Update: UK Adoption of Embedded Lending Falls Short of Potential

Embedded lending promises convenient, streamlined access to financing within merchant and business platforms. This proves especially impactful for individuals and microbusinesses and small businesses (MSBs) wanting to align their cash flow and expenses.

Despite most lenders in the U.K. offering this type of lending, use in the U.K. lags other markets. PYMNTS Intelligence finds that just 12% of U.K. consumers and 14% of U.K. MSBs have recently used it. There are bright spots, however, with greater adoption among key segments. For example, 21% of Generation Z consumers have recently taken advantage of this type of lending, as have 20% of small businesses generating between £1.4 million and £8 million in annual revenue.

Embedded lending users widely experience frictions that detracts from their experience. The biggest problem area is the application process. We find 48% of consumers and 60% of MSBs that recently used this type of lending report application issues. Lenders that address these issues could reach and retain more customers.

“The Embedded Lending Opportunity: U.K. Edition,” a PYMNTS Intelligence and Visa collaboration, explores the state of play for embedded lending in The U.K. 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: U.K. Edition”:

• What embedded lending is and how it differs from traditional products
• How the market in the U.K. 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 the demand
• The pain points consumers and MSBs experience when using this type of lending
• The obstacles U.K. lenders face in rolling out these products
• Which consumers and businesses are more likely to switch to providers offering this type of lending

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 the U.K.