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83% of customers would use POS finance when purchasing from SME retailers

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83% of customers would use POS finance when purchasing from SME retailers
  • 28% always ask for POS and buy now, pay later options, while 27% of consumers expect them

As buy now, pay later payment options continue to surge in popularity, new research finds that the majority of customers (83%) would use point of sale (POS) finance when purchasing from SME retailers.

 The research by innovative finance solutions provider, Duologi, found that more than a quarter of customers (28%) are now asking for POS and buy now, pay later options, when shopping with small and medium sized retailers.

 A further 27% of customers said they now expect POS finance from SME retailers when shopping in-store or online, illustrating a shift in consumer payment expectations and attitudes.

 The Finance: an SME issue report, which surveyed 500 SMEs across a range of retail sectors, found that the majority (79%) of retailers have considered offering finance to their customers, with more than half (53%) of retailers that do offer POS finance, saying they do so as it makes business sense.

 The race to keep up with the rapidly evolving retail sector means that 23% of SME retailers already offer POS finance options in an attempt to keep up with their competitors. This was highlighted as one in 10 (11%) fear bigger retail players like Amazon will steal their customers, as they are able to provide multiple payment options, lower prices and have greater visibility online.

 Michael Bevan, CEO of Duologi, said: “There is no denying attitudes to alternative finance options have shifted in recent years, with the research showing the majority of customers now consider using POS finance – a 10% increase over the past two years. It is therefore important that retailers are evolving to meet changing customer expectations.

 “POS finance is also proven to increase sales and customer loyalty so those retailers that haven’t yet looked into offering it could be missing out on additional revenue – especially those that worry about the future of their business. Current POS finance systems are easy to implement and work seamlessly alongside existing finance options, in-store and online.”

 However, the research highlighted that 31% of SME retailers currently do not offer POS finance options, reporting that they weren’t convinced finance would drive ROI for their business.

 One in four (25%) SME retailers also felt that offering POS finance was too much hassle, showing that finance providers in the retail sector still have work to do when it comes to proving the value of alternative payments partners.

 Michael Bevan, continued: “POS finance has the potential to increase customer loyalty, repeat purchase rate and overall basket size, as consumers opt for higher ticket items knowing that they can spread the cost over multiple months. However, there is a job to do to convince certain retailers about the benefits of POS finance.

 “Almost a third of SME retailers do not believe finance would drive return on investment for their business, while a further 20% think it is too expensive. Given that finance drives on average 40% growth for retailers, it seems that some lenders are failing to demonstrate how finance can work for their business.”

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China’s Ant to boost consumer finance unit capital as it restructures micro-lending – sources

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China's Ant to boost consumer finance unit capital as it restructures micro-lending - sources 1

By Julie Zhu

HONG KONG (Reuters) – China’s Ant Group is in talks with other shareholders in its new consumer finance unit to bolster the firm’s capital as the fintech giant prepares to fold in its lucrative micro-lending businesses, people familiar with the matter said.

It would need additional capital of 30 billion yuan ($4.6 billion) to meet regulatory requirements, said one of the people who has direct knowledge of the plans.

Ant plans to bring most of its micro-lending businesses into the unit – equivalent to roughly 1 trillion yuan ($155 billion) in outstanding loans – a move which will allow it to maintain operations nationwide and expand more easily, said two sources.

The plans reflect intense regulatory pressure on Ant to rein in some of its operations and subject them to rules and capital requirements similar to those for banks. That pressure scuppered Ant’s $37 billion IPO last year and has seen it formulate plans to shift to a financial holding company structure.

Ant has two lucrative micro-lending businesses: Huabei, which operates like a virtual credit card, and Jiebei, a short-term consumer loan provider. Both based in the southwestern city of Chongqing, they form the bulk of its credit business which accounted for close to 40% of Ant’s revenue in the first half of 2020.

But under new draft rules published by China’s central bank in November, Huabei and Jiebei would have to limit their operations to Chongqing unless they obtain new national licences – a potentially lengthy and uncertain process.

That would not be a problem if the micro-lending businesses were part of the consumer finance arm.

Another major benefit of shifting the businesses to the consumer finance unit is that consumer finance firms can lend up to 10 times their registered capital while online micro-loan firms are only allowed leverage ratios of 2-3 times.

The new consumer finance firm, called Chongqing Ant Consumer Finance Co Ltd, was set up in August 2020 but still has not gained its business licence, three sources said.

“Regulators won’t easily greenlight the launch of the business before it fully complies with the capital adequacy rules,” said one of the people.

The sources were not authorised to speak on the matter and declined to be identified.

Ant, an Alibaba Group Holding affiliate, declined to comment. The China Banking and Insurance Regulatory Commission did not immediately respond to a request for comment.

Micro-lending – loans for small purchases such as smartphones, cameras and white goods – is hugely popular in China.

Ant and other tech platforms such as Tencent-backed WeBank and JD.com Inc have become powerful third-party intermediaries who draw in borrowers, take as much as a third of lending profit margins while the banks they partner with passively supply the credit.

Ant owns 50% of the consumer finance unit, which it plans to develop into China’s biggest consumer lending player.

Hong Kong-based Nanyang Commercial Bank holds a 15% stake while Taiwan’s Cathay United Bank holds 10%. Other co-founders include battery maker CATL and Alibaba-backed intelligent transport services firm China TransInfo Technology.

If the other shareholders are reluctant to provide additional capital, Ant plans to bring new investors, two of the people said.

Several shareholders want more clarity on the consumer finance unit’s listing prospects, they added.

Shareholders are also hoping their stakes in the unit will be converted into shares in Ant’s financial holding company, which is likely to go public, the people said.

Most of the other shareholders did not respond to requests for comment. CATL referred queries to Ant.

($1 = 6.4686 Chinese yuan)

(Reporting by Julie Zhu in Hong Kong and Cheng Leng in Beijing; Editing by Sumeet Chatterjee and Edwina Gibbs)

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Airbus reports emissions data amid climate pressure

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Airbus reports emissions data amid climate pressure 2

By Tim Hepher

PARIS (Reuters) – European planemaker Airbus on Friday joined a growing list of companies outlining the environmental impact of their products, as aviation aims to reshape itself after the coronavirus crisis.

Major companies are under increasing pressure from investors and climate change activists to report the emissions that result when customers use their products, known as “Scope 3”.

Airbus says it is the first planemaker to do so.

It says it is driving aerospace toward zero-emission flying with plans for a commercial aircraft powered by hydrogen by 2035, which it reaffirmed on Friday.

But environmentalist groups say that flying itself needs to be curbed to have a meaningful impact on climate change.

Airbus estimated lifetime emissions for jets built in two dramatically different years: 2019, which saw record deliveries on the back of an order boom, and 2020, when the pandemic sent aviation into crisis and forced Airbus to slash output by 40%.

For the 863 jets it delivered in 2019, Airbus estimated lifetime emissions of 740 million tonnes of CO2 equivalent based on an average aircraft lifespan of 22 years. That includes 130 million tonnes related to the production of fuel burned in flight.

In 2020, it delivered 566 aircraft with estimated lifetime emissions of 440 million tonnes, including 80 million for fuel.

Airbus also published carbon intensity data suggesting an “average efficiency” of 66.6 grammes of CO2e per passenger-kilometre in 2019, improving to 63.5g in 2020.

A senior Airbus official said the data included conservative assumptions for synthetic fuels, whose use is expected to grow.

Intensity-based targets measure greenhouse emissions relative to industrial output, meaning absolute emissions can rise even if the headline intensity figure falls.

‘DRASTIC ACTION’

Aviation produces 2.5% of human-induced CO2 emissions and 12% of CO2 from transport, the industry says. It has pledged to reduce net carbon emissions to 50% of 2005 levels by 2050.

“The scale of the emissions disclosed underlines the need for governments to take drastic action to rein in the climate impact of flying,” said Andrew Murphy, aviation director for Brussels-based environmentalist group Transport & Environment.

Airbus did not provide data for non-CO2 emissions, which some scientists deem at least as much of a threat as CO2. But it said it was working on initiatives that have been promoted to help address this, including improved air traffic management.

Airbus also reported emissions from its factories, giving a glimpse of a multinational network linked by boats, trucks, barges and huge cargo planes.

Its own CO2 emissions decreased by about 20% last year amid the pandemic, and Airbus purchased 21% less water in Europe. It also produced 25% less waste and potentially damaging vapours.

Airbus aims to consume 20% less energy and emit 40% less CO2 from its more than 70 sites by 2030, compared with 2015.

French jet engine maker Safran on Thursday issued some Scope 3 emissions for business air travel and waste, and pledged to expand this to the use of its engines later in 2021.

(Reporting by Tim Hepher; editing by Gerry Doyle and Jason Neely)

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E-Commerce is more important to retail than ever 

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E-Commerce is more important to retail than ever  3

By Terry Storrar, MD, Leaseweb UK

Many household high street names have been badly impacted as a result of continued global lockdowns over the past year. Debenhams, Peacocks, Jaeger, Edinburgh Woollen Mill and the members of Sir Philip Green’s Arcadia Group: Topshop, Dorothy Perkins, Burton and Miss Selfridge, have had to close their doors to the public for good.

Yet, while the pandemic restrictions put existential pressure on many retail brands, others saw an unprecedented demand for their online services. In the UK, for example, online consumer spending soared to the highest on record in April 2020 at 30.7% of the total, compared with the 19.1% reported in April 2019. But, even when bricks-and-mortar stores reopened, the demand for e-commerce services remained strong. And with continued waves of COVID-19 infections likely, there will be even more pressure placed on high street retail; it’s clear that an effective digital presence is absolutely necessary for the long-term viability of many businesses across the sector.

But, this isn’t just a matter of simply augmenting in-person shopping by launching a website that can take orders and handle deliveries. In order to run a successful e-commerce business, it’s vital to invest in the right IT infrastructure – one that will provide speed, reliability, and security to deliver an effective online shopping experience. The last thing that businesses want in these challenging times is unhappy online customers who cannot access or use retail websites efficiently, and shop elsewhere as a result.

Every cloud has a silver lining

This means striking a balance between technical and customer requirements. From a technical standpoint, hybrid cloud-based solutions are offering retailers the power and flexibility they need to deliver great online experiences. It’s an approach which delivers the most versatile mixture of physical and virtual IT infrastructure and services, enabling users to specify the optimum computing investment for their business needs.

One of its major advantages is that hybrid cloud can help level the playing field between retailers, both large and small, with affordable services that can be tailored to need and scaled up or down to meet online demand and align to cash flow and seasonal buying patterns.

Commercially, investing in a hybrid-cloud solution allows e-commerce businesses to reach customers no matter where they are, leaving them happy and more likely to return in the future – as long as the customer experience matches the website performance. It also allows the flexibility to change and adapt your services and solutions based on the requirements of your clients, meaning you can constantly manoeuvre to meet the latest trends and buying habits. However, building a solution means there are some important infrastructure, network and customer experience priorities to consider, in order to get the balance right:

Cloud Infrastructure priorities

  1. Scale – Hybrid cloud infrastructure is all about the ability to scale. To thrive as an e-commerce business, it is imperative that retail websites can handle spikes in traffic which often occur around busy shopping periods. However, this is a challenge many online store owners are unable to implement adequately, and, in the process, risk downtime when a surge in online customers arrives, with disastrous financial consequences.
  2. Reliability – The last thing customers want is to be at an online checkout and about to make a purchase, only to suddenly find that the website/app no longer works. They want to know that, even in peak retail seasons, website crashes won’t stop them from capitalising on the best promotions.
  3. Security – Most consumers will have seen big brand retailers hit with major security breaches and are now extremely sensitive about security and data privacy. Add this to the increasing levels of regulation designed to protect consumer rights and the financial system means retailers need to choose a hybrid cloud infrastructure solution that prioritises security, as well as a partner that can demonstrate a track record of excellence.
  4. Cost – Although in times of high revenue, this might not seem the biggest priority, aligning cost and revenue, and making sure costs only increase when revenues rise, is very important.

Customer experience priorities

  1. Speed – Modern retail websites must run properly, load quickly and allow customers to view products and browse without any performance lag. Long waits for pages to load will cause customers to abandon their carts to find websites that perform better. Their tolerance is measured in seconds, so there is no margin for error on site performance.
  2. Navigation – Visitors should be able to manoeuvre from product to product without any issues, and they should be able to locate what they are looking for easily. Customers need to have information readily accessible as this will keep them happy and encourage them to buy more products and services.
  3. Checkout process – This should be as simple and painless as possible. A checkout system that is overly complicated, requiring the customer to go through several steps just to place an order, will result in them abandoning the whole process in frustration or because they become suspicious that it isn’t secure. What’s more, unexpected shipping costs requiring customers to create accounts and various other factors can also bring an abrupt end to the sales process. Another often forgotten aspect of the checkout process is the integration of the payment provider. Good connectivity will mean checkout and payment processes will most probably run smoother, giving customers a better experience.

Technology partnerships: the make-or-break behind-the-scenes relationship

Given those foundational challenges, how can retailers keep their online presence as slick and effective as their in-store offering? Partnering with trusted, industry-leading hybrid cloud organisations can provide customisable solutions for each retailer’s specific needs. It’s no exaggeration to say that getting the choice of partner right can be make-or-break for online profitability.

The buying world has moved to an ‘always on’ mentality which means customers want and need to be able to shop or browse for what they need, when they need to and how they need and if you don’t align to this mentality you will not be offering customers a service matches their lifestyles.

To meet their evolving and challenging demands, retailers should aim for a comprehensive cloud solution that includes hybrid-ready product portfolios, top quality security solutions, core uptime and an extensive underlying network. In doing so, they can integrate e-commerce into their business model with the confidence that it will support and enhance their core offering, helping them meet whatever challenges the future throws at them.

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