Category: Blog

Introduction

Embedded finance is a growing trend in the finance industry that involves integrating financial services into non-financial customer journeys, and it is now becoming prevalent in both B2C and B2B contexts. Embedded finance options will eventually be the norm for B2C purchases, even for traditionally conducted offline transactions. This trend helps to increase customer engagement and loyalty. As this trend continues to grow, many industries are exploring various embedded finance use cases.

What is Embedded Finance?

Embedded finance allows non-financial companies to integrate financial services or products into their digital offerings, making it more convenient for customers to purchase products and streamlining business processes. This trend has also led to embedded fintech, wherein financial service platforms integrate into commercial or financial service platforms.

In short, an embedded finance ecosystem integrates the various spheres necessary to complete the entire cycle of a financed transaction.

For instance, when a retail customer makes a purchase (in-store or online) and opts to pay for the purchase in installments, three things need to exist;

The Seller – The merchant selling the product or services through the systems they employ. In this case their Point-Of-Sale system.
In embedded finance, this is the ‘Distributor’ or ‘Embedder.’
These are retailers, software companies, and marketplaces – that integrate financial services into their products to benefit their customers.

The Lender – providing finance for the product or services purchased in point #1 for a fee and/or interest, allowing the seller to sell a product with no financial risk.
However, sometimes the ‘lender’ role is also fulfilled by the seller as a second source of revenue by offering loans with interest.
This is the ‘Balance Sheet Provider’ or ‘Financial service provider’: Banks, fintech, and other financial institutions.

And

Technology Provider – configuring and integrating the systems between the seller system and the lender system to create and maintain a seamless transaction
The ‘Technology Provider’ or ‘embedded financing platforms‘ are both experts in the seller technologies and service design and well-versed in the regulations and intricacies of providing financial services. They help stitch the embedded finance ecosystem together. They look at the customer journey to provide processes that are simplified and personalized.

A real world example would be Point of Sales financing whereby:

• The retailer would be the ‘Seller’ such as Lenovo

• The ‘Balance Sheet Provider’ would be a group of lenders bidding to offer the best consumer financing deal (long term installments financing)

• The ‘Technology Provider’, such as ChargeAfter’, enables this transaction to occur by integrating and connecting ‘The seller’ with ‘the balance sheet provider’ in an automated manner, facilitating the transaction efficiently.

Types of Embedded Finance

* Embedded finance, a multi-trillion dollar opportunity, Source: The rise of embedded finance, Dealroom and ABN AMRO Ventures, 2022

• Embedded Lending and Buy Now Pay Later (BNPL)

BNPL is an example of embedded lending. It falls under Point of Sale financing (also known as POS financing). BNPL  is a lending option that allows customers to purchase goods or services and pay for them through short term installment loans. BNPL financing is usually offered by fintech companies.

Point-of-sale (POS) financing is an umbrella term that describes a variety of embedded lending  methods and products. These include BNPL but also pay over time for longer and bigger purchases, as well as 0% APR, revolving line of credit, lease-to-own, and more.

Point-of-sale loans like these are gaining popularity and have become essential in improving the user experience and driving customer loyalty through repeat purchases.
According to a 2022 article by The Ascent, 56% of consumers surveyed in 2021 have used a buy now, pay later service, this is up from 37% in July 2020*

* https://www.fool.com/the-ascent/research/buy-now-pay-later-statistics/

Increasingly, Point-of-sale loans are integrated with online e-commerce websites as well as in-store.
Well-known big retail brands such as Best Buy, Costco,, Target, Walmart, and countless others recognize the value in offering various embedded consumer finance options in their online channels and stores with an omnichannel experience. Many of these big brands opt to integrate with consumer financing platforms such as ChargeAfter instead of developing their own.

ChargeAfter’s omnichannel multi-lender platform is designed to support merchants by providing various financing options to consumers and businesses. The platform is pre-integrated with more than 30 leading lenders, enabling merchants to offer multiple financing options using a single application directly on their e-commerce website or retail location. The platform allows for a quick financing approval process, with up to 85% of financing approvals completed in less than three seconds.

ChargeAfter’s embedded  financing platform is designed to offer shoppers various financing options, regardless of their credit history. The platform offers 0% APR, open lines of credit, short and long-term installments, card installments, lease-to-own, and B2B financing options.

There are many examples of well-known retail brands that offer embedded financing and BNPL at the point of sale. Below are some examples:

Jerome’s Furniture:

showcases its financing options already at the homepage, allowing customers to prequalify for financing offers.

In addition they embed the financing offer within the PDP:

42photo.com

Presents a promo pop up with the financial offer – welcoming any customer to to choose business financing

embedding the Point of Sale financing as part of a seamless checkout process:

Digital Wallets Integrated into Mobile or Online Platforms

Digital wallets allow customers to store and use digital currency to make payments or transfers, manage their financial accounts and track their spending. They can also be linked to traditional bank accounts or credit cards, providing a seamless and convenient way to make transactions. Examples of digital wallets include Apple Pay and Google Wallet.

• Some of Apple’s partners, to name but a few, include Best Buy, Disney, Dunkin Donuts, McDonald’s, Walgreens, Costco, Target, and Taco Bell.

• Google Pay also facilitates payment with Best Buy and other distributors.

• Loyalty programs with digital or store credit rewardsLoyalty programs that offer rewards or cashback in the form of digital currency or store credit allow customers to earn and use rewards or cashback within the platform or service they are already using. For example, credit card companies or retailers may offer rewards or cashback through loyalty points redeemed for discounts or other benefits.A familiar example of a loyalty program is the Star Bucks Rewards.

Conclusion

Embedded finance has arrived and is making its way into the finance ecosystem. The trend will continue to grow throughout all verticals of business and service providers, and more industries will adapt to it. By integrating financial services or products into their platforms, merchants  can offer a more seamless customer experience while streamlining their back-end processes. With the advent of omnichannel lending, including POS financing and BNPL, the future of B2C and B2B financing at the point of sales looks bright.

The rapidly evolving retail financing landscape presents new growth opportunities for merchants looking to expand their businesses.

Providing an omnichannel experience for consumer financing options is becoming increasingly important. With implementing a consumer financing platform a priority, it is crucial to manage the financing cycle and integrate with in-store point-of-sale systems. In this article, we will outline key points based on ChargeAfters’ Retailer Survey on the State of Consumer Financing related to retail financing and the implications for merchants in 2023.

What is in the Survey

Explore a range of retailer priorities on consumer finance, including:

 

Demand for Consumer Financing

Find out the importance of consumer financing and retailers’ take on consumer demand for POS financing.

Consumer Finance Approval Rate

In the survey, we assess the frequency of customers who walk away with a poor customer experience and lost revenues for the business and how statistics are a problem for near-prime and subprime customers.

Merchants find this information critical for expanding their financing options to remain competitive. Learn about the importance of Retail financing options such as in-store financing, checkout finance, and payment plans and how these can help merchants offer financing solutions that meet the needs of their customers.

Demand for Expanding Consumer Finance Lenders

Retailers want to serve the entire credit spectrum better and add to their lender portfolio. See how important it is for retailers to add B2B lenders, tertiary lenders (also known as a third-look lender), and secondary lenders to their financing portfolio.

The survey reveals how the drive to broaden the variety of options for consumers translates directly to improving the customer experience and revenues for the merchants, who are currently leaving money on the table.

Importance of Implementing Consumer Finance

End-to-end management of the financial cycle is crucial for financing platforms. Retailer insights reveal retailer priority on implementing a consumer financing platform and the range of essential considerations required, like, how the platform should manage the financing cycle, from reconciliations to chargebacks and dispute resolution, the ability to integrate with in-store Point-of-Sale, offering an omnichannel experience and connectivity to various lenders.

How vital is Consumer Experience & Omnichannel?

Providing omnichannel financing options is vital for most merchants, but smaller merchants must catch up. Today’s consumers often require an omnichannel experience when utilizing consumer financing and BNPL tools. The survey shows the importance of consumer experience and omnichannel from the retailer’s perspective.

The data paints a picture of consumer finance as an increasingly critical function in the business, linked to customer experience, revenues, and business growth. With technology investments and expansion a priority, merchants ask themselves – am I remaining competitive enough to support the business and my customers?

Conclusion

Download the FREE survey to gain insight into retailers’ demand for consumer financing, particularly for lower-priced items.

Find out what retailers need to improve customer experience and revenue and how crucial it is for merchants to provide an omnichannel experience for financing options. In the survey, learn how consumer financing is becoming an integral part of the customer experience, with some retailers creating a unique function for BNPL and consumer financing options.

As technology investments and expansion become a priority for merchants in 2023, they must remain competitive enough to support their businesses and customers. By understanding and addressing these critical findings in our survey, You can see how merchants can leverage the advantages of financing and capitalize on the growth opportunities offered by the rapidly evolving retail financing landscape.

Visit us at eTails Retail Conference held at JW Marriott Desert Springs in Palm Springs, California. The event is running from 27 February 2023 to 2 March 2023.
You will find our booth at ‘Startup Valley’

ChargeAfter is a b2b FinTech omnichannel innovator of Consumer Finance. We offer flexible white-label financing solutions for retailers and online merchants.

Our consumer financing solutions enable you to offer finance wherever your shoppers are. Online, In-store, and over the phone.

eTail has been bringing together global brands and retailers since 2003 and is excited to continue gathering key industry players in a safe, collaborative, and personalized way. The event is for senior-level, omnichannel & e-commerce executives and buyers who look to remain innovative and ahead of the curve by delivering value.

The event offers access to over 1800 retail professionals, of which over 53% are Director/VP level and up, making it a valuable investment of time. eTail is a must-attend for leading e-commerce and omnichannel minds and brings together a high proportion of decision-making teams with buying power

The event consolidates leading experts in retail to share knowledge and insights on the latest industry disruptions and future trends. With a 65% retailer attendance rate, it is the only event in the industry that has more buyers in attendance than sellers.

 

Furniture industry research specialist Dana French conducted the Consumer Insights Now research, which was released in September and was co-sponsored by ChargeAfter. The consumer finance study highlights customer behaviors across age groups (18-74). The primary goal of the research was to identify customer preferences and trends which would provide furniture sellers with useful information.

The survey provides data on how buyers often use consumer financing in a variety of ways. The research’s results include the kinds of goods they want to purchase, how they intend to finance such purchases, and how the furniture fits into their overall shopping list.

The research gives furniture retailers all the information they need to know about customer trends right now. For both new and established retailers looking to offer the precise services that customers want, the data may be of tremendous assistance. Especially when the study displays a variety of consumer behavior statistics.

The study emphasizes once more how essential consumer financing has become to our daily lives and how it affects every significant purchase made by a customer. Numerous survey results show that younger customers are more inclined to utilize consumer financing in their everyday life which is evidence that retail finance has become popular in recent years.

The survey’s findings could help retailers understand the value of customer financing in the furniture industry. It may be a signal for them to introduce additional buy-now, pay-later (BNPL) loans or POS financing alternatives.

The results of the survey also revealed which age group is the most significant group of consumers and which of them must be the primary category of potential customers. As a result, the data may be used by retailers to create a precise marketing strategy for upcoming sales and ensure that customers will have access to the financing choices they require. When properly applied, research may boost sales and conversion rates for shops.

 

How Consumers Plan To Pay

According to the chart above, different age groups have different plans for how they will make their payments, or use consumer finance solutions. Although the numbers for customers who use credit cards and those who prefer to pay with cash are practically identical, we can see that younger groups are slightly biased towards cash payments. Due to their familiarity with traditional banking services and installment payments, older generations are more inclined to utilize credit cards for payment.

In contrast, younger Millennials and Gen Z tend to choose Buy Now Pay Later services from financing platforms when it comes down to consumer financing options available to them.. There are two potential causes for this. Namely, younger consumers may like BNPL since it offers superior services and the benefit, occasionally, of no interest charges, or are often unable to qualify for credit cards because they do not yet have a solid credit score. Similar considerations apply to cash payments, which are often made from savings accounts and are more frequently made by older generations.

 

Are Consumer Financing Options And Promotional Terms Important To Consumers?

 

Promotional terms are significant to 49% of customers overall for home goods, whereas financing options are important to 43% of customers when we compare how financing choices and promotions trigger the purchase for the consumers. The younger generations of Gen Z are the only age group, as shown in the table above, that is more likely to make a purchase when the shop offers financing choices at the point of sale. However, this is not true for other age groups. Only 27% of Baby Boomers believe that financing alternatives at the store are the reason to make a purchase, according to the lowest numbers for consumer finance.

Though the comparison is close across practically all age groups, younger generations are more influenced by both possibilities and are more likely to purchase as a result. As we can see, promotional conditions are an excellent instrument for boosting sales and luring customers. Conversely, the businesses that choose to use both of the proposed solutions will succeed the most and draw in the most number of customers.

As shown, the Consumer Insights Now consumer finance survey provides the exact data and facts furniture retailers require to develop effective new tactics and know which consumer financing solutions to use.

 

References:

Consumer Insights Now research, Home News Now (September 11, 2022) Consumer Insights Now: Research highlights consumer buying behavior in the second half

Digital technology has disrupted the way retailers construct their marketing strategies and how customers shop, which is why the world of retail is very different today than it was just five years ago. Consumers now use their smartphones to see product reviews and compare prices. In other words, making informed decisions is much simpler for consumers. The same is true for the financial component. The form of retail financing the buyer chooses has changed due to advances in consumer financing over the past few years.

For example, the usage of point-of-sale (POS) financing increased drastically after the pandemic hit, and the trend is still going strong as BNPL and other POS financing options have become a habit for consumers. Recent data shows that BNPL is evolving beyond a mere payment option, According to McKinsey & Company, about 17% of Afterpay users initiated one or more transactions directly through the app in February 2021. This shift illustrates the evolving role of retail financing in the consumer shopping experience. As shopping patterns change, brands can develop and apply next-generation tactics to enhance the customer experience with different consumer financing options in the upcoming years.

Why is consumer financing necessary?

Retailers need help selecting the best retail financing options due to the wide range of choices available.

So why is retail financing so necessary?

To increase sales – you can offer customers lower interest rates, promotions, or discounts on your products. However, it’s becoming more attractive to consumers to pay full price if they have the option to finance their purchase and split the payment. Using lending services has become a part of our merchant offering and consumers’ lives.

In addition, customers can split payments over time without incurring any costs, thanks to current financing solutions. Because of this, BNPL lending and POS financing are among the most popular types of retail financing available today. According to data from Fit Small Business, 56% of millennials and 40% of consumers aged 25-34 have used BNPL services, making them the most significant demographic for BNPL. This trend is particularly pronounced among consumers earning between $20,000 and $50,000 annually, with 21% of this income bracket using BNPL last year.

Because of this, retail financing options are now available as an integral part of the shopping experience for products and services like furniture, home improvement, vacation, auto parts, education, and many more.

Rising popularity of omnichannel consumer lending

Consumer financing has become more popular overall during the past ten years. More consumers frequently use retail financing services to obtain the funds required for shopping or unexpected expenses. According to the statistics, consumers favor point-of-sale financing solutions. Retail financing choices give consumers freedom, making it much easier for them to manage their finances if used appropriately. Recent insights from McKinsey & Company highlight that POS financing providers are now not just payment partners but also integral to commerce enablement and co-marketing, particularly in omnichannel strategies.

Retailers today must ensure that their financing options are seamlessly integrated across both online and offline channels. Consumers expect a smooth transition between their digital shopping experiences and in-store visits, making it essential to provide a consistent financing experience. However, many retailers need help achieving this uniformity, which can lead to customer dissatisfaction or even lost sales. Retailers can effectively bridge this gap by adopting strategies such as integrated POS systems and maintaining consistent credit terms. Leading retailers who have embraced these strategies deliver the same convenience and flexibility, regardless of whether customers shop online or in-store. This approach enhances customer satisfaction, strengthens loyalty, and encourages repeat business. However, online retail financing is one of many instruments that can help buyers have a positive purchasing experience. Customers who prefer local shopping or need a nearly complex product to select or purchase online require retailers to adjust to their needs.

For instance, if a customer wants to purchase a new mattress or any other type of furniture, they may want to physically inspect it to ensure they are making the appropriate decision. Therefore, when a customer went to a store after seeing the retailers’ online pleasant retail financing options, they had to have the same financing experience. For situations like that, retailers offer in-store retail financing. To provide the buyer with the same comfortable shopping experience, several furniture stores, including Raymour & Flanigan, are now leveraging POS financing and BNPL lending features via an omnichannel multi-lender platform.

Point-of-Sale financing

POS financing has evolved into one of the critical tools for consumers, making it seamless to access flexible lending options. Younger generations are particularly inclined towards these methods, with BNPL being a significant driver. Technological advancements and deeper integration into the shopping experience have marked the rise of POS financing services. According to McKinsey & Company, POS financing providers now leverage advanced technological capabilities, such as sophisticated fraud detection models and deep integrations into shopping carts, to enhance consumer service and mitigate risks. These advancements are crucial for maintaining the effectiveness of retail financing solutions in a competitive market.

The fact that customers receive the quickest and coziest method of financing is one of the reasons the service has become so well-liked. It usually only takes a few seconds to apply and receive the funds you require when reputable third parties are involved. It also allows customers to receive the best financing options: Installments, Revolving loans, BNPL, or LTO (lease-to-own), among the most popular examples of financing.

Potential problems for retailers

Retailers will probably have to contend with a  continued challenging growth environment and higher expenses while offering solutions for their customers who are operating with cash constraints.

3 Strategies for retailers to tackle consumer financing demand

1.    Be on every channel

According to TIDIO statistics, customers utilize POS financing and BNPL differently in-store and online. All customers do not prefer online services. Some customers prefer to purchase goods and services from brick-and-mortar establishments.

This demonstrates the need for consumer financing solutions like POS financing or BNPL lending across all channels. Whether it will be for customers who choose to shop in person at the neighborhood store or for online users on websites or mobile applications, retailers need to ensure they are present on every channel to meet the diverse needs of their customers. Retail financing must be integrated into digital and physical platforms to provide a seamless experience that meets consumers wherever they shop.

2.    Offer simple and clear financing

According to the findings of Citizens Point of Sale Survey, 76% of American consumers are more inclined to make a retail sale if a payment plan is supported by an easy and smooth point of sale experience. The survey found that 62% of respondents would like fixed monthly contracts with unambiguous payment terms, and a good understanding of how the sum will be paid off as the most crucial elements. Additionally, 66% of customers believe they already have sufficient credit cards and would rather avoid adding an additional credit card merely to make a large purchase. This suggests that customers seek a different option than applying for a new credit card to make a sizable purchase at a store. Retail brands can modernize their payment solutions by moving away from the store credit approach and adding simple financing options to their customers.

3.    Offer white-labeled consumer financing

Consumers are flocking to private-brand products in the current market to combat inflation. Retailers should periodically reevaluate their category strategies to take advantage of this. Successful stores will strike a balance between fast-changing consumer tastes and pressures from individual inflation rates. This would require reconsidering their balance of national and private brands.

Consumers planning a significant purchase view trust in the organization providing the financing as one of the main reasons they prefer branded lending platforms over independent FinTech firms. This demonstrates how retailer brands can profit from branded white-label financing solutions to attract more customers. 

Additionally, financing platforms like ChargeAfter provide customizable white-label financing options. This allows the merchant to change the financing software however they see fit while giving customers the financing options they need and demand. By offering white-labeled retail financing, retailers can build stronger brand loyalty while providing trusted and customized financial solutions to their customers.

How to choose the best consumer financing company for your store

Ready to provide your clients with immediate financing? Great! But which should you pick? It’s difficult to single out the top consumer financing providers because so many fintech firms provide BNPL products. Having said that, there are some qualities to consider while selecting a BNPL and consumer financing providers:

• Positive customer experience: Businesses need to deliver satisfying user experiences. For instance, ensuring a smooth checkout experience would help prevent cart abandonment. Since over 80% of shoppers leave their carts empty before making a purchase, financing and BNPL ought to have superb integration into your customer journey. User-friendly features, and no interruptions during checkout help decrease cart abandonment.

• Perfect payment plans: By offering various payment options, retailers open up their products to more people, which can increase sales and brand loyalty. Customers and business owners alike can benefit from high flexibility. Thanks to financing platforms, any retailer can act as a lender. A financing platform gives shoppers the freedom to choose their financing conditions based on sophisticated risk assessment models. Customers will be able to select from a variety of payment plans without having to worry about not being approved.
• Reduced risks: Flexibility and scalability are features reputable consumer finance businesses can provide. You may increase sales, draw in new clients, and maintain existing ones by making it simple for people to finance the goods and services, but risk management should always be considered. Make sure to work with providers with low MDR (Merchant Discount Rate) and can provide the best interest rate for your customers. In addition, make sure the PoS financing solution of your choice has cutting-edge management including managing reconciliation, chargebacks and dispute resolution. Working with multiple lender increases redundancy as well as enabling personalization and choice. 
• Helps you control Data: Lastly, reputable BNPL and POS financing solutions should assist retailers in regaining control over consumer data and streamlining payments. This would enable retailers to understand better what customers want, need, and like. Advanced financing solutions permit retailers to give clients financing options, safeguard user information, and build long-lasting relationships with customers.

Summary

Retail financing is evolving and brands must stay on top of emerging trends to ensure they offer the services that customers want. The best way to do this is through a platform-first approach. As highlighted by recent data from McKinsey & Company, POS financing providers are integrating more profoundly into the shopping experience and expanding their service offerings to include traditional banking products. Retailers and retail financing platforms must work closely together to ensure they provide seamless, flexible, and secure financing options that meet the needs of today’s consumers.

Retail financing solutions have become critical to modern retail strategies. Retailers who successfully implement these advanced financing strategies— through an omnichannel approach, white-labeled, and improved risk management—will likely find themselves better positioned to capture consumer loyalty and drive long-term growth, even in a competitive market. Therefore, it is not just about offering financing options but about integrating retail financing into the broader retail strategy to enhance the overall customer experience and meet evolving consumer expectations.

About ChargeAfter

ChargeAfter is a leading multi-lender platform for Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees lending to every shopper, by matching the most relevant lender to every client. Using the unique consumer financing technology, ChargeAfter provides consumers with the best shopping experience. MUFG, VISA, Bradesco, BBVA, Synchrony, CITI Banks are among the investors of ChargeAfter.

The coronavirus epidemic in 2020 and 2021 forced firms to reevaluate and speed up their digitization initiatives more than ever. Years-long planned digitization efforts were finished in a matter of months. These modifications will remain as we move deeper into 2023.

The fintech industry, in particular how established companies involved finance on a different level by integrating financial processes into their whole company plan, is one of the most famous examples of digitalization. With an expected market price of above $138 billion in 2026, it’s obvious that the embedded finance age is here to stay and not simply a passing trend in finance.

What is Embedded Finance?

It can be difficult to grasp what this term actually means for individuals who are just getting familiar with the idea, as it is with any new ideas. The use of financial instruments or services by a non-financial provider, such as loan or payment processing, is known as embedded finance. An electrical retailer, for instance, might provide point-of-service insurance for items purchased in-store.

Consumer financial processes will be streamlined through embedded financing, making it simpler for customers to access the services they require when they do. In the past, customers might have needed to physically visit a bank branch to request credit in order to make a significant purchase. Thanks to embedded finance, they can now do both at the same time at the point of service. ChargeAfter, Amazon’s EMI financing choices, Klarna, and Applepay are some of the best-known examples of embedded finance.

The simplicity of embedded finance for consumers is one of its main advantages. Customers could be more likely to finish a purchase and enjoy customer pleasure, which is crucial for fostering brand loyalty, if pain points experienced by consumers are eliminated, such as the requirement to seek credit elsewhere. Because customers are more inclined to buy something and return to do so often, firms may have the possibility to boost profits.

But ease isn’t the only benefit of embedded finance. It also serves as a tool for a greater understanding of consumers, their requirements, and their purchasing patterns. Later, this information can be used to motivate more corporate growth.

Five types of Embedded Finance

1.Buy Now Pay Later (BNPL)

Modern consumers are opening a new line of credit thanks to buy-now, pay-later services. Consumers are empowered to shop differently when they have access to a greater variety of items that can be paid for overtime, whether they decide to spend more on a newborn’s travel system or a higher-end piece of home equipment. The consumer is given the option to divide the payment in order to avoid large transactions

2.Point-of-Sale Financing

Integrated lending, goes a step further with loans. Businesses looking to fund larger or more substantial purchases can integrate these financial instruments. To be able to lend responsibly, they frequently need more information, such as information on creditworthiness.

In contrast to BNPL lending, POS financing offers a suite of financing products such as B2B financing, Installments, revolving line of credit and even lease to own. Additionally, the application process is more pleasant and the application form is simpler. POS financing has grown in popularity with omnichannel and brick and mortar-retailers. For instance, Raymour and Flanigan, one of the major furniture merchants, recently began collaborating with ChargeAfter to equip its retail locations and online business with point-of-sale financing.

3. Embedded Insurance

Customers may wish to make certain that, should the worst occur, their money won’t be wasted while investing in a new good or service. Integrated insurance comes into play in this situation. Businesses are in a better position to provide insurance fast by integrating insurance finance technologies.

4.Trading and Investment

Users can connect with their physical bank to make investments in a way that suits their current financial condition and spending patterns thanks to embedded finance capabilities in investment applications. This is an illustration of how a different sort of financial services provider has used embedded finance.

5. Fintech-as-a-service

A fintech API called fintech-as-a-service enables businesses, including non-financial ones, to integrate financial functionality into their current goods, services, and programs.

The use of financial technology-as-a-service products in a whole is growing, from billing to customer acquisition and all in between.

Using Embedded Finance

Creating an embedded financial strategy that meets their customer demands can be the first step for businesses. This entails assessing your digital requirements and choosing the tools you want to integrate. Identifying your company’s objectives for its integrated finance initiative is the first stage in that process.

These could include initiatives like enhancing customer service, expanding an existing clientele, or starting a new business to cater to a particular target market or demand. For instance, if you want to enhance client loyalty, one strategy to consider is embedded payment.

For some customers, a BNPL model might increase access to products or services. You could find it simpler to establish yourself as a one-stop-shop concept with embedded finance. But before choosing the best option, you must first be aware of your needs.

Connect Lenders and Consumers

If your business is a retailer, connecting consumers with a variety of lenders can also help you. For this reason, ChargeAfter developed a platform wherein a network of global lenders are assigned to any point of sales, connecting them to customers who want to finance.

In other words, ChargeAfter’s multi-lender P2P platform connects the three parties in a way that is mutually beneficial.

About ChargeAfter

ChargeAfter is a leading multi-lender platform for Point of Sales Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees personalized lending to every shopper, by matching the most relevant lender to every client. Using the unique network and technology, ChargeAfter provides all parties, merchants, lenders, and consumers, with the best shopping experience. Phoenix, MUFG, VISA, Bradesco, BBVA, Synchrony, PICO Partners, CITI, Propel Venture Partners, Plug and Play, and other companies worldwide are among the investors of ChargeAfter.

Arvind Ronta, the Global Head of Installments at VISA, discussed in an interview at Money 20/20, how the company is revolutionizing the way cards operate and positioning itself as the industry leader in installments.

VISA seeks to provide a platform that will enable banks to offer installments at the point of sale more effectively as consumer financing and BNPL services change. By connecting lenders with a vast number of merchants, they can global acceptance, allowing the Buy Now Pay Later loan to be used anywhere. FinTechs, such as ChargeAfter, play a significant role in expanding BNPL and consumer financing options and giving merchants the opportunity to provide it in all types of point of sales – ecommerce, in store and call centers.

As banks began to work with BNPL white label platforms of FinTech companies, they gave merchants shops the option to offer various branded financial services, which all encourages the development of embedded finance. Visa strives to offer a platform and a product that both consumers and business owners will enjoy and use.

References 

• ChargeAfter, 2022. “How Visa is Turning Your Card into an Installment Powerhouse”.

“Disclaimer: This article’s information is provided for educational purposes only and shouldn’t be taken as legal advice on any subject. The author disclaims all responsibility for any damage of any kind caused by the use of such information.”

Consumers are increasingly turning to Buy Now Pay Later (BNPL) or POS financing to purchase items or services and spread out their payments over  time with a preset payment plan.

A recent poll found that during the COVID-19 outbreak, 60% of participants used a buy now, pay later service. 66 percent of respondents stated that they believe adopting buy now, pay later services to be “financially dangerous” at the same time. This is probably because services that let customers purchase items now and pay for them later might lead to overspending. Services that let you buy now and pay later may give the impression that an item is less expensive than it is. If shoppers indulge themselves, they could accumulate more credit than they can manage.

Important Data for BNPL

In 2022, there are expected to be 59.3 million BNPL users. The amount of BNPL customers has been sharply rising over time, driven in part by the financial difficulties associated with COVID and in part by the proliferation of BNPL businesses.

This line of credit is adaptable and simple to qualify for. For example, 45% of customers said they picked BNPL because paying with it was simpler than using a credit card, while 44% claim they did so because it offers more flexibility.

BNPL Use by Age

Age	BNPL User Percentage
18-24	61%
25-34	60%
35-44	61%
45-54	53%
54+	41%

BNPL Use by Average Household Income

Average Household Income	BNPL User Percentage
>$35,000	39%
$35,000-$49,999	47%
$50,000=$74,999	50%
$75,000-$99.999	43%
>$100,000	41%

People between the ages of 18 and 24 and 35 to 44 are the most likely to finance BNPLs. In general, younger age groups utilize BNPL more frequently. The income range of $50,000–74,999 is the one most probably to use BNPL. Customers in this range and those above it utilize BNP at around the same rates.

According to the most recent statistics, BNPL loan usage decreases as income and age rise. However, the trend suggests that this pattern is changing, and more and more individuals are beginning to use BNPL lending, which is hurting traditional banking products.

Top Reasons for BNPL Usage

Reasons to Use BNPL	Percentage of Users
Out of Budget Purchase	44.98%
Avoiding CC Interest	36.92%
Borrow Money	24.73%
Avoiding to Share Personal Data	20.79%
Credit Card Alternative	19.18%
Reached Credit Card Limit	17.2%
Can’t get CC	14.16%
No Bank Account	7.71%
Other	5.73%

Generally, purchasing clothing and electronics is the most frequent usage of a BNPL plan. The most frequent reason for selecting a BNPL plan is to make an expensive purchase.

Amounts People Owe to BNPL

Amount owed	User Percentage
Less than 100	28%
101-250	18%
251-500	25%
501-1000	17%
1001-2500	9%
2501-5000	2%
More than 5000	1%

BNPL Companies

Not just businesses and consumers benefit from BNPL loans; BNPL service providers also make significant profits. Even if the majority of the top financing platforms don’t charge consumers any additional fees, they nevertheless make money from the merchant companies that use their services to run their online storefronts. Simply defined, BNPL services are simple to use, but difficult to produce and secure. As a result, rather than developing a new system on their own, retailers employ the established and reliable financing systems of BNPL companies to increase their sales and conversion rates. Additionally, it draws a lot more customers overall.

Instead of just employing basic BNPL services, merchants and retailers are increasingly turning to the newly created and deployed BNPL white label services. Retailers can adopt BNPL services and do so under their name by using ChargeAfter’s white-label services. They get considerably better outcomes from branded BNPL solutions, which also improves the reputation and overall attractiveness of their business.

ChargeAfter’s BNPL Financing Platform

ChargeAfter’s  Waterfall financing increases the chance of approval  —  up to 85%.

As a result, merchants and financial institutions are using ChargeAfter’s BNPL white-label services to increase customer retention and maintain a competitive edge in the consumer financing sector.

Additionally, ChargeAfter is constantly improving and working to provide its merchants and banking partners with the best and most up-to-date services. According to Meidad Sharon, CEO of ChargeAfter, in an interview with Fintech Blueprints, the system is updated at least montly, and by the end of this year, they intend to increase the number of lenders to further ensure that every customer can get the financing they need.

References:

Haughn, R. (2022, July 8). 2022 Buy now, pay later statistics. Bankrate. https://www.bankrate.com/loans/personal-loans/buy-now-pay-later-statistics/

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