Embedded Finance Performs Double Duty as Sales Tool

It’s a challenging time at retail — both online and in-store. Merchants are grappling with a volatile economy and the fact that consumers, in at least some cases, are reining in their spending.

Max Rieck, CFO at Versatile Credit; Chris Guido, head of TD Owned Brands, Sponsorships and Emerging Opportunities for TD Retail Card Services; and Chad Evans, VP of merchandising at AVB Marketing, told PYMNTSTV that embedded financing — and using partners to offer that financing — can help enterprises navigate, and even thrive, amid those choppy macro waters.

Many independent retailers, Evans said, are “stretched pretty thin.”  These firms don’t have the tech know-how, or budget, to shift fully toward new back-end and consumer-facing initiatives that can help boost top and bottom lines, including offering financing options at the point of sale.

Evans noted that his company operates as a proverbial “one stop shop” for enterprises technology and marketing needs.

“They can come to our organization,” Evans said, “and we can help them with their marketing, from video content to online catalogs … and layer in the technology that gives them solutions such as consumer financing, which makes the transactions easier [for consumers] and what keeps businesses profitable.” 

Benefits of White-Labeling

On that last point, to integrate that financing, AVB has partnered with TD and Versatile Credit to offer AVB Complete, its consumer financing program. That program leverages TD’s omnichannel waterfall application processing platform — providing access to financing options from multiple lenders via TD Complete — which is in turn powered by Versatile Credit’s financing solutions, connecting enterprise level merchants and financial institutions including TD. 

“At the end of the day,” Guido said, “the financing program needs to be an extension of the business, and we need to be aligned to help grow the retailers’ businesses.”

As Rieck said, “With embedded lending, we’re meeting the merchant where they are,” as those financing options can be integrated across customer relationship management (CRM) and point-of-sale systems and inventory management. Rieck said the expertise comes in an “off the shelf” manner that “allows merchants to be onboarded quickly into a lender stack that allows them to service consumers’ needs” across the prime, near prime and subprime credit spectrum.

Observed Evans of the partnership effort: “It cuts down on the friction between the retailers, the consumers, and in our case, the financing. … The retailers are definitely all in on” embracing a platform that gives them options to cut down on those frictions.

Beyond improving consumer engagement, Rieck said, the platforms and partnerships give merchants visibility into who’s buying what inside a store and online, and how they’re using credit to do so.  Companies with multiple locations can use granular, data-driven insights to determine how to fine-tune the performance of those locations.

In addition, Evans said, the average ticket goes up, the customer keeps coming back, and they have a credit line with which they can walk back into a merchant, and AVB can set up lifecycle marketing.  The smaller merchants have same “ability” with embedded lending that the larger companies have.

As Evans remarked to the panel, “You’re reaching additional customers that you could not reach before, and customers are able to transact more efficiently because they’re given more options.”

Added Rieck, “Embedded lending allows a relatively frictionless process … drive more sales and further drive the business.”

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