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Empowering Growth: How Payfacs Can Leverage Embedded Lending

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

Tools and ResourcesPartnershipsTechnology

By Pipe 4 Min Read — April 9, 2024

Payment Facilitators (Payfacs) are constantly seeking innovative ways to enhance their offerings and add value for their merchants. Embedding financing options, like embedded lending, is a powerful strategy, offering a seamless integration of financial services that can increase merchant success and the growth of Payfacs themselves.

Introduction to Embedded Lending

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.

Benefits for Payfacs

  • Enhanced Merchant Value: By offering embedded funding, Payfacs can provide a more comprehensive service package to their merchants. This not only helps merchants manage cash flow and fund growth initiatives but also positions the Payfac as a crucial partner in their success.

  • Increased Processing Volumes: Merchants that take advantage of embedded funding are likely to invest in their growth, leading to increased sales and, consequently, higher GPV through the Payfac's platform. It can also encourage merchants who use more than one facilitator to migrate more of their revenue through the PayFac to access more capital, increasing revenue and solidifying the merchant-Payfac relationship.

  • Market Differentiation: In a competitive market, Payfacs need to stand out. Offering embedded funding can be a key differentiator, attracting merchants looking for financial solutions alongside payment processing services. This unique selling proposition can help Payfacs capture a larger market share.

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Implementation Insights

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

Navigating Challenges

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.


Embedded finance 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.

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

Disclaimer: Pipe and its affiliates don't provide financial, tax, legal, or accounting advice. What you're reading has been prepared for knowledge-sharing and informational purposes only. Please consult your financial and legal advisors to determine what transactions and decisions are right for you and your business.

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Pipe Pipe is the modern capital platform built to connect entrepreneurs and business owners to fast, frictionless, dilution-free financing. Pipe turns all forms of revenue into up-front working capital to help companies improve cash flow, scale operations, and grow on their terms.

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