Banknotes,clock and sticky note with the word Buy Now Pay Later.

Democratizing credit: the impact of embedded lending

The following is a guest post by Kim Van Esbroeck, Country Head for Aion Bank Belgium & Chief Revenue Officer, Vodeno/Aion.

Over the past few years, Banking-as-a-Service (BaaS) has allowed businesses to offer seamlessly integrated banking products to their customers.

BaaS-enabled embedded lending is one solution that is gaining in popularity across many B2C and B2B use cases.

Research by FMI has indicated that the embedded lending market is expected to exceed $32.5 billion by 2032, demonstrating the scale of demand for its potential. What is driving the explosion of BaaS lending?

And what kinds of solutions are underpinning this growth?

Lending on the rise

Today, embedded lending is creating the possibility for brands to offer credit products, helping to improve their customer journeys.

According to GlobalData, the Buy Now, Pay Later (BNPL) market is expected to reach US$ 596.7 billion in 2026. While BNPL’s popularity has pushed embedded lending into the spotlight, this is just the beginning.

Outside the B2C space, a host of products like merchant financing (essentially BNPL for SMEs) are growing in popularity, enabling marketplaces to provide upfront capital to their merchants to produce or buy goods, with repayments drawn from their revenues once they are sold.

Offering merchants flexibility over their repayments and easily accessible credit allows them to scale their business, while platforms and marketplaces stand to create loyalty amongst their best vendors.

More generally, BaaS lending makes access to credit more convenient – as a fully digital process, removing the need for physical wet signatures and automating the sharing of financial and credit history data.

BNPL or Buy Now Pay Later concept. Dollar bills and label with message on black background

Different BaaS lending products

BaaS is enabling the creation of new credit options – here are some of the most promising examples:

Buy Now, Pay later

Buy Now, Pay Later (BNPL) is one of the most sought-after lending options available to consumers, allowing them to split the cost of their purchases and pay later, typically without incurring any interest charges.


To make BNPL possible, instant credit and risk management decision engines operate in real-time, providing a seamless shopping and purchasing experience. Merchants also benefit from this arrangement, as it can lead to a 20-30% increase in conversion rates and helps with customer retention.

BNPL was already utilized by 360 million consumers globally in 2022, and experts predict that this number will surpass 900 million by 2027.

Merchant financing

Marketplace spending is predicted to exceed $2 trillion by 2023. Competition for the best vendors amongst marketplace platforms is fierce, and BaaS lending can help aid vendor loyalty and customer conversion.

Not unlike BNPL, merchant financing is a solution that marketplaces can offer their vendors. It provides SMEs with upfront capital that they can use to produce or buy goods, with repayments linked to sales. These businesses have easy access to credit without the complicated process of obtaining a traditional bank loan.

Decoupled debit

Decoupled debit cards enable brands to offer their customers a card linked to any current account they choose.

Thanks to BaaS, which powers the back-end connection, consumers can use the card without needing to open a new account or top up funds. Depending on the specific needs of their customers, businesses can even layer on added incentives and rewards like cash back, making the card even more appealing to consumers.

Debt receivable financing

Some lending companies may find themselves capital constrained, impacting their growth. Debt receivable financing offers a solution to these organizations — Aion/Vodeno works with lending businesses to purchase the unpaid invoices (debts) of their existing loan book (receivables). This frees up their capital, meaning they can acquire new customers.

The future of lending

BaaS lending solutions provide people with greater accessibility to credit products; meanwhile, the advantages to BaaS adopters, both B2B and B2C, are clear: the opportunity to generate new revenue streams, create greater brand affinity, and establish a competitive edge.

  • Kim Van Esbroeck

    Kim is Country Head for Aion Bank Belgium and Chief Revenue Officer for Vodeno/Aion. Kim is responsible for growing Vodeno/Aion’s business through commercial activities and business development.