Finance, or Buy Now Pay Later, is a heavily discussed idea in the aesthetics industry. With thousands of solo practitioners or clinics offering it, or some being critical about their reasons why they won’t use it, the fact remains about how finance increases bookings and profits for aesthetic professionals.
However, as the number of interest-free finance lenders is increasing due to huge opportunities in our industry, practitioners might be allured to work with these lenders without knowing that they’re unregulated. The term unregulated finance can be frightening for most people, especially with 39% of the population admitting that they’re unsure. But unregulated finance doesn’t necessarily mean it’s illegal or unsafe. In this blog, we will inform you about the dangers of unregulated finance and how Faces can support your business through regulated financing.
Understanding Regulated and Unregulated Finance
To keep it short and simple, the biggest difference between regulated and unregulated finance is the amount of time set for repayments. If the loan is repayable over 12 months or more, it is regulated finance. If the loan needs to be repaid within 12 months with interest-free options, we’re dealing with unregulated finance.
Another key difference between the two is that regulated finance needs to be authorised by the Financial Conduct Authority (FCA), while unregulated buy now pay later isn’t regulated by FCA; hence the term ‘unregulated’.
Finance lender PayL8r is a unique lending provider as it offers split payments within 12 months while being regulated by the FCA.
This means unregulated buy now pay later is good, right?
Well, not necessarily. The word unregulated is there for a reason; this means that most BNPL lenders is not regulated by the FCA. This entails that consumers using unregulated finance will forfeit certain protections. Escalating complaints to the Financial Ombudsman Service (FOS) is one of the rights you would forfeit, as this is out of their scope. This means that when you’re unhappy with your service or product and make a complaint, this would be between you and the finance lender, and the scales may not be in your favour.
The blow to credit score
Most unregulated finance lenders will conduct hard credit checks. These hard credit checks will appear on your credit record and can negatively affect your credit score for up to 12 months. Hard credit checks are also viewed by other lenders as a ‘signal’ that applicants are a risky prospect for financing.
As a regulated finance lender, PayL8r does not apply hard credit checks to applications. Our finance partner on Faces only conducts soft credit checks to determine the customer’s suitability.
How do I choose the right buy now pay later lenders?
Offer/Acceptance rate
The offer rate is the proportion of favourable responses out of all the applications for a buy now pay later application. For example, if the finance lender offers BNPL to 70 out of 100 applicants, the offer rate would be around 70%. Understanding and examining the offer rates at BNPL would result in a higher frequency of approved clients for your treatments.
Tech performance
Potential clients can book and schedule a treatment 24/7 on Faces Marketplace. Therefore, having a 24/7 finance lending system is pivotal to attracting more clients. Through Faces’ partner, clients can book, apply for buy now pay later, and get an instant decision, whatever time it is!
Seamless integration
This point refers to how simple and quick you can offer buy now pay later on a customer journey. Usually, offering split payments is placed in the checkout section to inform and attract clients to seal the deal. This feature is hard to come by or can only be accessed through subscription-based platforms. Clinics and practitioners using Faces enjoy free, seamless integration and automated finance marketing for their clients. Interested? Sign up on Faces by clicking here.
Wrapping it up
Whether you’re a solo aesthetic practitioner or an aesthetic clinic owner, safeguarding your client’s financial health should be on your best interests as well. Though having a better stream of income with finance is good, informing clients to make rational-based decisions and understand the pros and cons of buy now pay later would establish better client relationships.
If you want your clinic to partner with a leading regulated finance lender, sign up by clicking here!