siliconindia | | February 202019dise through instant installment loans. Startups are re-inventing lending at the point-of-sale. POS lenders are partnering with merchants to provide shoppers -- both in-store and online -- access to capital.With the mass adoption of mobile phones and the ar-rival of the Age of the App, the ability to access a form of credit nearly as simple as the credit card became more practical. If more and more people's "card" is their smartphone, then flashing an approval code on their phone from a point-of-sale lender isn't much of a stretch. Helped along by FinTech-enabled online marketplace lenders, the attraction of what had been a less-popular form of consumer credit grew.The bottom line is that consumers want a simple and comfortable experience when they make a large purchase, and research shows that retail brands can modernize their payment model by moving away from the co-brand/store credit approach of the past. There is tremendous opportunity in this space, and well-known technology brands have already started to create ripples and bring about the much-needed disruption. The role of POS For consumers, POS lending offers transparent, fixed-payment loans as a simpler alternative to credit cards. For merchants, offering POS financing can help boost sales, increase conversion rates, and smooth cash flows. While POS installments is not a new business, the com-bination of consumers' aversion to credit cards and more effective underwriting algorithms has created fresh mo-mentum in the market.If POS lending startups can effectively measure their risk, these startups will thrive. Advantages of adapting to POS-based fundingCombining lending with payments has multiple benefits - 1. Increased machine adoption, stickiness, and us-age: It acts as an incentive and a value-added service to increase the utilization of POS terminals. As merchants discover their ability to borrow against their transac-tions, they tend to do more transactions. Many POS pro-viders and FinTech have reported a definite increase in customer loyalty and adoption because of the combined proposition of lending with payments. 2. Reduced EMI burden: Most cash advance pro-grams allow merchants to opt for a daily deduction from their swipes to repay their interest fees. This means that the merchant can pay in regular installments instead of monthly, and this helps them manage money better.3. Ability to create a credit bureau footprint: Once the merchant successfully borrows and repays, their bu-reau score goes up, and they are then able to borrow at better rates as their risk profile becomes more evident to other lenders.Opportunities in the POS Funding SpaceThe Merchant Cash Advance program is a great financ-ing option for merchants who accept card payments and can be used to incentivize payment adoption and reduce EMI burden. India POS terminals market is forecasted to exhibit a CAGR of more than 11%, in value terms, during 2017-2022, primarily owing to increasing gov-ernment focus and initiatives aimed at digitizing the country's economy.Technology-enabled Point-of-sale Finance, or Point-of-sale Lending, has become attractive to all three legs of the consumer credit stool. It appeals to consumers who want what they want -- now -- but with somewhat more control and more flexibility than traditional credit card purchases allow. And it calls to both online and store-based merchants who wish to even more ways to enable them to make a sale while the consumer is hot to trot.The Future of POS Funding Currently, 30 lakh POS devices are deployed across In-dia, but astonishingly there are approximately more than 5 core registered businesses over the country. This mas-sive difference in the number underscores the untapped opportunities in India POS terminals market and pros-pects for a lucrative business. A report by Global Market Insights, Inc., has predicted: "India POS terminals indus-try to surpass a valuation of USD 3 billion by 2024 hav-ing recorded a revenue worth USD 450 million in 2016".Digital payments are projected to grow multi-fold over the next decade leading to billions of financial foot-prints that can be used very effectively to provide secure credit. Aggregated merchant base, transaction data, and continuously advancing technology will be critical pro-pellers for this industry, and a merchant friendly fee struc-ture with paperless/branchless execution can result in exponential growth.
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