GLOSSARY: Embedded Lending

What is embedded lending?

Embedded lending is the process of offering loans, credit and other financing options directly to consumers and businesses at the point of sale, embedded within the native customer journey.

Traditionally, customers seeking financing options would need to apply through a third-party, typically a bank, lender or other financial institution. The process was often time-consuming and paperwork-heavy.

With embedded lending, the customer financing options are seamlessly integrated within the merchant or service provider’s sales process, enabling customers to obtain financing quickly and easily at the exact time and place that they need it.

What are the benefits of embedded lending?

Embedded lending is beneficial to banks, lenders, merchants and B2C and B2B customers. 

    Benefits for Lenders:

      By embedding their loans within the customer purchase journey, lenders are able to easily acquire new customers, build their brand presence at the point of sale, cross-sell to existing customers, and onboard new merchants at scale.

      Benefits for Merchants:

      Embedded lending can increase sales, average order value and customer loyalty. 

      By embedding responsible financing options from reputable lenders at the point of sale, sellers make it easier for their customers to make purchases that they might not have otherwise been able to afford, while simultaneously protecting the customer from unmanageable debt.

      Benefits for Customers:

        Embedded lending offers convenience, flexibility, and transparency. 

        Instead of having to navigate the complicated and often intimidating process of applying for a loan, customers can quickly and easily obtain financing directly within the merchant’s buyer journey. 

        Furthermore, because the financing options are integrated into the sales process, customers can clearly see the cost of their purchase, including any interest or fees associated with the loan, before making a final decision.

        Another benefit of embedded lending, when provided by a bank or regulated lender, is that it can help consumers build or improve their credit score. By making regular, on-time payments on a loan obtained through embedded lending, customers can establish a positive credit history, which can help them qualify for more favorable lending terms in the future.

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