Thanks for the contribution :)
Is this "pay in installments" option that you see more and more often also Embedded Finance, where your data is then passed on to some bank via API?
Does this mean that the customer thinks he's paying off his purchase at the retailer, but instead it goes through a bank in the background, which the customer doesn't even notice? Or have I got this completely wrong?
Is this "pay in installments" option that you see more and more often also Embedded Finance, where your data is then passed on to some bank via API?
Does this mean that the customer thinks he's paying off his purchase at the retailer, but instead it goes through a bank in the background, which the customer doesn't even notice? Or have I got this completely wrong?
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@stefan_21 Yes, exactly! This "pay in installments" option is a classic example of embedded finance. For example, if you buy a pair of trousers for CHF 100 and choose the option to pay in installments, it is not the retailer who takes care of the financing, but a bank or payment service provider in the background. Your data is passed on to this financial service provider via an API, which processes the financing.
Example:
Retailer: sells you the trousers for CHF 100 and receives the money from the bank immediately.
Bank: Takes over the installment payment and possibly charges interest.
Customer: Pays off the amount in installments, often without knowing that the bank is involved.
Advantage for the customer: Flexible payment.
Disadvantage: Possible additional interest costs.
However, the terms of the contract can vary. The dealer may only receive 95% and the credit broker (licensed for financial products) receives the remaining 5% + any interest). It is not always so easy to see that there are partners in the background, but this should be indicated and visible somewhere. OCCASIONALLY, companies without a banking license or a license for financial products are not allowed to grant small loans, for example. (If there are lawyers, please correct me. ;-) )
Is that enough of an answer for you?
Example:
Retailer: sells you the trousers for CHF 100 and receives the money from the bank immediately.
Bank: Takes over the installment payment and possibly charges interest.
Customer: Pays off the amount in installments, often without knowing that the bank is involved.
Advantage for the customer: Flexible payment.
Disadvantage: Possible additional interest costs.
However, the terms of the contract can vary. The dealer may only receive 95% and the credit broker (licensed for financial products) receives the remaining 5% + any interest). It is not always so easy to see that there are partners in the background, but this should be indicated and visible somewhere. OCCASIONALLY, companies without a banking license or a license for financial products are not allowed to grant small loans, for example. (If there are lawyers, please correct me. ;-) )
Is that enough of an answer for you?
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âą@GeldGenie Thanks, of course that's enough of an answer for me :D
Interesting and also practical for the customer. Depending on what personal data is sent back and forth via the API, however, there is also a bad aftertaste - especially because it is not necessarily recognizable for the customer that there is a bank sitting in the background with which he concludes a kind of loan :)
Interesting and also practical for the customer. Depending on what personal data is sent back and forth via the API, however, there is also a bad aftertaste - especially because it is not necessarily recognizable for the customer that there is a bank sitting in the background with which he concludes a kind of loan :)
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âą@stefan_21 Unfortunately, that's the way it is. Customers don't know where their data goes, the credit check (young people accumulate huge loans...) is usually lousy or non-existent and the benefits lie with the provider and retailer (retailer sells what the customer can't actually afford & financial service provider earns from the business (possibly) & interest on debt).
Was also once a TikTok trend... Unfortunately.
https://www.rnd.de/wirtschaft/klarna-schulden-warum-der-tiktok-trend-nicht-witzig-ist-und-was-betroffene-tun-koennen-HHNXZTH6VVBWDK43FMEV4OQ7WU.html
I say financial education is important. â„ïž
Was also once a TikTok trend... Unfortunately.
https://www.rnd.de/wirtschaft/klarna-schulden-warum-der-tiktok-trend-nicht-witzig-ist-und-was-betroffene-tun-koennen-HHNXZTH6VVBWDK43FMEV4OQ7WU.html
I say financial education is important. â„ïž
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@stefan_21 So at least in Germany, such offers must of course be accompanied by a chunk of small print, with information about which partner is handling the transaction and a link to a wall of text with the full data protection information. If you are really offered this somewhere without such transparency, then you should definitely study law and get rich as a warning lawyer.
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@stefan_21 Hasn't that always been the deal with 0% financing? At least that's how it worked at Saturn. There was a bank in the background with which you took out the loan. However, they didn't offer 0% out of charity, but to get your data as a customer for potentially other products
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