What is Embedded Credit & How it is Transforming the Credit Ecosystem?

The seamless integration of Lending-as-a-Feature into digital platforms is referred to as Embedded Credit. Instead of redirecting clients to a third-party site, platforms can offer credit to their customers with a familiar interface at the time of demand creation.

Embedded Credit Infrastructure firms, who supply full-stack lending solutions to digital platforms, make this possible. Underwriting, KYC, working with banks, and customer service are all part of the software architecture. It helps them to quickly launch and execute loan initiatives at a lesser cost. Embedded Credit, in the end, results in higher margins on FinTech goods and additional routes to market.

3 Goals of Embedded Credit for Business

Enabling core business

Smooth credit enablement immediately supports business and increases the sector in industries such as B2B E-commerce or FMCG. For example, merchants with credit can place greater orders than they might otherwise.

Vertically scaling business

Financial services as a product offering helps software companies scale vertically. Digital platforms are vying to become the industry’s leading one-stop-shop technology provider. Vertical markets have a winner-take-all mentality, therefore financial services integration has become critical.

The initial step toward vertical expansion of digital platforms was digital payment. Payments are now an integral part of any digital platform. It eliminates the need for users to go to a third party in order to execute a transaction. Other financial services have been following behind, but are now quickly catching up.

Alternate revenue streams

Through commissions, Embedded Finance assists businesses in monetizing their consumer base.

Use Cases of Embedded Credit

Image Source: Finbox

As Embedded Finance becomes more widely used, it’s fascinating to see how different firms have applied it to their specific use cases. Here are some examples of how Embedded credits being implemented in various industries through various digital platforms, as well as how it is affecting those businesses.

B2B E-Commerce Marketplace

MSMEs have a high demand for short-term loans, but finding it can be difficult. At checkout, B2B E-Commerce systems provide sellers Buy-Now, Pay-Later (BNPL) choices.

This B2B credit option, which is driven by credit lines, is the fastest-growing E-Commerce payment method and is gradually becoming the standard. Customer acquisition for BNPL apps has increased by 162%, and BNPL is estimated to account for 3% of worldwide E-Commerce spend by 2023.

Image Source: Business Insider

Accounting Apps

If MSMEs choose to, they can use BNPL to buy on credit and pay off later. This enables them to grow their business and handle working capital shortages while also enhancing the digital platform’s AOV and CLTV.

Retail Tech Platforms

Image Source : eMarketer

Retail-tech platforms that cater to SMEs can use Embedded Finance to diversify their income streams and monetize their customer base. They can offer customised finance to their consumers through a revenue-share relationship with an Embedded Finance platform. These revenue-share arrangements bring a new type of revenue called “usage-based revenue,” which takes less time to scale up than subscription-based revenue. They can help platforms increase income per user by 5x.

B2B Credit

Pirimid allows manufacturers, merchants, distributors, factories, and wholesalers to provide their consumers tailored credit products. BNPL (immediate credit at checkout), credit lines up to 5 Lacs, overdrafts, invoice financing, and accounts receivable financing are some of the options available.

HR Tech & Payroll

On employee portals, they offer personalised credit solutions to employees, such as salary advances and small personal loans (to help them meet contingencies). When it comes to repayment, the borrowing employee’s income is transferred to the lender after the EMI has been deducted, and the repayment is made directly from the employer’s current account.

Credit rates are reasonable and not available on the open market to employees. This increases talent recruiting and retention as well as staff morale and performance.

Logistics Platform

These companies provide fuel and maintenance finance to trucking fleets and drivers. This allows its partners to obtain funds more easily during moments of fluctuating demand without having to rely on external parties. As a result, the logistics platforms’ reputation increases, resulting in increased client acquisition and retention, as well as additional revenue streams.

Business Aggregator Companies

Embedded Finance can be used by companies like Zomato and Swiggy to provide small loans to its partners to assist them enhance their service level. For example, delivery partners may be eligible for vehicle purchase and maintenance loans, as well as working capital loans for their businesses.

By using driver ratings, trip details, and other factors, ride-sharing businesses like Uber and Ola can offer personal loans to its driver-partners. They can also use collection tactics such as deduction at source.

Challenges Solved by Embedded Credit

In the Indian loan industry, there are inherent inefficiencies that Embedded Finance directly addresses. Let’s look at what these are and how to deal with them.

New to credit society


India is essentially a credit-deprived country. Because data to assess borrowers is either absent or insufficient, credit is either inaccessible or expensive. This lengthens the time it takes to approve a loan and makes the underwriting process more expensive.


Embedded Finance uses a variety of data sources, including device data, cash flow data, and platform data, to underwrite borrowers more quickly and efficiently.

Digital discovery


It’s difficult to find credit products online. The majority of the Indian population is digitally illiterate, making it difficult to look for, compare, and select credit products using typical digital channels.


Embedded Finance tackles this problem by placing financial products in the right environment and educating users.

Expensive small ticket loans


Small-ticket digital loans are prohibitively expensive. Obtaining, processing, and servicing a loan digitally is currently too expensive for a lender. These fixed costs, along with the scarcity of accurate consumer credit data, render the majority of the Indian populace ineligible for loans.


Embedded Finance reduces the cost of executing a loan by removing overheads (such as marketing expenditures), speeding the digital lending path, and providing hooks for servicing the loans.

Rigid credit products


Lenders provide restrictive credit packages that do not meet the customer’s specific needs.


Embedded Finance allows lenders and anchor platforms to work together more effectively. It takes advantage of the platform’s in-depth knowledge of the consumer and tailors the credit product to the end-individual customer’s demands. Buy-Now-Pay-Later in B2B and B2C E-Commerce is one such example.

The Bottom-line

With its tech-focused approach and proven underwriting stack, Pirimid provides effective customer-centric Embedded Credit solutions that meet with the highest regulatory standards. Lenders will benefit from higher profit margins. They must create partnerships with digital platforms in order to tap into the market’s varied pool of clients. For the consumers, the most exciting portion is yet to come. Embedded Finance will provide customers from all economic and social groups with affordable, personalised, and easy-to-access financial services.


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