Grow your Business

Finance your Business

Run your Business

Customer Stories

Tools and Resources

Partner Stories

In the fast-paced fintech landscape, strategic partnerships are crucial for fostering innovation and accelerating growth. With a focus on 

, Pipe distinguishes itself by offering a spectrum of partnership models, each designed to cater to the varying needs of its partners and their end-users. These models range from referral partnerships to deep integrations, illustrating Pipe's commitment to flexibility and mutual growth.

At the foundation of Pipe's partnership strategy lies the referral model. This approach is built on simplicity and accessibility, allowing partners to refer their clients to Pipe's capital solutions. It's a mutually beneficial arrangement where partners can enhance their service offerings without the need for direct integration. For businesses looking for quick and straightforward ways to provide additional value to their customers, the referral model offers an entry point into the world of embedded finance.

Pipe Hosted Approach with One Data API Integration

Moving a step further, Pipe offers a hosted approach through a single data API integration. This model is designed for partners seeking a balance between 

 and a seamless user experience. By leveraging pre-approved offers based on the partner's merchants’ data, this approach allows for a more 

personalized and streamlined service directly within Pipe's platform

. It's an efficient way to offer embedded capital solutions without full integration.

 aiming for the pinnacle of seamless integration, Pipe offers a comprehensive solution through deeper integration via SDKs and APIs. This model is tailored for platforms that prioritize a native experience for their users, embedding Pipe's 

 directly into the partner's ecosystem. It transforms the way capital is accessed, making it an integral part of the partner platform's workflow. This deep integration ensures that the end-users benefit from a frictionless experience, accessing capital as if it were a native feature of the platform they’re already using. While the technical demands of a full integration are a bit higher, our expert Product and Engineering team offers support every step of the way.

Through these strategic collaborations, Pipe not only improves financial access for small businesses but also enriches the ecosystems of its partners. For instance, a software platform for SMBs can integrate Pipe's embedded capital solutions to offer their users instant access to 

 without leaving the platform. This not only enhances the platform's value proposition but also supports the growth and sustainability of the businesses it serves.

Building Success Together: Pipe's Partnership-First Approach

Implementing these partnership models requires aligning strategic goals and managing technical integrations. However, Pipe's commitment to flexibility, combined with our technical support, ensures that these challenges are navigated successfully.

Pipe distinguishes itself from traditional funding sources by prioritizing a partnership-first approach rather than merely facilitating transactions. Unlike conventional lenders that may impose rigid terms and focus solely on profitability, Pipe collaborates closely with businesses to understand their unique challenges and opportunities. This collaborative approach ensures the capital solutions provided aren’t just tools for immediate needs but are part of a strategic framework designed to support long-term growth and success.

Whether through simple referrals, hosted solutions, or deep integrations, Pipe offers a capital funding model that caters to the unique needs of our partners. This flexibility not only fosters growth and innovation but also ensures that end-users have seamless access to the financial services they need. As the fintech landscape continues to evolve, we hope our collaborative model serves as a blueprint for how strategic partnerships can unlock new possibilities and drive the industry forward.

Interested to learn more? Watch the full conversation between Luke Voiles (CEO of Pipe) and Tom Priore (CEO of Priority) 

Three ways Payfacs and ISVs can partner with Pipe to quickly launch an embedded capital offering.

Three ways Payfacs and ISVs can partner with Pipe to quickly launch an embedded capital offering to support their merchants, grow GPV, and drive new revenue

Discover Pipe's Partnership Ecosystem

As the small business economy evolves, Payment Facilitators (Payfacs) are a crucial partner enabling seamless transactions across platforms. However, in an increasingly competitive marketplace, Payfacs must continuously seek innovative ways to enhance their value proposition and strengthen merchant loyalty. One strategy that’s gaining traction is the integration of 

—a move that promises not only to transform the Payfac ecosystem but also to improve merchant satisfaction and drive growth significantly.

The Value of Embedded Capital for Payfacs

 seamless integration of working capital within non-financial platforms

, allowing merchants to access funding directly through their existing payment processing systems. This innovative approach addresses a critical need among merchants for timely access to working capital, enhancing the overall service offering of Payfacs. By embedding capital solutions into their platforms, Payfacs can provide more comprehensive financial support, making it easier for merchants to manage cash flow and fuel growth without having to look elsewhere.

Enhancing Merchant Satisfaction and Loyalty

Direct access to embedded capital addresses one of the most common financial pain points for merchants: the need for 

. Whether it's to stock up on inventory before a peak season or to bridge a cash flow gap, merchants often find themselves in need of short-term funding. Traditional lending channels can be slow, requiring extensive paperwork and long waiting periods. Embedded capital offers a swift, streamlined alternative, significantly enhancing merchant satisfaction.

Moreover, by providing these essential financial services, Payfacs can foster greater loyalty among their merchant base. Merchants are more likely to stick with a Payfac that not only processes their transactions but also supports their growth and financial health. 

Offering embedded capital can serve as a powerful differentiator for Payfacs in a crowded market. Not only does it add value for merchants, but it also opens new revenue streams for Payfacs themselves. As merchants leverage embedded capital to expand their operations, they're likely to process more transactions and generate higher volumes, in turn, increasing the processing revenues for Payfacs, along with a share of fees generated from the capital product.

Operational Efficiency and Risk Management

By leveraging the vast amounts of data that Payfacs already collect, implementing embedded capital can be streamlined and efficient. This data can be used to assess whether merchants are qualified for a working capital offer, and 

the offers are tailored to the merchant's financial health

. This process is dynamic, generating new working capital offers as merchants grow, all while minimizing the risk of defaults by aligning payments with the merchant's cash flow.

Navigating Challenges and Maximizing Opportunities

While integrating embedded capital presents numerous opportunities, it also comes with challenges, such as regulatory compliance and the complexities of financial product integration. However, these challenges can be navigated with careful planning, leveraging 

partnerships with fintech companies like Pipe

, and employing robust technology solutions.

Embedded capital is set to transform Payment Facilitators, offering a strategic tool to enhance merchant services, drive growth, and differentiate in the market. By embracing this innovative approach, Payfacs can not only improve their value proposition but also foster deeper, more loyal relationships with their merchants.

As the digital economy continues to evolve, Payfacs that are quick to integrate embedded capital into their platforms will be well-positioned to lead the way, offering a comprehensive, supportive financial ecosystem that empowers merchants to thrive.

Interested to learn more? Watch the full conversation between 

Find out how embedded capital can help payment facilitators build merchant loyalty, grow GPV, and drive revenue, while managing their risks.

Find out how embedded capital can help payment facilitators build merchant loyalty, grow GPV, and drive revenue, while managing their risks and resources

Transforming Payfac Ecosystems with Embedded Capital

 marks the evolution from traditional, standalone financial services to their integration within platforms and services that businesses and merchants use daily. Initially, financial solutions were broad, one-size-fits-all tools. However, as technology advanced, these solutions began to specialize, catering to the unique needs of specific industries or verticals. This transition from horizontal to vertical-specific tools has significantly enhanced the customer experience by providing more tailored, relevant, and efficient tools. It’s also made embedded financing much more powerful.

Embedded Finance and Its Impact on Small Businesses

For small businesses, embedded finance has been a game changer. By 

integrating embedded capital solutions directly into business platforms

, companies gain direct access to capital, without ever leaving their operational ecosystem. This 

 empowers businesses to focus more on growth and less on funding logistics.

For example, think about a coffee shop that, two decades ago, would manage transactions, payroll, and accounting through cumbersome, manual processes. Today, that same coffee shop can leverage specialized tools that handle all of this within a single platform. Now, with embedded finance, they can easily access working capital from within that same platform, with no need to compile financial statements and go to the bank.

The concept of unified commerce is emerging, where all facets of financial services—payments, banking, access to capital—are seamlessly integrated into a single platform. This unified approach makes financial management more intuitive and less time-consuming for business owners, who are often time-strapped and wearing multiple hats.

For small businesses, this could mean having a single dashboard that manages everything from inventory purchases to employee payroll, with embedded financial services like access to capital or payment processing. This level of integration not only streamlines operations but also provides businesses with a holistic view of their financial health, enabling better decision-making and fostering growth.

The evolution of embedded finance represents a significant leap forward in the way businesses interact with financial services. By breaking down the barriers between financial and operational platforms, embedded finance offers a more integrated, efficient, and accessible financial ecosystem for businesses of all sizes.

 continue to lead the way, driving innovations that promise to further transform the business landscape. In today’s market, staying ahead means embracing the integrated, seamless, and efficient solutions embedded capital provides.

This blog was inspired by the conversation between 

Payments, banking, and access to capital are coming together on unified platforms.

Payments, banking, and access to capital are coming together on unified platforms. See how embedded finance makes this possible in a whole new way. 

The Evolution of Embedded Finance Towards Unified Commerce

The Evolution of Embedded Finance: A Leap Towards Unified Commerce

Independent Software Vendors (ISVs) are at the forefront of technological innovation, crafting solutions that not only meet but anticipate the needs of businesses across industries. As these ISVs seek to provide more value and deepen user engagement, embedded finance emerges as a key area of opportunity. 

Integrating financial services—particularly access to working capital

—into software platforms can transform user experiences, open new revenue streams, and ensure platform stickiness.

 refers to integrating financial services within non-financial platforms. For ISVs, this means offering users access to financial products—such as capital, lending, payment processing, and insurance—directly within their software. This integration creates a seamless experience for users, who can access financial tools without leaving the platform, enhancing efficiency and user satisfaction.

Partnering with Embedded Capital Providers

For ISVs interested in integrating  a working capital model for embedded finance, various partnership models exist. These range from referral agreements with financial institutions to deeper tech-enabled collaborations involving API integrations. Pipe offers flexible e

 models that allow ISVs to choose the level of integration that best suits their platform and user needs. Through these partnerships, ISVs can provide embedded capital solutions that appear native to their platforms, enhancing the user experience without the need to develop complex financial services in-house.

Embedded finance within ISV platforms can be transformative. For example, business management software integrating embedded capital can enable its users to apply for and manage a loan or advance directly through the software, using data already within the system to streamline the application process. This not only simplifies access to capital for businesses but also strengthens the software's role as an indispensable tool for business operations.

Despite the clear benefits, ISVs may have concerns about implementing embedded finance, from technical integration challenges to maintaining user trust. Collaborating with established fintech partners like Pipe can alleviate these concerns. Pipe's experience and technology enable smooth integration of financial services, ensuring compliance, data security, and a seamless user experience.

For ISVs looking to future-proof their platforms and drive growth, embedding financial services offer a compelling opportunity. By integrating working capital and other financial solutions, ISVs can enhance their platform's value, foster deeper user engagement, and tap into new revenue streams. 

Pipe’s embedded capital offering isn’t a loan; it’s an advance based on a company’s revenue. This allows a wide range of businesses to access capital quickly, with an approval process that’s much faster than typical for lenders. By embedding Pipe Capital into your software platform, you give your merchants easy access to funding, including pre-qualified offers based on first-party transaction data.

Find out how ISVs can gain a strategic advantage by offering embedded financing and how simple it can be to implement

ISVs and the Future of Embedded Finance

Innovating at the Intersection: ISVs and the Future of Embedded Finance

Payment Facilitators (Payfacs) are constantly seeking innovative ways to enhance their offerings and add value for their merchants. Embedding financing options, like 

seamless integration of financial services

 that can increase merchant success and the growth of Payfacs themselves.

Embedded lending is the integration of lending services directly into the platforms that businesses already use for their daily operations. This approach eliminates the need for businesses to seek external financing solutions, providing them with fast, convenient access to capital. For Payfacs, embedded lending represents an opportunity to deepen relationships with merchants by addressing one of their most critical needs: access to funding.

Integrating an embedded capital product requires a strategic approach. Payfacs can look to 

, like those used by Pipe, which range from simple referrals to deep API integrations. These models provide flexibility in how Payfacs can offer services, allowing for a tailored approach that meets the needs of both them and their merchants.

While the benefits are clear, Payfacs still need to consider challenges such as regulatory compliance and integration complexities. Partnering with experienced fintech companies like Pipe can mitigate these challenges. Pipe's partnership-first approach ensures that Payfacs can implement embedded capital solutions that are not only compliant but also seamlessly integrated into their existing platforms.

Pipe’s embedded capital offering isn’t a loan, it’s an advance based on a company’s revenue. This allows a wide range of businesses to access capital quickly, with an approval process that’s much faster than typical for traditional lenders. By embedding Pipe Capital into your software platform, you give your merchants easy access to funding, including pre-qualified offers based on first-party transaction data.

 offers a pathway for Payfacs to significantly enhance their value proposition, deepen merchant relationships, and drive mutual growth. By addressing the critical need for access to capital, Payfacs can empower their merchants to achieve their growth objectives, resulting in increased processing volumes and revenue. As the digital payment landscape continues to evolve, embedded capital stands out as a strategic advantage for Payfacs willing to embrace innovation and partnership opportunities.

Here's how embedded lending and other embedded capital offerings can help Payfacs drive growth.

Here's how embedded lending and other embedded capital offerings can help Payfacs drive growth and become even more essential to the merchants they serve.

Empowering Growth: How Payfacs Can Leverage Embedded Lending

This article was originally published on 

Personalization has become a cornerstone in shaping products and services today. As consumers, we’ve grown accustomed to customized offerings, an expectation that's rapidly expanding into the B2B sector. Within this evolving market, the payments industry has a notable advantage: access to a vast amount of first-party data gives companies accepting payments a unique edge. This sets the stage for verticalized Independent Software Vendors (ISVs) and payment facilitators (PayFacs) to develop finance solutions tailored to specific industry requirements and even bespoke offers for a company’s unique situation.

Companies that facilitate and handle payments are sitting on a goldmine: their 

. This wealth of data holds more than just transactional details; it reveals patterns, preferences, financial health, seasonality trends, and behaviors of the customers and merchants involved.

In the broader digital landscape, the prominence of 

 is waning due to increasing privacy concerns and stringent regulations. These changes have diminished the reliability and depth of insights from third-party data sources, making first-party data even more invaluable.

First-party transaction data offers several distinct advantages:

Direct Insight: Unlike data sourced from third parties, which may be diluted or generic, first-party data is direct and unfiltered. This means a clearer picture of customer preferences and behaviors without the noise of external sources.

Timeliness: Real-time transaction data allows companies to swiftly respond to emerging trends, customer needs, or market shifts, providing agility that's critical in the fast-paced world of finance.

Relevance: By analyzing transactional trends, payment companies can discern not only what products or services a customer prefers but also when and how they prefer them. This granular level of detail allows for the creation of highly relevant product offerings.

Privacy & Compliance: Using first-party data reduces reliance on external data sources, which often come with a host of privacy concerns and regulatory implications. Companies can have better control over data handling, ensuring both security and compliance.

Armed with these insights from first-party data, payment companies are in a prime position to craft personalized financial products and services. These tailored offerings, rooted in real transactional behaviors, can resonate more deeply with customers, leading to increased loyalty and engagement. The potential extends beyond just offering products; it opens doors to proactive solutions, anticipating customer needs even before they are explicitly expressed.

Unique positioning of verticalized ISVs and PayFacs

Verticalized ISVs and PayFacs stand distinctively in the payments ecosystem, owing to their deep industry understanding and access to transactional data. This combination allows them to design highly tailored financial solutions. More than just addressing current needs, their keen grasp of industry-specific challenges positions them to anticipate and create solutions for future demands. Instead of merely adapting, they're often a step ahead, aligning their offerings closely with the evolving needs of the industries they serve, thus becoming strategic partners rather than just service providers.

Transactional data isn't just about numbers—it's a window into a merchant's daily operations. By analyzing this data, companies can 

 on a daily basis, ensuring timely financial support. Moreover, pre-qualifying merchants based on this data can lead to more effective marketing campaigns. For instance, offering funding solutions at the right time or providing merchants with indicative funding limits can result in improved customer engagement and loyalty.

Beyond immediate financial offerings, transactional data provides a roadmap for long-term relationship building with merchants. By continuously monitoring and understanding spending patterns, seasonality, and other financial behaviors, payment companies can predict potential business challenges and opportunities for merchants. This proactive approach enables companies to tailor their financial products, not only addressing immediate needs but also future-proofing merchants and building those future needs into their product roadmap. In doing so, they position themselves as invaluable partners, deeply embedded in the growth journey of their merchants.

With the recommendation engine market poised to reach $54 billion by 2030, the potential for ISVs and PayFacs is significant. These engines, powered by first-party data, can push real-time product suggestions that resonate with the merchant's immediate needs. Whether it's a tailored financial product or a unique service offering, timely and relevant recommendations can drive growth and customer satisfaction.

A recommendation engine, tapping into this financial data, could proactively suggest a tailored financing solution to help manage inventory or expand operations. Conversely, during slower periods, it might propose 

. By constantly analyzing transaction trends, payment behaviors, and historical financial data, these engines can pinpoint the exact financial product a merchant might require, even before the merchant realizes the need. This level of anticipatory service, backed by powerful algorithms, ensures that financial solutions are not only relevant but also delivered at the optimal moment, maximizing impact and fostering deeper merchant trust.

Beyond immediate financial solutions, ISVs and PayFacs have the potential to introduce credit and savings programs that genuinely matter to merchants. Relevant reward schemes, for instance, can motivate merchants to engage more with a platform. On the savings front, offering multiple high-yield savings account options allows merchants to diversify their financial goals, from short-term objectives to long-term financial security. Moreover, given the unpredictable nature of business incomes, offering investment platforms with varying degrees of liquidity and returns can help merchants optimize their surplus cash.

Maximizing merchant loyalty through tailored rewards programs

Harnessing the depth of first-party transaction data, PayFacs and ISVs are uniquely positioned to create bespoke loyalty and rewards programs for their merchants. One such approach is the introduction of Tiered Benefits. For example, merchants who achieve specific transaction milestones could enjoy perks such as reduced fees, access to premium customer support, or even the chance to engage in exclusive partnerships. 

Additionally, to foster a sense of community and expand their network, PayFacs and ISVs can roll out Referral Programs. In this model, merchants are rewarded for bringing new businesses on board. These rewards could manifest as cashback incentives or special discounts on transaction rates. In essence, by tapping into personalized data-driven strategies, PayFacs and ISVs can ensure that their reward systems resonate more deeply with their merchant partners, driving both loyalty and growth.

The payments industry is at an inflection point, with the potential to reshape its future through personalization. With the right mix of data, technology, and industry expertise, verticalized ISVs and PayFacs can craft financial solutions that not only meet the present needs of the industry but also anticipate its future demands. As the lines between B2C and B2B continue to blur, personalization stands as a key differentiator, promising growth, loyalty, and long-term success.

Pipe CPTO Namrata Ganatra shares how Payfacs and ISVs can leverage personalization and first-party data to improve merchant experience.

Pipe CPTO Namrata Ganatra shares how payment processors and ISVs can leverage personalization and first-party data to improve merchant experience and metrics

Personalization and the Payment Industry

How the Payments Industry Can Leverage Personalization to Grow GPV and Loyalty

Digital lending is growing at a rapid pace. Looking ahead, the global embedded lending industry is projected to achieve a robust compound annual growth rate of 

 from 2022 to 2029. By 2030, the entire embedded finance sector is projected to reach a value of 

These forecasts make it clear that something is shifting. As more customers come to expect convenience and ease in conducting business, embedded lending is evolving and becoming the next big era of finance. Those who don't seize the opportunities in embedded lending risk becoming irrelevant and losing customer loyalty as competition heats up.

Fintech startups and even non-financial companies are jumping into embedded lending, shaking up the traditional banking sector. This new way of doing things is forcing regulated banks to rethink their strategies and adapt.

In this article, we’ll look at the benefits of embedded lending and its future impact on banking. Before we get into that, let’s go over some of the basics.

–is the practice of integrating credit into non-financial services or products such as payment systems and financial management software. Embedded lending opens doors for companies that aren't traditional financial institutions to meet the modern consumers' desire for easy and frictionless lending experiences without having to leave the platform they're using.

Like embedded finance on the whole, embedded lending streamlines and offers a seamless consumer experience by integrating lending services into the everyday platforms customers use, eliminating the need to seek out and vet separate providers.

Embedded lending fundamentally changes the lending process by removing traditional barriers. Small business owners no longer have to make a mad dash to the bank when they need a 

.  Instead, they can seamlessly access capital right on the platform they use to process payments or manage operations. 

Example: embedded lending for Sarah's Boutique

Sarah, who runs her store on a popular e-commerce platform, notices an opportunity to expand her product line with a new fashion trend. However, she needs additional funds to 

. Thankfully, the e-commerce platform she uses partnered with Pipe, giving her several advantages:

 like Pipe, Sarah doesn't have to spend time searching for 

 or comparing different loan offers. The integration allows her to manage her business and financial needs in one place, saving time and reducing complexity by applying for an advance directly from her store's dashboard. 

Pipe uses Sarah's sales history, and revenue trends to personalize her capital offer. Pipe’s algorithms analyze her store's performance and predict future sales, offering her a funding amount and payment terms tailored to her business's unique financial situation. 

This personalized approach ensures that Sarah gets funding that fits her business. Payments flex with her sales, with no minimum payment, so she’s protected against a cash flow crunch if she has a slow month.

Sarah's application is processed using Pipe’s automated risk assessment model that evaluates her ability to pay based purely on data and the health of her revenue. 

Based on factors such as transaction volume and revenue consistency, Pipe makes an unbiased decision, providing fair access to all merchants, without accessing a credit report or a long business history.

One of the most significant advantages for Sarah is the speed of access to capital. Pipe eliminates the long waiting periods associated with traditional bank loans. Once approved, the funds are quickly disbursed, allowing her to capitalize on the new fashion trend immediately.

Embedded capital also has several benefits for the e-commerce platform Sarah uses.

Firstly, it allows the platform to create an additional revenue stream without the need to develop a new product or expand their team.  

Secondly, it increases the platform's value proposition, attracting more merchants like Sarah who are seeking comprehensive business solutions and accelerating migrations for larger capital offers. 

Thirdly, as merchants grow their businesses with the help of these loans, their transaction volumes increase, boosting the GPV of the platform. 

Finally, offering such integrated financial solutions fosters merchant loyalty, reducing churn and strengthening the platform's market position.

The role of technology in embedded lending

Technology plays a central role in the success of embedded lending. Let's take a closer look at the role of technology in embedded lending.

Technology enables the seamless integration of lending services into non-financial platforms, such as e-commerce websites, 

, or mobile apps. Through well-designed Application Program Interfaces (APIs), financial institutions and fintechs can connect with these platforms, making the lending process accessible within the user's existing digital environment, without compromising security. 

Advanced data analytics and machine learning algorithms are used to assess a borrower's creditworthiness. By analyzing a wide range of data points, technology allows lenders to make fair and accurate lending decisions. This benefits companies with limited credit history or business models that may have been underserved by traditional lending practices.

Technology enables real-time processing of loan applications and approvals. Borrowers can receive decisions within seconds or minutes, significantly reducing the time and effort required to secure a loan. This speed is a hallmark of embedded lending, making it a highly attractive option for customers.

Robust technology ensures the security of sensitive financial information and compliance with data protection regulations. It's essential to maintain the trust of customers and adhere to privacy requirements, and technology plays a crucial role in achieving this.

User-friendly interfaces and mobile applications provide a smooth and user-centric experience. Borrowers can easily apply for loans, track their applications, and access funds. This level of convenience is made possible through advanced technology design and development.

Technology allows embedded lending to scale efficiently. Financial institutions and lenders can extend their services to a wide range of non-financial platforms and reach a broader audience. This scalability is essential for the growth and adoption of embedded lending.

Automation is a key feature of embedded lending. It streamlines the loan application and approval processes, reducing the need for manual intervention. Borrowers can often receive near-instant approvals, and the entire process is more efficient.

Technology empowers embedded lending to be agile, data-driven, secure, and user-friendly. It removes many of the barriers that traditionally limited access to credit and enhances the overall lending experience for consumers and businesses alike.

The rise of embedded lending offers numerous benefits to both borrowers and lenders. Let's explore some of these advantages:

As we already explained, embedded lending simplifies and enhances the borrowing experience by allowing users to access credit seamlessly within platforms they already frequent. This eliminates the need to navigate through various websites or apps, making the entire process user-friendly and convenient.

Lenders benefit from embedded lending as it reduces the burden of extensive paperwork and manual processing. The integration of technology allows for automation, reducing the time and effort required in loan origination and servicing. This streamlined approach increases operational efficiency, leading to quicker loan approvals and automated disbursements.

Embedded lending is a game-changer for financial inclusion. It widens access to credit for a broader spectrum of individuals and businesses. Traditional lending models often overlook those with limited credit histories or unconventional business models. Embedded lending platforms leverage alternative data sources to evaluate creditworthiness, making loans available to individuals who may have previously been denied.

Embedded lending platforms often use advanced data analytics and risk assessment techniques to evaluate potential borrowers. This can result in more fair and accurate risk assessments and lower default rates for lenders, ultimately reducing financial risk.

For businesses, integrating embedded lending can create new revenue streams. Whether it's a retailer offering point-of-sale financing or an e-commerce platform partnering with lending providers, it diversifies income sources beyond the core business.

Offering embedded lending can be a significant competitive advantage for businesses, especially in crowded markets. It can attract and retain customers who value the convenience of accessing credit within their existing platforms, setting a company apart from competitors.

While embedded lending offers numerous benefits, it presents its fair share of risks and challenges. Let's explore some of the key concerns:

When lending services become part of non-financial platforms, it brings up some important regulatory issues. Financial authorities have a role in making sure that consumer rights are protected and that lending practices remain fair. Regulations must be updated to handle potential risks and ensure the financial system's stability.

Embedded lending relies heavily on data. This does raise concerns about the privacy and security of that information. To safeguard sensitive business data, embedded lending platforms need to take strong security measures and follow strict data protection rules.

One thing lenders need to keep an eye on is credit risk. Since embedded lending often considers borrowers with limited credit histories, there's a potential for risk that some loans might not get repaid. Smart risk assessment models can help lenders manage this challenge effectively, reducing the risk and potentially even bringing it below traditional lending levels.

With all the personal and financial data exchanged on these platforms, there's an increased risk of fraud and identity theft. Lenders have to make sure they have strong identity verification and fraud prevention measures in place to protect both their customers and their own businesses.

These challenges are like hurdles in a race–they may look daunting, but with the right strategy and preparation, they can be overcome, leading to even greater success in the world of embedded lending.

The future of embedded lending holds exciting possibilities and is likely to influence traditional banking significantly. Here are some emerging trends to watch:

Embedded lending is poised to revolutionize banking and lending. The future of embedded lending promises a financial ecosystem characterized by increased accessibility, efficiency, and innovative solutions, benefiting both merchants and the industry as a whole.

While Pipe is not a lender, our revenue advance allows small- and medium-sized businesses to access capital embedded in the software platforms they use every day to run their businesses. By analyzing secure, live transaction data, Pipe creates custom capital offers based on the health of the business and its revenue streams. Whether you’re looking for growth capital or looking for an embedded capital solution for your customer, you can 

Find out how embedded lending can grow your GPV and increase the lifetime value of your customers.

Find out how embedded lending can grow your GPV and increase the lifetime value of your customers while improving their experience on your platform.  

Exploring the benefits of embedded lending

Exploring the Benefits of Embedded Lending

If you've been keeping an eye on the latest developments in the fintech space, chances are you've come across the term 

With an estimated market value of over $138 billion by 2026 and a projected global value of $7 trillion in the next decade, it's clear that this isn’t just some short-lived trend; it's the real deal.

Forbes has spotlighted some compelling examples that vividly illustrate the impact of embedded finance. A standout case is Uber, which relies on Instant Pay for 70% of its driver paychecks. Then there’s Shopify, which managed a whopping $14 billion in gross payments through its Shopify Payments Service during Q3 2020.

With such success stories, it's clear that embedded finance is reshaping the landscape of financial services, empowering businesses to offer enhanced customer experiences while bolstering their own financial bottom line. And this trend is still accelerating.

In this article, we'll delve deeper into embedded finance. We’ll uncover what makes it such a game-changer and explore its significance and role in reshaping financial services and the financial landscape in general.

What is embedded finance, and how does it work? 

Embedded finance has seen a surge in popularity in recent years, driven by businesses' pursuit of a more streamlined user experience. As consumers demand faster and more convenient services and companies seek quicker payments, embedded finance has emerged as a game-changer. So what exactly is embedded finance?

Put simply, embedded finance refers to the 

 like payment processing, lending, or insurance into non-financial businesses, including online marketplaces, e-commerce platforms, and mobile apps.

In other words, it's making financial products and services readily available to a broader audience by incorporating them into the non-financial products and services they use every day.

For instance, a travel booking website could partner with a financial institution to offer travel insurance directly within their platform, or a ride-sharing app could offer users the ability to pay for their rides directly within the app without having to switch to a separate payment processing platform. It’s really just about making financial services seamlessly available where you need them most.

This seamless integration eliminates the need to redirect customers from the platform to traditional financial institutions, providing a more accessible, efficient, and seamless user experience for consumers and businesses alike.

By embedding financial products and services, businesses can now offer their customers a convenient one-stop solution for all their needs. But how exactly do businesses achieve this? By leveraging Application Programming Interfaces (APIs), businesses can embed various financial products and services, such as payments, lending, or insurance, directly into their platforms.

For example, Cafe Delight, a leading coffee shop chain, recently expanded their payment options through a partnership with a prominent payment facilitator (Payfac). Their user-friendly mobile app now lets customers order and pay for their coffee seamlessly using various digital payment methods.

- Efficient ordering and payments: Customers can order ahead and pay directly through the app, significantly reducing wait times and improving service speed.

- Integrated loyalty program: The app tracks purchases, offering personalized rewards and discounts, encouraging repeat business.

- Data-driven personalization: Utilizing customer data, Cafe Delight tailors offers and recommendations, enhancing customer satisfaction.

The result of this implementation was a notable increase in efficiency and customer retention. The streamlined payment process, coupled with tailored customer engagement, not only simplified Cafe Delight's operations but also offered valuable insights for future business strategies. Platforms like this are a huge step in digital integration for customer-centric service in the food and beverage industry..

Several key components make embedded finance so effective, including:

At the core of embedded finance is the integration of financial services into non-financial businesses. This integration can vary in complexity, ranging from simple payment processing to offering more intricate financial products like 

 and insurance, all within the same platform.

APIs (Application programming interfaces)

 play a vital role in enabling non-financial businesses to access financial services easily. In the context of 

, financial institutions provide APIs that allow businesses to access their financial products and services. 

For instance, in the early days, businesses often partnered with banks to offer basic payment processing services for e-commerce transactions. With the introduction and adoption of APIs, that’s no longer necessary. These interfaces act as bridges, making it super easy for businesses to offer a wide range of financial solutions without needing to build and maintain their own banking infrastructure from scratch.

Learn not only the definition of embedded finance but also how it works in real life to help improve financial access.

Learn not only the definition of embedded finance but also how it works in real life to help improve financial access and convenience for business owners.

Partnerships

Discover Pipe's Partnership Ecosystem

Transforming Payfac Ecosystems with Embedded Capital

The Evolution of Embedded Finance: A Leap Towards Unified Commerce

Innovating at the Intersection: ISVs and the Future of Embedded Finance

Empowering Growth: How Payfacs Can Leverage Embedded Lending

How the Payments Industry Can Leverage Personalization to Grow GPV and Loyalty

Exploring the Benefits of Embedded Lending

What is Embedded Finance and How Does it Work?

Should vertical software companies develop in-house embedded financing or partner?

Pipe Blog

SubscribeGet the best of Pipe's Blog

Partnerships

.css-13o7eu2{display:block;}Pipe Blog

Subscribe.css-hjy75e{display:block;margin-top:var(--chakra-space-2);color:var(--chakra-colors-StaticContentPlaceholder);}Get the best of Pipe's Blog

Pipe Blog

SubscribeGet the best of Pipe's Blog