I first started working on the idea for Payaca back in 2018. I wanted to build a simple quoting app, but there was a key question:
Could businesses use our app to quote for work and include simple customer finance options?
I knew from launching a heating installation company from within a larger business that offering finance could form part of an easier buying experience, but the complex Financial Conduct Authority (FCA) regulations made it very difficult for the smaller businesses to offer these options.
The original solution was simple, but involved weeks of research and a prolonged negotiation with the FCA. In short, we included a link within a quote to a loan comparison page. Customers could apply, find the best rate for them, take an unsecured loan directly, then use it in full or part to fund home improvement work. This solution was simple but limited a company using Payaca purely to share information, which was handled by our quote in a very controlled way.
Later we added directly offered options where you could work with one of our partners to offer the finance plan in a way that linked it directly to the quoted work. It delivered a slicker buying experience that was more like a typical e-commerce journey that people were used to. However, it came with much higher risks for everyone involved.
We had 4 key issues:
Our first problem has always been communicating the value of finance. It’s useful to offer it as an additional payment option at the point a customer has already chosen to buy, but often we found that businesses saw it as a silver bullet that was going to bring in lots of new leads.
In reality, customers choosing a business because they offer finance hadn’t bought into the value of working with that business. They didn’t turn into valuable customer relationships.
We also found many customers overestimated their credit rating and saw higher decline rates than expected. Many times, although unfairly, this reflected badly on the business offering it. Many times we heard that a customer had a “perfect credit rating”, but got declined. Models lenders use to offer credit are a complete black box from the outside, which is a terrible customer experience.
With our simple solution, if a customer had a bad credit rating they were offered a higher rate. It’s hard to communicate why this is and it wasn’t our place to do so. We worked with multiple top lenders, so we were fairly confident most of the time the rates offered would be close to the best available for that customer.
The second problem was losing control of the customer experience, partners we worked with always had the best intentions but we found they often fell short of the level of customer experience we strived for. We often spent hours acting as a go between trying to fix communication problems. We also struggled to work with outdated technical solutions with too much scope for human error, we always tried to bring in better processes but always hit uncrossable hurdles that relied on a third party.
As we started to add huge amounts of value to our product outside of simple quoting and invoicing, we were finding that accounting for finance as a feature massively slowed us down. Every member of our team had some involvement in managing the process both in the tech team and customer facing roles. Time spent on finance always came at the expense of supporting businesses in every other area, and this didn’t feel fair.
Over the past few weeks in coming to the decision to remove finance, we spent hours talking to our customers to gather their feedback. We found that 80% weren’t bothered either way, 10% actively disliked it and 10% really valued it. When we looked at the 10% who really valued it the data showed us that most had very minimal, if any, actual success with it. The only real argument here is related to the perceived value of offering it (i.e. looking more professional, offering more options to help customers).
For the 10% of customers that do value finance, we’re working with them and our partners to offer ways that they can continue to access this support.
Overall it’s clear to me that we can deliver much more value to you without finance than we can with it.
We’re removing all support for finance features by the end of March 2022.
The reason for doing it so quickly is it will quickly free us up to make rapid progress in the key areas we’re focused on (and much more to come):
This is just the start and will be delivered over the next couple of months, the rate we can deliver value will continue to accelerate.
As ever we highly value your continued feedback, you can and I’m sure will help shape our product.
Many thanks for your continued support.
Founder & CEO of Payaca