Divido is a financial technology company that offers a platform for retailers, lenders, and payment intermediaries to manage point-of-sale (POS) finance. Divido’s service integrates with a retailer’s checkout process, allowing customers to apply for financing and pay for their purchases in installments.
Founded in 2014 and headquartered in the United Kingdom, Divido has expanded its operations to several European countries and the United States. The company partners with banks, lenders, and payment service providers, customizing its solutions to different markets and regulatory environments. In 2022, Divido partnered with Novuna Consumer Finance in the UK, which boosted conversion rates as high as 76% through the Divido platform.
The platform is adaptable, integrating with a variety of ecommerce platforms and in-store POS systems. Retailers that use Divido’s services can offer their customers a choice of payment plans, often with the option to pay over time without accruing interest.
Divido has gained attention for its technology and business model, attracting investments and forming ties with major financial institutions and retailers. The company’s growth reflects a broader trend in retail and finance, where customers are increasingly looking for flexible payment options.
Alongside its expansion and partnerships, Divido remains focused on its core service of providing POS finance solutions. The company acts as an intermediary, facilitating transactions between customers, retailers, and lenders, while not directly offering loans or financial advice to customers.
We’ll discuss what businesses need to know about Divido: how it works, who uses it, business benefits of accepting it as a payment method, and its alternatives.
What’s in this article?
- Where is Divido used?
- Who uses Divido?
- How Divido works
- How businesses can benefit from accepting Divido
- Divido’s security measures
- Alternatives to Divido
Where is Divido used?
Divido operates in multiple regions, each of which has its own market conditions and customer behaviors. The company also plans to expand further, raising $30 million in 2021 to enter more international markets. Let’s look at how Divido’s usage across different markets reflects local trends and regulations:
Europe, including the UK
Divido first established its presence in the UK and expanded across Europe, with the Divido Connect platform operating in France, Spain, Portugal, Italy, Belgium, and Romania. European markets are known for their strong customer protection laws and regulation of credit and financing. This regulatory environment means Divido’s platform has to be flexible and compliant with different national standards. In Europe, an increasing number of customers are opting for installment payments, particularly in ecommerce. This consumer behavior aligns well with Divido’s offering, allowing retailers to meet customer demand for flexible payment options.
The US has a well-established culture and long history of installment payments and purchasing with credit. The US market is diverse and competitive, with a large number of retailers and financial institutions. Divido’s role in this market is to provide a tech-forward, customer-friendly financing option that aligns with American customers’ familiarity and comfort with credit-based transactions.
Divido has carefully adapted to local market conditions. In regions with strong consumer credit cultures, it capitalizes on existing behaviors. In markets with stricter regulations, the platform’s flexibility allows for compliance and adaptation to local standards. This geographical spread also demonstrates a broader global trend: people are increasingly seeking flexible payment solutions, and retailers are trying to meet this demand while navigating complex regulations. Divido’s growth across markets showcases its ability to cater to these varied needs effectively.
Who uses Divido?
Online and brick-and-mortar retailers use Divido widely. Divido’s service is particularly attractive in sectors where products are typically more expensive, such as electronics, furniture, and luxury goods. Offering installment payments helps retailers increase sales by making higher-priced items more accessible to a broader customer base.
Car dealerships use Divido to offer financing options to their customers. Buying a car is a significant investment, and the ability to spread the cost over time can be a key factor in a customer’s purchase decision. Divido’s platform allows dealerships to provide a variety of financing plans, making it easier for people to afford a new or used car.
Some healthcare providers, especially those that offer elective procedures or private healthcare services, use Divido to allow their patients to finance their medical expenses. This can include cosmetic surgery, dental work, or other healthcare services not covered by insurance. By offering financing options, healthcare providers can make their services more accessible to patients who might otherwise be unable to afford them.
Education and training
Educational institutions use Divido to offer students the option to pay tuition fees in installments. This makes education and professional training more accessible, particularly when students are not eligible for traditional student loans or government funding.
Travel agencies and tour operators use Divido to let customers book and pay for holidays and travel experiences over time. This can make expensive travel packages more attainable for customers who prefer to spread the cost over a length of time rather than pay a large sum up front.
Middle-income customer segments
Divido appeals to a broad range of customers, but it’s particularly popular among middle income groups who appreciate the flexibility to manage their finances without the immediate burden of a full payment. Younger customers, who may not have extensive savings but are comfortable with credit, also show a preference for these payment options.
These diverse use cases demonstrate how Divido’s platform caters to different industries and customer needs. The common thread across these sectors is the need for flexible payment solutions that align with customers’ financial situations and purchasing preferences. As consumer behavior shifts toward more manageable payment plans, businesses across these sectors are adopting solutions like Divido to meet this demand.
How Divido works
Divido’s platform connects retailers, lenders, and customers to facilitate installment payment options. Here’s how it works:
Integration with retailers
Retailers integrate Divido’s platform with their payment systems for both online and in-store transactions. The integration process is designed to be smooth and not disrupt the retailer’s existing checkout processes. Once integrated, the option to pay using Divido becomes visible to customers at the POS.
Customer chooses to use Divido
When a customer decides to make a purchase, they can choose to pay with Divido at checkout. This option is typically presented alongside other payment methods like credit cards or PayPal.
The customer then enters their details into the Divido interface to apply for credit. This process involves filling out a form with personal and financial information. This process is straightforward and fast, often taking just a few minutes.
Credit check and approval
Once the customer submits their application, Divido performs a credit check. This is done in real time using algorithms to assess the customer’s creditworthiness. The platform is connected to multiple lenders, which allows it to find the best available rates and terms for the customer.
Loan offer and acceptance
If the customer passes the credit check, they are presented with a loan offer. This includes the terms of the loan, such as the interest rate, duration of the loan, and monthly payment amount. The customer can then choose to accept the offer.
Completion of purchase
Upon accepting the loan terms, the purchase is completed. The retailer receives the full payment for the product or service, while the customer agrees to pay back the loan to the lender through Divido over the agreed-upon period.
Customers make their payments directly to Divido according to the schedule described in their loan agreement. Divido manages these repayments and ensures they are passed along to the correct lender.
Support and management
Throughout this process, Divido provides support to retailers and customers. Retailers can manage their financing options through a dashboard, and customers can access their loan information and make payments using the Divido platform.
This system benefits retailers by allowing them to offer flexible payment options without managing credit risks or loan administration on their own. For customers, it provides a quick and convenient way to access credit at the POS, often with competitive rates and terms. The entire process is transparent and user-friendly, making it easy for customers to understand their financial commitments.
How businesses can benefit from accepting Divido
Businesses using Divido can benefit in multiple ways:
Offering installment payment options can encourage customers to make larger purchases than they would if payment is immediately due in full. This can increase average transaction value, boosting overall sales for the business.
Attracting new customers
By providing a flexible payment option, businesses can appeal to a broader customer base. This includes those who might not have the immediate funds to pay for a product or service but can afford installment payments. It’s especially appealing to younger consumers who are more accustomed to and comfortable with paying with credit.
Enhanced customer loyalty
Offering convenient payment options can improve the customer experience, increasing customer satisfaction and loyalty. A customer who finds a payment plan that suits their financial situation is more likely to make future purchases.
In markets where installment payments are not yet the norm, businesses that offer the option can stand out from competitors. This can be a unique selling point, especially in competitive industries.
Reduced financial risk and administrative burden
Divido handles the credit risk assessment and manages the installment payments. This takes a significant administrative burden off the business, allowing them to focus on their core operations without worrying about credit management.
Improved cash flow
Since Divido pays the retailer up front for the purchase, there’s an immediate positive impact on cash flow. The business gets the full payment for the sale without waiting for the customer to pay off their installment plan.
Access to market insights and data
Divido’s platform can provide valuable data and insights into customer buying behaviors and preferences. This information can be used to customize marketing strategies and improve product offerings.
Adaptability to various markets and regulations
Divido can adapt to different regulatory environments, allowing businesses to offer consistent financing options across various markets. This makes it easier for businesses with a global presence to manage their payment solutions.
Integration with existing systems
Divido’s platform is designed to integrate seamlessly with a business’s existing ecommerce and in-store systems. This minimizes disruption and ensures a smooth implementation process.
Enhanced brand perception
Offering flexible payment options can enhance a business’s brand image, positioning them as customer-centric and forward-thinking.
These benefits create value for businesses in terms of immediate financial gains, long-term customer relationships, market positioning, and operational efficiency.
Divido’s security measures
Divido strongly emphasizes security, which is necessary because of the sensitive financial transactions and personal data it handles. Here are some of the security measures Divido has in place:
Divido uses encryption to protect data. When information is sent or stored, it’s converted into a code that prevents unauthorized access. Encryption is important for safeguarding sensitive customer information like personal details and financial data.
Secure application processing
The platform processes loan applications and customer data securely. This involves verifying customer identities and performing credit checks through secure channels.
Compliance with regulations
Divido adheres to financial regulations related to data protection, such as the General Data Protection Regulation (GDPR) in Europe. Compliance with these rules ensures that the platform handles data responsibly and securely.
Regular security audits
Regular audits and assessments of its security infrastructure help the platform defend against new and evolving digital threats. These audits are conducted by internal teams and often involve third-party security experts.
Fraud detection and prevention
Divido employs systems to detect and prevent fraudulent activities. This includes monitoring transactions for unusual patterns and implementing measures to verify the authenticity of transactions.
Secure integration with retailers
For businesses using Divido, the integration of the platform with their existing systems is managed securely. This ensures that the transaction data shared between the retailer’s system and Divido is protected against unauthorized access.
User access controls
Divido provides businesses with tools to manage access to their finance platforms. Businesses can control which of their staff members can view or manage customer finance applications, reducing the risk of internal data breaches or improper access.
Secure payment processing
Payment handling and processing is secure on the Divido platform, so customers’ money is safe throughout the transaction process.
Customer data protection
Divido has measures in place to ensure that customer data is not misused and is accessed only for legitimate purposes related to the financing services.
These security measures are important for maintaining the trust of the businesses that use Divido and their customers. They provide a secure environment for managing financing options, protecting against both external threats and internal vulnerabilities.
Alternatives to Divido
Alternatives to Divido in the POS finance market vary by region, and each has its own set of features, benefits, and drawbacks. Here’s an overview some of these other services:
A well-known buy now, pay later (BNPL) service, Klarna offers instant financing at checkout. It’s popular for its user-friendly interface and the option for customers to pay later or in installments. Retailers benefit from Klarna’s strong brand recognition, which can boost consumer trust. However, Klarna’s fees might be higher compared to other options, and its widespread popularity means less brand differentiation for retailers.
Similar to Klarna, Afterpay allows customers to pay for their purchases in four interest-free installments. It’s particularly popular in fashion and lifestyle retail. Afterpay is known for its ease of use, but it typically targets a younger demographic, which might not suit all retailers.
Affirm, which mainly operates in the US, also offers various payment plans, some of which include charging interest. It’s a good fit for retailers selling higher-priced items. Customers appreciate Affirm’s transparency about interest and fees, but paying interest might be a downside for some shoppers.
As an extension of PayPal, this service offers short-term credit options. It’s a strong option due to PayPal’s large user base and well-regarded reputation. However, PayPal Credit’s offerings are more one-size-fits-all and might not offer the same level of customization as some other platforms.
This service allows customers to split the cost of purchases over time using their existing credit card, without requiring additional approvals or credit checks. The ease of use is a major advantage, but it may not appeal to customers who don’t have a credit card or those looking for longer-term financing options.
Laybuy is another BNPL service that offers weekly payment options. It’s particularly popular in the UK and New Zealand. Laybuy’s unique weekly payment structure sets it apart, but it may not be suitable for all types of purchases or customer spending habits.
Local banking partners
Some businesses opt to partner with local banks to offer financing solutions. This can build trust with local customers and offer more tailored financial products. However, the integration and management of these partnerships can be more complex and less streamlined compared to using a dedicated BNPL platform.
Larger businesses might set up their own in-house financing options. This allows for complete control over terms and the customer experience but requires significant resources to manage credit risk and regulatory compliance, along with a dedicated staff.
Choosing the right alternative depends on several factors, including the retailer’s customer base, average transaction value, market presence, and desired level of control over the financing process. Each option has a unique market position, with some more suited to smaller, spur of the moment purchases and others more appropriate for larger, considered transactions. Retailers must weigh the cost implications, customer preferences, and operational aspects when selecting a financing partner.