Application Frictions Slow Australians From Adopting Embedded Lending

Embedded lending is growing in popularity around the world. It offers convenient, streamlined access to financing for specific expenses from within merchant, business and other platforms. This proves especially impactful for individuals and microbusinesses and small businesses (MSBs) that want to better align cash flow and expenses.

In Australia, 13% of consumers and 11% of MSBs have recently used embedded lending, with much greater adoption among key segments. For example, 20% of millennial consumers have recently used this type of lending, as have 26% of small businesses.

However, embedded lending users widely experience friction that detracts from their experience. The biggest problem area is the application process. PYMNTS Intelligence’s research reveals other friction points that lenders need to address to enable this type of lending to reach its potential.

“The Embedded Lending Opportunity: Australia Edition,” a PYMNTS Intelligence report commissioned by Visa, explores the state of play in Australia for the consumer and MSB market segments. The report draws on a 360-degree study of lenders and end users, conducted between Jan. 13 and March 15, 2024.

Inside “The Embedded Lending Opportunity: Australia Edition”:

• What this type of lending is and how it differs from traditional lending products
• How the market in Australia compares to those in other major economies
• Which consumers and businesses are more likely to use this type of lending
• The critical role of cash flow stability in predicting demand
• The pain points consumers and MSBs experience when using this type of lending
• The obstacles that lenders in Australia face in rolling out these products
• The factors that predict how likely a consumer or MSB is to switch to a provider that offers this type of lending

Our research reveals that interest in this type of lending is strong in Australia. Lenders should reconsider their hesitations about developing embedded lending products.

This report includes crucial information for lenders looking to become market leaders in embedded lending. Download the report to learn more about what’s next in Australia.