A new study has revealed that only half of consumers are satisfied with the embedded lending options available to them. This finding comes from a PYMNTS Intelligence report commissioned by Visa, titled “The Embedded Lending Opportunity.” Despite the growing availability of such services, there is a clear gap between consumer expectations and the current offerings, particularly in countries like Australia and Japan where satisfaction levels are notably low.
The study, which surveyed 8,326 consumers across six major economies (Australia, Germany, India, Japan, the United Kingdom, and the United States), indicates a significant unmet demand for better credit solutions. Although embedded lending options such as ‘buy now, pay later’ services and instant credit card offers at checkout are intended to provide convenience, they often fall short of consumer expectations, particularly among younger demographics like millennials who show only a 60% satisfaction rate.
High Interest, Low Usage
Interestingly, while the interest in embedded lending options is high—with 43% of consumers expressing a keen interest in providers offering these services—actual usage in the past three months stands at just 15%. This discrepancy suggests that while the concept is attractive, the execution or the awareness of these services might be lacking.
The study also highlights that consumers experiencing ongoing cash flow issues are more likely to utilize embedded lending services. For instance, 14% of respondents with ongoing financial strain have used these options to pay for essentials like groceries, compared to only 2.3% of those without such financial pressures. This indicates that embedded lending is particularly valued by those in tighter financial situations for managing immediate needs.
There’s a clear message for providers: nearly half of the consumers surveyed expressed a strong interest in switching to services that offer embedded lending, suggesting a significant market opportunity. However, to attract these consumers, providers need to address existing friction points and align offerings more closely with consumer needs and expectations.
