The concept of embedded lending, a subset of embedded finance, is gaining traction as an important trend in consumer financial behavior. Visa, among other companies, is championing its potential, emphasizing the need for consumer education about its benefits. Embedded lending allows consumers to access credit tools or borrowing capabilities directly within a merchant, provider, or FinTech platform, providing contextualized lending options during transactions. Visa's own embedded lending innovations, such as Visa Installments, have led to significant conversion spikes, offering users effective cash flow management strategies and increasing satisfaction among consumers.
Research from Visa and PYMNTS Intelligence underscores growing consumer interest in embedded lending, with many expressing dissatisfaction with current financing options and a willingness to switch allegiances to platforms offering lending options. However, hesitancy persists due to concerns about data sharing and trust issues. Visa stresses the importance of transparency in disclosures and the need for a variety of installment plans to cater to different consumer needs and profiles. Despite challenges, enterprises offering embedded lending options stand to gain significant repeat purchase rates, particularly among younger demographics like Generation Z and millennials, indicating a promising future for embedded lending in consumer finance.
