Posted: May 15, 2023 By Kieran Darmody

4-Click Funding: How Acquirers Are Offering Instant Funding Without Putting Their Balance Sheet at Risk

Acquirers in the payments industry are partnering with embedded lending platforms to offer instant funding to SMEs, enabling them to access tailored financing solutions and improve cash flow management, while the acquirers differentiate themselves and mitigate risk through a streamlined 4-click process.

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There’s an all-too-common scenario that pervades the payments landscape: acquirers blindly falling into a commodity trap. This unwanted outcome occurs when a financial institution that processes credit and debit card transactions on behalf of merchants sees its competitive edge blunted by competition. Over time, their service becomes indistinguishable from others or falls behind those that offer more product benefits – squeezing their margins.  

To stand out from the crowd, these single-service acquirers must diversify while creating value for customers. By partnering with an embedded lending provider, they can augment their core payment proposition by integrating tailored financing solutions into their technology ecosystem.  

For small and medium-sized enterprises (SMEs) that depend on the payment services of acquirers, this ability to circumvent clunky traditional lenders and access instant funding shields them from an existential threat: cash flow bottlenecks. Suddenly they are empowered to meet essential financial commitments, such as making payroll on time, buying stock for seasonal periods, paying VAT bills, and supporting the supply chain.  

So, what is embedded lending? How can it help acquirers offer sustainable instant funding? And what are the benefits of 4-click instant funding for SMEs? 

What is embedded lending?

Embedded lending – a subset of embedded finance – is breaking down ingrained funding barriers that prevent SMEs from achieving financial independence. By seamlessly integrating credit or financing products into an acquirer’s payment processing journey, SMEs can access frictionless, digital-first lending experiences at the point of need – removing legacy providers from the lending process.  

No longer reliant on their rigid lending frameworks, SMEs are considered creditworthy thanks to flexible funding options like revenue-based financing: this allows them to access funding based on their overall business revenue, not just their credit score. Nor do they have to rely on banks’ convoluted application and assessment processes in the face of a time-critical need for finance. 

Embedded lending is powered by customisable APIs that can be tailored to meet SMEs’ needs – and the benefits are compelling for both parties: 

  • Maintains brand integrity. 
  • Differentiates the acquirer’s offering. 
  • Adds customer value. 
  • The lending process becomes faster, simpler, and frictionless. 
  • SMEs can focus on using the funds, rather than applying for them – improving their cash flow management.  

Any concerns acquirers might have about their balance sheet when embracing alternative financing solutions are allayed by embedded lending providers like Liberis who provide the initial capital and absorb the risk. 

The rise of acquirers and their lending challenges

Merchant acquiring is an integral part of card payment transaction processing. Driven by a proactive community of new entrants – such as Nets – that embrace innovation and value-added experiences, today’s merchant acquiring market is more dynamic than ever.  

A quick look at the numbers reveals that the global merchant acquiring market is growing at a brisk clip: worth $27.80 trillion in 2021, it is estimated to hit $41.75 trillion by 2026. In terms of transaction flow, the market stood at 421.03 billion in 2021 and is expected to reach 987.95 billion by 2026. Notable mega-mergers in the acquiring space – such as Fiserv and First Data, FIS and Worldpay, and Global Payments and TSYS – have helped fuel this growth. 

Amid the increasing commoditisation of the market, acquirers are being forced to pivot to meet shifting customer requirements. Traditionally, they have focused on doing one thing well. However, specialisation has become a barrier to growth in an age of value-added services, with customers demanding the same levels of convenience they experience elsewhere online – including frictionless lending. 

Acquirers have made significant progress in terms of creating differentiation by offering innovative value-added services like analytics. When it comes to lending, however, they continue to be hamstrung by common challenges – such as regulatory hurdles and risk management. For example, their dependency on narrow credit scores, which assess a borrower’s past financial information, leaves lending decisions reliant on myopic factors like payment history and outstanding debt – rather than their suitability to repay the loan in the future. 

Embedded lending: risk-free instant funding

Embedded lending is an enticing combination of flexible and timely lending experiences that not only elevates an acquirer’s offering, it also shields them from the associated risk to their balance sheet. For example, revenue-based financing judges creditworthiness decisions by horizon scanning a business’s current and future financial situation using factors like sales, inventory, and reputation. Consequently, the likelihood of repayment hinges on the borrower’s ability to repay a loan when required – not just their credit history.  

This agile approach to lending provides SMEs with two benefits that can mean the difference between survival and ceasing to exist: 

  • Once underserved by short-sighted and clunky traditional lenders, they can now access capital expeditiously when they need it. 
  • Repayments can be made in parallel with the business’s cash flow – with more repaid during profitable periods. 

Risk mitigation is one in a long list of benefits that partnering with an embedding lending platform offers acquirers – others include automated underwriting, AI-powered real-time analysis of vast data sets, and loan monitoring. For example, an embedded lending platform leverages cash flow and transaction data that enables instant – and informed – underwriting decisions. 

Partner with an expert

Deciding to integrate lending solutions into your payment journey is the easy part; putting your plans into action is less straightforward. Acquirers that choose to build the platform themselves run the risk of turning a value-added project into a time-consuming and costly headache.  

For this reason, savvy acquirers outsource their embedded lending platform to the experts. By partnering with a specialist third-party provider, they can save on initial and ongoing development costs, significantly reduce the time to market, and tailor their lending solutions by working with a partner that aligns with their goals and objectives – benefits that underscore the importance of the vendor selection process. 

To harness the power of embedded lending to offer a value-added service, acquirers must trust the third-party provider from a security, technical, reputational, and strategic perspective. Take the Liberis/Nets partnership for example: the customer-centric payment solutions provider has partnered with Liberis to power its value-added financing service – with meaningful results: improved customer retention, supercharged revenue stream, and democratised financing for its customers.  

Benefits of 4-click instant funding for SMEs 

Embedded lending is supported by three key pillars: convenience, transparency, and personalisation – all of which can be amplified by leveraging artificial intelligence (AI) to power a seamless and streamlined 4-click journey: 

  1. See the offer: The lending functionality is seamlessly embedded into the brand’s existing customer journey, enabling an automated pre-approved offer to be made. 
  2. Customise the offer: Real-time user experience optimisation customises the lending proposition depending on the brand’s offering and the customers’ requirements.  
  3. Confirm details: The applicant’s details are processed instantly, and an auto-approval decision is made followed by an auto-approved offer. 
  4. Sign the contract: The applicant accepts the offer immediately, gaining access to the funds almost instantly. 

What was once a laborious and restrictive application process for SMEs is being reshaped by this streamlined journey, with rejections or frustrating delays replaced by expedited processing times, point-of-need access to capital and improved cash flow management. 

Impact of embedded lending on the lending industry

Embedded lending’s inherent convenience, transparency, and personalisation is consigning entrenched assumptions that have pervaded the lending industry to the past – assumptions that have limited SMEs’ access to responsible and sustainable finance: 

  • Banks will always own the lending infrastructure. 
  • SMEs are too risky to engage with. 
  • New entrants into embedded finance won’t embrace lending like they have payments. 

Research by Bain Capital estimates that by 2021 around $12 billion in B2B loan transactions were made via embedded finance, which it expects to increase exponentially to between $50 billion and $75 billion by 2026. Spearheading this growth are prominent acquirers like Barclaycard, Clover, Elavon, and WorldPay. 


Specialisation is being superseded by diversification in the payments landscape – and acquirers are at the forefront of this change. Traditionally, these processors of merchants’ credit and debit card transactions have been single-service providers – an increasingly outdated model amid the commoditisation of core payment processing in the digital age.  

To differentiate themselves from the sea of competition in this saturated market, proactive acquirers are partnering with embedded lending platforms to seamlessly integrate alternative lending solutions into their ecosystems – providing a point of difference. They benefit from a unique opportunity to create new revenue streams and increase merchant retention; while the SMEs they service are cashing in on the financial inclusion they deserve. 

At the core of this for both parties is 4-click instant funding – a fulcrum of convenience and risk mitigation. SMEs benefit from expedited funding applications and improved cash flow management, while acquirers are reassured that each applicant’s suitability to repay in the future has been considered during the application process – shielding their balance sheet from credit risk. 

Get in touch

To harness the power of embedded lending and offer value-added services, acquirers can partner with trusted third-party providers. By doing so, they can save on development costs, reduce time to market, and tailor lending solutions that align with their goals. Contact us today to learn more about how embedded lending can transform your business and benefit both acquirers and SMEs. 

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