• Ivo Gueorguiev, co-founder at Paynetics


• 23.07.2021 03:30 pm
undisclosed

Firms are increasingly seeking ways to bring the ease and simplicity of digitalised consumer payments to new verticals and explore new use cases. And Credit as a Service (CaaS) is set to be one of the main drivers in this next phase of payments innovation. 

At its core, CaaS is the ability to integrate credit into other environments, create new user experiences, and leverage the wealth of transaction data generated by the purchasing behaviour of customers. Through CaaS technology, companies have the tools they need to tailor and invigorate the way they offer consumer credit. 

Its implementation can help businesses increase conversion rates, reduce churn, explore new revenue streams, and more easily scale their lending operations across borders. 

Customer Insights and reduced risk

By embedding payments into their platforms, lenders get a deeper understanding of their customers. 

Combining payments with credit enables continuous monitoring and analysis of customer behaviours. This unique insight into customer purchase patterns and financial behaviour empowers companies to personalise and differentiate their offering - giving them an edge over competitors. 

Understanding how and where customers spend their money is also the holy grail of underwriting. So not only will this data help to spot trends that boost sales, it will also improve risk management.

Increasing loyalty and conversions

CaaS brings the fintech to the relatively stale lending business. Flexible, and easy-to-use credit payment solutions can increase conversion rates for B2C lending firms. For example, merchants that provide Buy Now Pay Later (BNPL) options can lower short-term cost barriers for customers and drive sales for their business.  

CaaS modules are designed to provide a superior user experience, which increases conversion. The easier it is to pay, the less likely shoppers are to abandon their purchase. In fact, research by American Express found that 86% of buyers are willing to pay more for a great customer experience. CaaS also allows for significant cross and upselling opportunities, helping boost customer loyalty and retention.  

Expanding cross-border lending 

Through facilitating cross-border lending, CaaS enables businesses to expand and scale their operations globally. 

While flexible fulfilment options such as BNPL are replacing some traditional functions of credit cards for younger consumers, these payment options currently have limited usability. Conversely, credit cards are universally accepted, but they’re far more expensive for businesses and their customers. 

This is where CaaS can offer the best of both worlds. 

By enabling a digital wallet with a debit card, companies can offer a credit function within the context of an e-wallet. This can then be legitimately passported across borders, without the need for costly additional licenses. This is why CaaS encompasses so much more than just BNPL and can be priced more attractively for merchants and customers alike.  

Through the digital capabilities of virtual cards, CaaS supports merchants to scale their offering, while letting consumers spend in more places. 

The future of CaaS

Looking forward, it's likely we’ll see a new hybrid product emerging via digital wallet solutions. This will change the paradigm of how credit is offered from specialised institutions in a compartmentalised way, to seamlessly embedded in a wide variety of environments. By doing that, CaaS has the power to bring businesses and their customers closer together than ever before, whilst generating sustainable revenue streams.