Embedded finance as a way to increase customer loyalty
Embedded lending allows companies to offer their customers convenient and affordable financing options when they need it most. This blog explores some of these options and the types of companies already adopting the phenomenon.Return to blog posts
Embedded lending is a type of embedded finance that allows companies to offer loan and credit products to their customers without needing to set up the necessary infrastructure from scratch.
Bridging the gap between brands & finance
With embedded financial services, companies can offer financial services throughout the digital customer experience and prevent customers from navigating away from their website or dashboard to complete a transaction.
Embedded lending can help companies increase revenue and customer loyalty by providing merchants with access to convenient and affordable financing options at the point of sale or even within their dashboards. This can be especially beneficial for businesses with unexpected cashflow issues, to purchase stock or equipment or even just to pay unexpected bills.
Various embedded lending products
There are a variety of embedded lending products that companies can offer, including:
- Buy now, pay later (BNPL): BNPL allows customers to purchase items and spread out the payments over time, often without interest.
- Revenue-Based Finance: Revenue-Based Finance provides businesses with quick access to cash in exchange for a percentage of future sales.
- Equipment financing: Equipment financing allows businesses to purchase equipment without having to pay the full cost upfront.
- Inventory financing: Inventory financing helps businesses finance their inventory so that they can meet customer demand.
- Invoice factoring: Invoice factoring allows businesses to sell their unpaid invoices to a factoring company in exchange for immediate cash.
With more customer data and better financial relationships with your customers, companies can use embedded finance to acquire, retain, and increase customer lifetime value while generating revenue in new ways.
Embedded finance and customer loyalty
Embedded lending can also be used to increase customer loyalty. For example, companies can offer their customers loyalty rewards points for using their embedded lending products. These points can then be redeemed for future purchases, discounts, or other benefits.
Overall, embedded lending is a powerful tool that companies can use to increase revenue, improve customer loyalty, and grow their business.
Here are some specific examples of embedded lending in action:
- Worldpay: Worldpay offers its merchants a variety of embedded lending products, including BNPL, merchant cash advances, and inventory financing. For example, Worldpay Working Capital and Worldpay Business Finance are offered to merchants in partnership with Liberis.
- Vagaro: Vagaro is a cloud-based business management software platform for the beauty and wellness industry. Vagaro offers its merchants Vagaro Capital through its partnership with Liberis in as little as 4 clicks. This allows Vagaro’s merchants to focus on what really matters – growing their businesses.
- Klarna: Klarna is a BNPL company that partners with a variety of retailers to offer customers the ability to purchase items and spread out the payments over time. Through its partnership with Liberis, they are able to offer funding to their merchants in as little as 4 clicks.
These are just a few examples of how Worldpay, Vagaro and Klarna are using embedded lending to improve customer experience, provide their merchants with much-needed access to finance to help them grow and thrive.
Embedded lending is a rapidly growing trend, and more and more companies are offering these products to their customers. If you are a business owner, you should consider offering embedded lending products to your customers to improve your bottom line and grow your business.
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