What used to be the territory of banks and microfinance institutions is now being offered directly at the point where customers live, work, and shop. Retailers are letting buyers spread payments at checkout. Telcos are using mobile money platforms to deliver instant microloans. Employers and payroll platforms are advancing salaries or financing purchases directly from paychecks. Marketplaces are supporting their sellers with working capital, and even utilities are experimenting with flexible payment plans to keep households connected.
For lenders, this shift is more than just a new distribution trend. It opens the door to engaging customers earlier in their decision-making, often at the very moment they are about to spend. These partnerships also generate valuable transaction data that can sharpen credit models and reduce blind spots in underwriting. Perhaps most importantly, loans placed in these contexts are tied directly to real usage whether that is a purchase, a bill, or a service, which can strengthen repayment incentives.
In this article, we break down five models of how non-financial companies are embedding loans into their customer experience. We will also explore how lenders can position themselves to take advantage of these models by aligning on pricing, managing risk, and building partnerships that make sense both commercially and operationally.
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1) Point-of-sale finance inside retail and e-commerce
What it is: Point-of-sale finance allows customers to spread the cost of purchases over time, usually by opting into instalment plans directly at checkout. In practice, the retailer or e-commerce platform presents the option, but the actual financing is often handled by a third-party lender or bank that sits behind the scenes. In some cases, the merchant brands the product as their own to keep the customer experience consistent, while the credit and risk management is quietly powered by a lending partner.
Why it matters now: The rise of buy now, pay later (BNPL) in Africa has shown how powerful this model can be. Industry trackers valued the African BNPL market at several hundred million dollars in 2023, and forecasts suggest that figure could climb into the billions as more shoppers move online and digital payments continue to gain traction. What makes this significant for lenders is that credit is being offered right where the decision to buy is happening. Rather than trying to convince someone to apply for a loan after the fact, lenders can plug into retail and e-commerce channels to capture demand in real time. The checkout becomes a payment and origination point, and because the financing is directly tied to a purchase, conversion rates are much higher than traditional channels.
How lenders should approach it: To succeed in this space, lenders need systems that can assess applications quickly and accurately, because customers expect instant decisions when they are standing at the checkout or about to confirm an online order. That means building underwriting flows that rely heavily on merchant transaction data such as purchase history, average order value, and repayment performance from previous instalment plans. For small-ticket items, offering simple split-cost instalments works best, while for larger purchases, lenders can design slightly longer-term plans with flexible repayment options.
2) Telco-led microloans and wallet credit
What it is: Telecommunications companies have become some of the biggest distributors of credit in Africa. By capitalizing on mobile money platforms and airtime top-up systems, telcos are able to extend small, short-term loans directly to their users. These loans are often accessed through simple USSD codes or mobile apps, making them highly accessible even in areas where traditional banking services are thin. While most products start small (like airtime advances or microloans repaid within days), the scale of mobile money adoption means the numbers add up quickly.
Why it matters now: Mobile money has grown into a dominant financial channel across sub-Saharan Africa, with hundreds of millions of registered accounts and billions of dollars transacted monthly. This wide reach means telcos already sit on enormous amounts of transaction and usage data, from call records to payment flows. That data allows them to make fast, low-cost credit decisions at scale, something traditional lenders struggle with. For many households, these microloans are the first and sometimes only form of formal credit they can access, which gives telcos an edge in customer loyalty and daily financial relevance.
How lenders should approach it: For lenders, partnering with telcos can open distribution channels that would be impossible to replicate independently. Rather than trying to compete, it is often more strategic to supply capital and risk management expertise while letting the telco handle customer experience and disbursement. Co-lending models, revenue-sharing agreements, or white-label solutions work well here. Lenders should also design products that reflect the short cycles of telco-led loans, where repayment is often tied to airtime recharge or wallet activity. Credit limits can grow gradually based on repayment patterns, and loan terms should be kept simple and transparent. Because telcos are highly visible brands, compliance and customer protection are especially important to maintain trust.
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3) Payroll-deduct and employer-financed loans
What it is: Employers and payroll platforms are increasingly stepping into credit by offering employees salary advances or loans repaid directly from their paychecks. Some companies run this in-house, while others work with lenders who integrate with payroll systems to handle the financing. Because repayments are deducted before salaries are disbursed, the risk of default is often lower compared to unsecured consumer loans.
Why it matters now: In markets with large formal workforces, payroll lending creates an efficient credit channel that benefits both employees and lenders. Employees get quicker access to funds without having to go through lengthy bank processes, while lenders enjoy predictable repayments tied to salaries. For employers, it can also be a retention tool, as offering affordable credit through payroll makes them more attractive to staff. In regions like Africa where traditional credit penetration remains low, payroll lending can fill important gaps, especially for middle-income earners with consistent wages but limited access to bank loans.
How lenders should approach it: Success in payroll lending depends on building strong relationships with employers and payroll providers. Lenders should invest in reliable verification systems to confirm employment and income, and create pricing models that reflect the lower default risk in this channel. Integrating directly with payroll software or HR platforms can make disbursements and deductions automatic, reducing operational headaches. However, safeguards are necessary for cases where employment ends before loans are fully repaid. Clear agreements with employers on how to handle such situations are important. For lenders willing to take the time to build these partnerships, payroll lending can be scaled with relatively predictable returns.
4) Marketplace and platform instalments for SMEs and sellers
What it is: Online marketplaces and B2B platforms are no longer just connecting buyers and sellers; many now offer credit to help merchants finance inventory, cover working capital gaps, or advance payments against pending orders. This lending is possible because platforms have deep visibility into seller performance, transaction histories, and customer feedback.
Why it matters now: For small businesses, cash flow is often the single biggest obstacle to growth. A merchant may have strong demand but lack the funds to restock quickly or manage large orders. Marketplaces can spot these patterns early, and with embedded credit, they can help sellers scale while improving their own transaction volumes and retention rates. In African markets, where many SMEs are unbanked or underbanked, marketplace lending provides a practical entry point to formal credit.
How lenders should approach it: To work in this model, lenders need to design products tailored to the rhythms of SME cash flow. Inventory financing, short-term working capital loans, or invoice discounting can all fit, provided repayment schedules are aligned with sales cycles. Platforms should be viewed as active partners, not just distributors, since they bring essential data like sales velocity, refund rates, and seasonal trends. Sharing performance and repayment data keeps both lender and platform aligned on risk. Short-term, renewable facilities often work better than long, rigid loans because they adapt as seller performance evolves.
5) Subscription and service-provider credit
What it is: Companies that sell services on a recurring basis such as utilities, schools, healthcare providers, and even SaaS platforms are beginning to offer credit to smooth out payments for their customers. Instead of paying everything upfront, customers can spread costs across months or align payments with income flows. For high-value services like medical treatments or education, instalment plans are especially attractive because they remove the barrier of large lump-sum payments.
Why it matters now: Subscriptions naturally create long-term relationships with customers, which makes them fertile ground for embedded credit. A customer who consistently pays for electricity, internet, or insurance over many months is already showing reliability, and that pattern can be used to underwrite small or medium-term loans. From the provider’s perspective, offering flexible payments reduces churn and increases customer retention. For lenders, these recurring payments create predictable cash flows and clear behavioural data, both of which lower credit risk.
How lenders should approach it: Lenders looking at this model should build products that align closely with subscription schedules. Instalment plans can be structured to mirror billing cycles, making repayment simple and natural for customers. Credit scoring can incorporate usage data, such as energy consumption or service engagement, which often predicts willingness to pay. For one-off but high-cost services, like surgeries or vocational training, financing can be offered in structured instalments that match expected income recovery timelines. Importantly, repayment mechanisms should integrate directly with the provider’s billing system so payments are collected automatically with minimal effort from the customer. Done well, this creates a win-win where providers improve retention while lenders benefit from lower risk and steady repayments.
Related read: Embed BNPL into your platform without becoming a lender
Finding your footing in embedded lending
Embedded lending is always about partnership, and lenders that understand this dynamic will have the most success. The starting point is choosing a single channel that offers both reliable data and clear legal agreements, along with a commercial structure that makes sense for both sides. From there, it helps to run a small but deliberate pilot test rather than going broad too quickly. Pilots give lenders the chance to track conversion rates, repayment behaviour, and operational hiccups in a controlled way before committing significant capital.
Once the early results are clear, scaling becomes a matter of focusing on the flows that consistently deliver. In Africa, the strongest opportunities tend to appear in channels where there is already heavy customer engagement, repeat usage, and dependable payment settlement. These conditions create the foundation for profitable lending at scale. When products are designed with both the partner’s business goals and the borrower’s repayment capacity in mind, lenders are able to grow sustainably while protecting credit quality.
