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

In Germany, 14% of consumers and 10% of MSBs overall have recently used this type of lending. We find much greater adoption among key segments. For example, 20% of millennial consumers have recently taken advantage of embedded lending. Among smaller businesses, 18% of those generating between €1.5 million and €9.3 million in annual revenue have used it.

However, users widely experience friction. The biggest problem area is the application process. The fact may be one factor limiting the adoption of this type of lending in Germany. Lenders that address these issues will reach and retain many more customers.

These are some of the key findings explored in “The Embedded Lending Opportunity: Germany Edition,” a PYMNTS Intelligence report commissioned by Visa. This edition details the state of play for embedded lending in Germany 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.

Inside “The Embedded Lending Opportunity: Germany Edition”:

• What embedded lending is and how it differs from traditional products
• How the market in Germany 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 Germany face in rolling out 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 Germany.

The post Consumers and Smaller Businesses Form an Untapped Embedded Lending Market in Germany appeared first on PYMNTS.com.

While Zelle is often considered a tool for peer-to-peer transactions, iWallet developed a notification system that uses Zelle to provide an efficient way for SMBs to send and track invoices, according to a Wednesday (Sept. 25) press release.

The combination of iWallet and Zelle for invoicing eliminates processing fees when Zelle is used, enables easy reconciliation and tracking, and provides real-time notifications on payment status, according to the release.

“Adding the ability for [SMBs] to receive invoice payments via Zelle democratizes payments,” iWallet founder and CEO Jim Kolchin said in the release. “The Zelle integration builds upon our commitment to innovation and expanding the accessibility of digital payments.”

IWallet’s field service point of sale app is designed to accept payments in the field, according to the company’s website. The app’s users include home service businesses like appliance repair, lawn care and cleaning services.

The integration of Zelle is the latest in a series of capabilities added to the iWallet payment app. In earlier enhancements, the firm integrated PayPal and Venmo and enabled real-time mobile check deposits powered by the FedNow® Service.

Fifty-one percent of Americans regularly use peer-to-peer apps like Zelle and Venmo for quick and easy money transfers, according to the PYMNTS Intelligence report “P2P Payment Potential: Promoting Convenience While Protecting Consumers.”

The appeal of these apps includes convenience, speed and the added security of dealing with a trusted financial partner, the report found.

During the first quarter, consumers’ and businesses’ use of Zelle increased about 30% year over year, Early Warning, the company behind Zelle, said in April.

The number of transactions completed using the service rose 29% to 639 million, and the amount of money sent grew 31% to $180 billion. In addition, the number of financial institutions on the Zelle network topped 1,900 in the first quarter.

“It’s clear that our user base for Zelle is growing and ever-more engaged, and we are committed to continuing to bring trust to the financial moments that matter to them through strong fraud prevention and robust regulatory oversight and compliance,” Albert Ko, who was CEO of Early Warning at the time, said when announcing the figures.

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The new capabilities, announced by the financial platform Wednesday (Sept. 25), include Local Transfer – an international payment option for small- to medium-sized businesses (SMBs) — along with upgrades to BILL’s instant payment and invoice financing payment offerings.

“SMBs are increasingly facing more complexity as they make payments to vendors, partners, and customers both locally and around the world,” Mary Kay Bowman, general manager for payments and financial services at BILL, said in a news release.

“This is why BILL continues to enhance our payment experiences to give SMBs more flexibility to make the payment choices businesses need and to manage and optimize their cash flow,” she added. “BILL’s sophisticated payment infrastructure gives SMBs the ability to meet unique customer and supplier payment needs, while accelerating payment speed and reducing risk.”

With Local Transfer, businesses can make faster same-day international payments to vendors in their local currency without having to work with intermediary banks and take on the associated fees, the release added. Transactions are delivered directly to local banks abroad, letting businesses pay overseas vendors ‘like a local’ from anyplace in the world.

Meanwhile, BILL’s enhanced payments experience now lets businesses send payments to their vendors in the U.S. within minutes with the new BILL Accounts Payable Instant Payment option. Businesses can also get easier access to capital via the company’s Accounts Receivable Invoice Financing offering.

PYMNTS Intelligence has been monitoring some of the challenges facing SMBs recently, with research showing that these businesses often find themselves locked in an endless battle to manage cash flow, forcing them to focus on survival rather than growth.

“Many SMBs use outdated cash management practices, which leads to mounting pressures from delayed payments and inefficient processes,” PYMNTS wrote recently. “For many SMBs, limited cash reserves force a focus on immediate survival rather than long-term growth. Seventy percent of these businesses hold less than four months’ worth of cash reserves, leaving them vulnerable to operational disruptions.”

And with the vast majority of revenue eaten up by operational costs, SMB owners are often left juggling a fragile cash flow that threatens their stability.

Additional research shows that many SMBs are turning to FinTech solutions to overcome manual processing constraints.

“Despite a forecasted 50% surge in payment volumes and a 46% rise in invoicing over the next three years, many SMBs remain saddled with outdated systems,” PYMNTS wrote.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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The new SMB (small- to medium-sized business) Suite, announced Tuesday (Sept. 24), is designed to support secured and unsecured lending, while streamlining deposit account origination, among other benefits.

“The financial services industry has long struggled with a range of issues in the SMB lending space,” Amount said in a news release. “Accurately assessing the credit risk of small businesses, adhering to complex regulatory requirements, and overcoming slow loan approval processes are just a few of the hurdles institutions face. Additionally, high operating costs and competitive pressure from fintech companies have intensified the need for more efficient and effective solutions.”

The release pointed to a survey conducted last year by the Federal Reserve that showed that 80% of small businesses expect their banks to deliver streamlined digital services and faster loan processing to stay competitive and efficient.

“We developed these enhanced capabilities to help financial institutions sharpen their competitive edge in attracting and retaining small business customers,” said Adam Hughes, CEO of Amount.

“In today’s market, where small business owners prioritize exceptional service and comprehensive solutions, our platform enables banks and credit unions to deliver a seamless, integrated experience for both credit and deposit origination — driving customer satisfaction and operational efficiency,” Hughes added.

PYMNTS spoke last week with Andrea Moe, vice president of customer success at Amount, about the need for lenders to embrace digital processes.

“Digital basically upends manual, paper-heavy and operationally cost-intensive processes,” Moe said during a conversation for the PYMNTS series “What’s Next in Payments: How Do You Do Digital?” adding that these processes have traditionally defined legacy banking systems.

She stressed that adopting digital tools within the financial services space not only improves operations and customer engagement, but also leads to greater profitability.

This shift is especially crucial as customers have increasingly come to favor speed, convenience and automation, the report added.

“Part of our role is helping our clients with their own customers by looking at the overall effectiveness of their funnel, of their policies, of the ways that they’re mitigating fraud,” Moe said. “And each of our customers comes to us with some nuance as it relates to their own unique priorities and what’s important. Together, we help them in striking a balance between risks and outcomes.”

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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.

The post Update: UK Adoption of Embedded Lending Falls Short of Potential appeared first on PYMNTS.com.

These challenges, as sprawling as they are complex, are commonly ill-suited to be met by one-size-fits-all tools and generic solutions. Rather, they require dynamic and agile innovations — innovations like artificial intelligence (AI).

And with the news Thursday (Sept. 19) that Amazon has introduced a new generative AI (GenAI) initiative aimed at helping sellers streamline business operations and scale their businesses, tapping AI to enhance operational efficiency, improve customer experiences and drive growth is becoming key for SMBs.

That Amazon news is just one of many data points, from this month alone, when it comes to the opportunities AI holds for SMBs. 

Elsewhere, Gusto announced Sept. 11 that it will soon add an AI-powered assistant called Gus to the human resources (HR), payroll, benefits and compliance platform and products it offers for small business owners; while Google on Sept. 12 introduced a pair of initiatives to help small businesses integrate AI into their operations.

Although AI is often associated with large enterprises, its impact on SMBs is becoming more profound, enabling these businesses to scale and compete in ways previously unimaginable.

Read more: Small Business Transformations Put the AI in Main Street 

AI’s Role in Streamlining SMB Operations

For many SMBs, operational inefficiencies are a constant struggle. Manual processes, resource constraints and disorganized systems often result in lost time and revenue. AI, however, is changing that narrative. Through automation and intelligent data analysis, AI can significantly reduce the administrative burden, allowing small business owners to focus on strategy and growth. 

“AI can help integrate data from across spreadsheets, PDFs and business units, unlocking insights that can improve operations and progress toward business goals,” IBM’s Head of Sustainability Software Christina Shim told PYMNTS in an interview. 

Recent research by PYMNTS Intelligence shows that 96% of SMBs that have used AI tools — though not necessarily GenAI — view it as an effective way to streamline tasks.

One of the most impactful areas of AI adoption is automated administrative tasks. For example, AI-powered tools like chatbots, virtual assistants and automated scheduling software can manage customer inquiries, appointment bookings and routine communications, freeing up valuable human resources for more strategic tasks.

Separately, AI tools that leverage natural language processing (NLP) can assist in drafting emails, documents and reports, reducing the need for manual input and allowing businesses to operate more efficiently.

Andre Machicao, senior vice president at Visa Acceptance Solutions, and Josh Scheer, president and owner of White Lotus Travel Design, told PYMNTS over the summer that SMBs can use AI to create marketing plans and product descriptions in minutes without a big marketing team to do it. The tech can also help streamline back-end operations so that scheduling, reminding a customer of upcoming payment deadlines and keeping on top of trends and news become automatic.

Read more: SMBs Race to Critical Mass on AI Usage

The Future of AI for Main Street SMBs

While AI tools are still fairly new, their future possibilities and applications are nearly endless — with most firms only scratching the surface of AI’s potential impact across their operations.

Findings revealed in “Innovators and Cost Cutters: Growth Strategies for SMBs,” a PYMNTS Intelligence report, show that while 37% of SMBs on average use AI, 51% of those with increasing revenues use it. Businesses with increasing revenues, and those generating more than $1 million in revenue, are twice as likely to use AI as ones with decreasing or stable revenues.

Still, many SMBs remain hesitant to embrace AI, often due to concerns over cost, complexity and implementation.

Against this backdrop, platforms that offer AI-as-a-Service are also gaining traction, allowing SMBs to access advanced AI capabilities — such as machine learning algorithms, predictive analytics and automation — on a subscription basis. This democratization of AI technology enables small businesses to compete on a level playing field with larger enterprises that have more extensive resources.

Ultimately, by leveraging AI to streamline operations, enhance customer experiences and drive growth, small businesses can position themselves as competitive players in their respective markets. And as the adoption of AI becomes more widespread, it is becoming more and more clear that the technology will be a game-changer for SMBs, empowering them to not only survive but also excel in an increasingly complex business environment.

The post Big Tech’s AI Tools Are Helping Democratize Growth for Small Businesses appeared first on PYMNTS.com.

Late payments cost small businesses 22,000 pounds (about $29,000) a year on average, resulting in 56 million hours of lost productivity across the economy, according to a Thursday (Sept. 19) press release. They also cause 50,000 business closures each year.

“We know how important it is for business owners to have the peace of mind and certainty around their cash flow to keep their businesses alive,” Prime Minister Keir Starmer said in the release. “Late payments cost businesses tens of thousands of pounds and is one of the biggest reasons businesses collapse.”

To tackle this problem, the government will propose new legislation in the coming weeks requiring all large companies to include payment reporting in their annual reports, according to the release.

The requirement will make clear how these firms treat small businesses and will enable company boards and international investors to see how they are operating, the release said.

The government will also step up enforcement of existing late payment performance reporting regulations, per the release. Current laws require large companies to report their payment performance twice a year and impose criminal prosecutions on the responsible directors at companies that fail to do so.

The government will also propose other measures addressing poor payment practices in the coming months, according to the release.

“Late payments are simply unacceptable, and this government is determined to level the playing field for small business,” Business Secretary Jonathan Reynolds said in the release. “When the cash flow runs dry, small firms go under, which is why we need to hold larger [businesses] to account with their payment practices and foster an environment that supports growth and jobs.”

Paul Stoddart, president of bank payment company GoCardless, welcomed the news that the government plans to tackle late payments.

“Stamping down on late payments through the measures laid out by the government will lead to economic growth,” Stoddart said in a statement emailed to PYMNTS. “This will encourage an environment that allows small businesses to thrive, invest in new employees, boost wages and do business overseas, rather than spending time and resources chasing down late payments.”

The European Commission has also been looking to clamp down on late payments, saying these efforts will benefit small- to medium-sized businesses (SMBs), PYMNTS reported in January 2023.

The post Small Businesses Will Benefit From Restrictions on Late Payments, UK Government Says appeared first on PYMNTS.com.

The move is designed to offer small- to medium-sized businesses (SMBs) financial products and rewards designed to improve their financial stability, the San Francisco-based company announced Thursday (Sept. 19).

“Entering the SMB space allows us to tap into a growing market and address the specific needs that traditional financial services often overlook,” Michael Spelfogel, Cardless president and co-founder, said in a news release. “Our experience across the airline sector has shown us how to tailor solutions effectively, and we’re now applying that expertise to help small and medium-sized businesses overcome their unique challenges.”

The company is launching this effort with Chinese eCommerce giant Alibaba as it prepares to roll out its first U.S. co-branded credit card.

“The decision made by Alibaba.com to partner with Cardless, over traditional financial giants, highlights the fintech’s unique value proposition and establishes the company as a leader in delivering innovative, flexible, and tailored financial solutions,” the company said.

According to the release, Cardless has also recently made a pair of “strategic hires”: Joe Wold, former head of credit cards for Wells Fargo, as Cardless’ head of partnerships, former Robinhood compliance chief Ailien Phan, who will take on that same role for Cardless.

“By leveraging its specialized expertise and innovative approach, Cardless is well positioned to grow its footprint in the SMB space, bringing impactful financial solutions that empower SMBs to navigate their most pressing challenges and fuel their growth,” the company said.

PYMNTS has been monitoring some of the challenges facing SMBs, including the persistent issue of delayed payments. It’s a problem that stems from “outdated processes and slow manual systems,” and is something that “threatens the stability and growth potential of SMBs,” PYMNTS wrote recently.

As the landscape changes, a PYMNTS Intelligence/American Express study, “End the Wait: SMBs and the Protracted Challenge of Delayed Payments,” poses a question: Could a new wave of digital transformation spell the end of this chronic delay?

Delayed payments aren’t just an inconvenience for SMBs, that report added, but a severe threat to cash flow and operational stability. Close to one-third of SMBs still rely on manual processes for ad hoc payments, which account for a substantial chunk of their revenue. And surveys have shown that 46% of SMBs without automated accounts receivable (AR) software consider delinquent payments their chief concern.

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The company will accept applications for the Mastercard x Pier Five Small Business Fund until Nov. 3, it said in a Wednesday (Sept. 18) press release.

Mastercard is offering this opportunity at a time when fewer than two in 10 small businesses in Canada are owned by women and when women small business owners’ companies historically receive 150% less funding than male-owned companies, according to the release.

“We are committed to furthering inclusivity and levelling the playing field for small business owners in Canada by opening access to resources, opportunities and partnerships for every business to flourish,” Nishant Raina, vice president, small and medium enterprise, Mastercard, Canada, said in the release.

Together with the funding, recipients will receive access to a Priceless Experience in Toronto that includes mentorship opportunities with Mastercard executives and partners as well as networking opportunities with other entrepreneurs, according to the release.

Mastercard’s partner in offering this program, Pier Five, is a platform that supports creatives, entrepreneurs and small businesses and organizes events, fundraising programs and content series, according to its website.

This year’s Mastercard x Pier Five Small Business Fund is the third, following ones offered in 2022 and 2023, per the release. Previous winners included Canadian entrepreneurs in markets that include health and wellness, food and beverage, pet care, fashion, beauty, florist and outdoor excursions.

One of the 2023 recipients, Helen Yin, founder of Inoki Bathhouse, said in the release: “All small businesses need to be part of a community, to have a place to connect on things that only small business owners understand. I’m grateful to Mastercard for offering me not just important financial tools and resources, but in opening that community to me.”

Mastercard also offers the Strive fund, saying in December that the fund awarded nearly $2 million in grants to organizations that support small businesses. The Strive Innovation Fund announced at that time will support 11 organizations around the world.

The post Mastercard Offers Grants and Mentorship to Women Entrepreneurs in Canada appeared first on PYMNTS.com.

And scaling operational productivity without scaling headcount, particularly within the back-office, is increasingly top of mind for today’s businesses of all shapes and sizes.

After all, among the core processes that directly impact a company’s financial health, the accounts payable (AP) and accounts receivable (AR) functions especially are ripe for innovation and modernization.

For decades, AP and AR processes have remained largely unchanged, relying on spreadsheets, paper-based approvals, and slow, error-prone manual inputs. This approach has left many businesses, particularly small and medium-sized businesses (SMBs), grappling with inefficiencies, cash flow constraints and a lack of real-time financial visibility.

But increasingly, after years of being bogged down by manual work and fragmented workflows, technologies like robotic process automation (RPA) are helping modernize AP and AR departments — with their implementation requiring a minimal technical and labor lift while resulting in a significant productivity lift.

For SMBs in particular, the adoption of RPA is not just a modernization effort; it’s a lifeline toward AP/AR automation that enables more efficient operations, better cash flow management and ultimately survival in a competitive market.

Read more: OCR’s Key Role in Scaling Paperless Invoicing and AP/AR Automation

Understanding RPA: What It Is and How It Works

In an increasingly digital-first world, businesses of all sizes are under pressure to modernize their financial operations to remain competitive.

For many SMBs, the challenge in AP/AR lies in dealing with the volume and variety of documents, many of which are still paper-based or siloed across disparate systems. The PYMNTS Intelligence report “Getting Paid: Digital Payments for Improving Cash Flow and Customer Experience” found that 75% of companies still use paper checks. RPA offers a way to automate data entry, verification, and processing, thus reducing the manual labor and potential for human error associated with these tasks.

Robotic process automation refers to the use of software robots or “bots” that mimic human actions to perform repetitive, rule-based tasks. Unlike artificial intelligence (AI), which can learn and adapt over time, RPA is designed to follow specific instructions, making it well-suited to automating structured, predictable processes.

In the context of AP and AR, this means tasks like invoice processing, payment scheduling, and reconciling accounts can be handed off to RPA systems, freeing human workers to focus on higher-value tasks such as strategic financial planning and vendor management.

The introduction of RPA into AP and AR functions is a game-changer for SMBs looking to modernize without overhauling their entire financial infrastructure. RPA can work within existing systems, acting as a bridge that connects disparate processes and systems into a seamless, automated workflow. This capability is particularly important for SMBs, which may not have the budget to invest in a full-fledged enterprise resource planning (ERP) system but still need to improve their operational efficiency.

See also: Businesses at Risk: The High Cost of Manual AR Processes and What to Do About It

Competitive Edge: How RPA Levels the Playing Field for SMBs

PYMNTS earlier this month examined the challenges facing SMBs, noting that these operations deal with a persistent issue: delayed payments.

Against that backdrop, RPA can help firms automate the extraction of invoice data, verify the information against purchase orders, and process payments according to predefined rules. This not only speeds up the process but also reduces errors associated with manual data entry. For SMBs, this can ultimately mean fewer late payments, better vendor relationships and improved cash flow management.

Accounts receivable management is often an overlooked area of financial operations, especially for SMBs, but it has a direct impact on cash flow. RPA can help automate the sending of payment reminders, track overdue accounts, and even initiate collection processes. By automating these tasks, SMBs can reduce their days sales outstanding (DSO), improve cash flow predictability and avoid the need for costly collection agencies.

Still, despite its benefits, integrating RPA driven solutions is not without challenges. Some SMBs may face resistance to change, particularly if employees are wary of automation replacing their jobs. Additionally, while RPA can handle repetitive, rule-based tasks, it is not a cure-all for more complex financial processes that require judgment or nuanced decision-making.

But at the same time, by automating repetitive tasks, SMBs that turn to RPA for their AP and AR functions can operate more efficiently, reduce overhead costs and improve the speed and accuracy of their financial operations — advantages that were previously out of reach for smaller companies.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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