economic impact is significant, leaving people with less money to spend yet with the same needs. When it comes to consumer financing, how can retailers adapt and help its customers during this challenging time? The answer is peace of mind.

There are different types of loan programs that can be offered to a customer. Installment loans are the most popular for online purchases. This type of financing program is integrated directly to the site’s checkout, and offers the customer a one-time loan for the exact cost of the purchase in the cart, which the customer then pays back over time.

The other type of financing is a "line of credit." This isn’t connected to a specific purchase, but gives the customer the ability to complete individual purchases over time, and pay back in monthly payments only the amount that is spent.

Now is the time for retailers to consider adding a line of credit option to their websites. Consumers are in a period of financial uncertainty and need to be able to properly plan their spending for what may be an extended period of time. With a line of credit, the customer knows how much they can spend before they start shopping online, as well as what their monthly repayments would look like. There's no pressure to complete a purchase on the spot, and they can use their line of credit for any amount of purchases over time.

This doesn’t involve a physical card or any type of integration with an existing e-commerce site. A line of credit can be extended via a virtual card that's issued instantly for online purchases and is restricted to be used only on a specific site. The digital card can be accessed at any point by the customer for subsequent purchases.

Providing customers with a manageable way to plan their purchases over time and spread the cost during this turbulent period is a good way for retailers to offer their customers peace of mind. A line of credit can do exactly that.

Nufar Segal is general manager of consumer financing at Jifiti, a zero-integration point-of-sale financing solution for retailers.