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Retailer-Backed Financing: The Hidden Goldmine Most Retailers Are Ignoring

8 Minute Read

Author

Andrés Gutierrez
January 31, 2025

Retailers Are Funding Their Competition Without Realizing It

Every single day retailers unknowingly fund their competitors.

You invest in marketing acquiring customers and optimizing conversions only for a third-party lender to step in at checkout and own the customer relationship future sales and profits.

By 2030 embedded finance including retailer-backed lending will exceed seven trillion dollars in transactions. (1)

Retailer-backed financing is not just an option it is the future. The only question is will you take control or will your competitors beat you to it?

The Real Problem Third Party Lenders Are Quietly Taking Your Profits

For decades retailers have outsourced financing assuming banks and third-party lenders were the only viable options. But here is what they do not tell you

  • You are losing revenue. Third-party lenders take a percentage of every financed sale profit that should stay in your business.

  • You are losing customers. The lender, not you owns the customer relationship meaning they capture repeat purchases upsells, and brand loyalty.

  • You are making it harder to buy. Third-party lenders introduce friction clunky applications slow approvals and redirect customers off your site.

Retailers who integrate embedded lending into their checkout process see a twenty to thirty percent increase in conversions. (2)

A study by EY found that retailers lose billions annually by outsourcing financing instead of offering in-house financing with AI-powered credit models. (3)

Every time you rely on a third-party lender you are handing them your future revenue.

The Number One Revenue Killer Cart Abandonment Due to Lack of Financing

The biggest hidden revenue leak in retail is not marketing inefficiency or high customer acquisition costs it is cart abandonment.

The Hard Data

Seventy point nineteen percent of online shopping carts are abandoned and forty-eight percent of customers cite unexpected costs like lack of financing as the primary reason. (4)

The Moment of Decision

A customer is about to buy a fifteen hundred dollar product from your store. They want it. They need it. But at checkout, they see one painful reality full payment upfront.

  • Their credit card is maxed out

  • They see no financing options

  • They get redirected to a third-party lender’s website

What happens next when they leave?

Solution Retailer-backed financing solves this friction by offering real-time approvals seamless payment options and instant financing directly at checkout without sending the customer to another lender.

Retailers using embedded financing report a forty percent reduction in cart abandonment. (5)

Customers buy more and they buy now when financing is easy.

Solving Retailer Hesitations AI-Powered Risk Management

Retailers hesitate to offer financing because they fear defaults and infrastructure challenges. AI eliminates both concerns.

How AI Reduces Risk and Approves More Customers

Instead of traditional rigid banking models AI-driven lending

  • Analyzes real-time customer data shopping patterns transaction history

  • Uses AI-powered affordability scoring not just credit scores

  • Approves more customers while reducing risk

Objection Handling What Retailers Worry About

  • What if I do not have the infrastructure to manage financing?

    AI powered platforms integrate seamlessly with e-commerce and POS systems meaning you do not have to build financing infrastructure from scratch

  • What happens if a customer defaults?
    AI risk models predict payment behavior and adjust terms dynamically to reduce default rates

With AI in-house financing is not just possible it is safer and more profitable than third-party lending.

Customer Loyalty Equals Three Times Higher Lifetime Value

A customer who finances a purchase stays loyal to the retailer who financed them. Why?

  1. They have an open line of credit with you

  2. They return to finance future purchases with your store

  3. They see your brand as a financing partner not just a one-time seller

Key stat retailers offering in-house financing see three times higher repeat purchase rates than those relying on third-party lenders. (6)

Retailer-backed financing is not just about selling more it is about keeping customers for life.

Retailer-Backed Financing Is the Future. Will You Own It?

By 2028 embedded finance will be a seven-point two trillion dollar market. (2)

Retailers who fail to offer in-house financing will lose market share conversions and long-term customer relationships to competitors who do.

Final Thought Retailers who control financing control the future.

  • Stop handing revenue to third-party lenders

  • Start offering flexible AI-powered financing to your customers

  • Own your financing Own your customers Own your future

Retailers who do not evolve will get left behind.

References