Embedded lending: the next big opportunity or a niche play?

Hey!

I have written a lot about embedded payments, which refers to the integration of payments into software platforms. Companies like Shopify, Toast, and Bill generate billions in revenue from payment processing.

Adyen, in collaboration with Boston Consulting Group, estimated the embedded lending opportunity (as in potential revenue) to be $48 billion. Embedded lending is believed to be an even larger opportunity than embedded payments, and remains largely untapped.

My research suggests that individual lending programs have struggled to capture this opportunity. Despite years of effort, major embedded lending programs like Square Loans and Shopify Capital have captured a small fraction of this opportunity. Perhaps, this opportunity is not that large after all?

Or, perhaps this opportunity won't be captured by individual lending programs, but rather by embedded lending providers that power multiple small programs? Think Stripe Capital for Platforms, Adyen Capital, Parafin, and YouLend.

This is an exciting area! Shall we dive in?

Jevgenijs

p.s. I would like to thank Rhea for helping me with this research. This topic has been on my to-do list for a long time, and would probably stay there if not for her help🙏🏻
p.s.s. if you have feedback just reply to this email or ping me on X/Twitter

Upgrade to read this article