Embedded Lending: A Solution to BNPL’s In-Store Checkout Challenges

Buy Now Pay Later (BNPL) products have gained popularity among consumers in recent years primarily because of the speed and convenience they offer. Nevertheless, they are not without their own set of challenges, according to Fintech Nexus.

BNPL, with its Pay in 3 or Pay in 4 options and no interest, has become a hit with consumers. However, it has raised concerns about untraceable debt, as many providers accept loan requests at the point of sale (POS) without credit checks. This has led to a demand for fair and responsible products from regulated financial institutions.

And for this reason, many entrants preferred the path of less resistance—online—where there still may be a dose of integration, but it is more minimal.

Integrating BNPL into physical stores is complex and time-consuming due to various third-party software and hardware providers at checkout. This process is not only tedious but also expensive.

However, embedded lending, which has emerged as a prominent topic of discussion in the world of finance and retail, offers a potential solution to BNPL’s in-store checkout problems.

Embedded lending technology has emerged as a promising solution. It allows banks and lenders to seamlessly embed their loan products within the buyer’s journey at the POS. This provides individuals and businesses with easy access to financial options tailored to their needs, including installment loans, lines of credit, split pay, and business-to-business (B2B) payment plans.

The types of loans supported by embedded lending programs tend to cater to larger ticket items and are repayable over a longer period of time. As in-store purchases tend to be of higher value than online orders, these types of bank loans are a good fit for in-store transactions.

Embedded lending supports larger transactions, making it suitable for in-store purchases. It isn’t limited to specific industries and can be deployed for essential products and services across various sectors, from healthcare to professional courses.

Embedded lending technology, first and foremost, takes into account the ability to embed within existing systems, dedicating time and resources when building its infrastructure to pre-integrate with as many terminals and POS systems as possible.

Embedded lending focuses on technological enablement, making it easier to integrate with existing systems. It offers flexibility and robustness by utilizing tools such as virtual cards, digital wallet web provisioning, and QR code payments.

By giving customers a convenient financing experience across channels, an embedded lending platform can enable financial institutions to grow their loan revenues, reach new customers where they already are, and remain competitive in today’s ever-changing lending and payment landscape.

While BNPL has become a popular payment method, it faces challenges in streamlining offerings across channels and tailoring payment options. Embedded lending technology addresses these issues by seamlessly integrating bank financing capabilities into merchant POS systems, both online and in-store. This flexibility empowers banks to provide customers with financing options aligned with their unique needs.