Embedded finance.

In plain English

Embedded finance is the placement of financial services inside products that are not primarily financial, such as a checkout that offers installment credit at the moment of purchase. A ride-hailing app that pays its drivers instantly is the same idea on the payout side. The consumer-facing brand owns the interface and the customer relationship, while a licensed bank or insurer sits behind it providing the regulated product. Distribution is the whole point, because offering credit or insurance where a decision is already being made converts far better than asking someone to apply separately. The same convenience removes the pause that a separate application used to force.

01Why it matters

Credit offered at the exact moment you want something is much easier to accept than credit you have to go looking for, so those terms deserve the same reading you would give a loan application at a bank.

02The math, step by step

Say a checkout offers four payments of 50 dollars on a 200 dollar order with no interest, plus a 7 dollar fee per missed payment. Miss two and the cost is 14 dollars on 200 dollars, about 7 percent, on a product advertised as free.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.