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Hi embedded finance friend

welcome to the summer edition of the Embedded Finance Review.

Format: I decided to change the format of this newsletter a little bit and will likely further adjust it over the next few weeks. Compared to previous editions, the new format contains fewer links but instead provides more insights for the relevant stories. I hope that this format provides more value for you as it helps you to cut through the noise. Based on your feedback, I will either return to the old format after a couple of editions or stick with the new one. Please use the survey at the end of the mailing to share your feedback or just hit reply. I am really curios to hear from you!

Our next event: I have been preparing for the next Embedded Finance Review Event that will happen on October 10th in Berlin. We are partnering with the Berlin SaaS Week and I will share sponsors and content in a couple of weeks. But if you can’t wait, you can get your ticket already now.

Thank you: A personal shoutout to Patrick de Haan for referring six new subscribers to this newsletter. As a small thank you, he could choose a link of his choice to be included here: he picked his blog post about embedded finance and financial inclusion - here you go.

And now let’s dive in 👇

German craftsman SaaS provider launches payment product

German craftsman SaaS provider Tooltime has launched a payment product in cooperation with Adyen (Product website, only in German). Tooltime is a vertical SaaS provider focusing on the needs of craftsman companies and their features include CRM, time tracking, quotes, invoices and more. The company was founded in 2019 and currently operates in its home market in Germany and expanded to the UK. Last week, they announced the logical extension of their SaaS product and enable their customers to not only to send invoices to their clients but also include a payment functionality. The customer of the craftsman company will receive an email with a link where she can make the payment with the method of her choice. In addition, the craftsman company can easily see open invoices and send payment reminders. Embedding the payment functionality into the core product is not only more efficient for the craftsman company but will likely reduce the average time for payment from customers as well.

Tooltime chose Adyen as their infrastructure provider. It is not a surprising choice, due to Adyen’s strong track recording including working with other vertical SaaS companies. And in many cases, these companies started with a payment acceptance product but added other financial products as well, for example cards, accounts or financing products. Will Tooltime do the same?

If you are wondering what kind of an impact the launch of an embedded payment acceptance product can have, check out last week’s podcast with hotel SaaS provider Mews. Their CEO Matt Welle describes very well how his company started with payment acceptance in 2016, added lending in 2023 and are now exploring other financial products. You can find the podcast on Spotify or Apple Podcasts.

eBay and Urban Sports Club launch a lending product

The global marketplace eBay has announced it partnered with embedded lending provider Liberis to offer a cash advance product to their sellers in the US (Liberis website). Business sellers can apply for funding for up to $1 million and receive an answer within 24 hours. A merchant cash advance is a working capital financing product and the seller can use this for example to buy more inventory. A marketplace like eBay can earn additional revenue through this lending product with adding a margin to the interest rate, however, an even bigger benefit is often the increase in transaction volume of the core product. Since the merchants are able to purchase more inventory, they are likely selling more, and thus, are paying more fees to eBay - which often increases the need for financing products. Flyweel?

In Germany, the gym and sport activity aggregator Urban Sports Club announced a partnership with embedded lending provider Banxware (LinkedIn post). A consumer who is subscribed to Urban Sports Club can visit a wide range of partner sport facilities, from yoga to rock-climbing gyms. The sport facilities can be large chains or independently owned studios and with the new financing product, these facilities can obtain a financing product. This product is likely targeted at smaller or medium sized businesses who can have a hard time obtaining a financing product from their bank.

Enpal launches financing products for third parties

German unicorn Enpal is one of the major producers of solar panels and heat pumps. Enpal does not only produce the hardware but takes care of installation as well, for which the company employs the necessary staff. Therefore, the property owner can get all necessary products and services from the same company.

An interested customer can either purchase the hardware products and pay for the installation themself, or Enpal also offers a subscription model where the homer owner pays a monthly fixed fee. Enpal is offering this product since quite some time already, but again, it is only applicable to products and services from the Enpal ecosystem.

The company announced now that it founded Enpal Financial Services which offers embedded financing products to external installers (FinanceFWD; only in German). This means that a local installation company that puts solar panels from another brand (not Enpal) onto the roof of a customer, can offer them an Enpal powered financing product. Enpal might be one of the biggest hardware producer in the market, however, the market is heavily fragmented and the majority of the business is conducted by independent installation companies. With ambitious growth plans, Enpal can now increase their business outside of their core market.

With the new embedded financing launch, Enpal is competing directly with a few specialised fintech startups that launched in the past few years. Most importantly, with a company called Cloover that we covered already in one of our previous podcast episodes (Maybe we should invite Enpal for an episode as well? 😉). If you haven’t listened to the episode already, you can find it on Spotify or Apple Podcast.

German supermarket chain launches embedded insurance products

The German discount supermarket chain Netto has announced a partnership with Hakuna, an embedded insurance provider (Hakuna website). The insurance product offering is embedded into the online shop of Netto, where the company sells over 120,000 items including electronics and appliances. The new insurance products are suitable for any non-consumable products, and based on the products, the shop will offer the right insurance: a theft insurance for a bike purchase and an extended warranty for a purchase of a fridge.

Onboarding limitations for European BaaS providers: Modulr exits it and Solaris gets an extension

British banking-as-a-service provider Modulr has finally managed to convince the UK regulator FCA, that they are able to fulfil regulatory duties, and therefore, Modulr’s onboarding restriction has been lifted (The Paypers). The ban has been introduced back in October 2023 and was only introduced for their e-money agents and distributors but not all business customers. Compared to the regulatory restrictions applied to N26 and Solaris (see below) in Germany, Modulr was able to lift the onboarding ban rather quickly. But perhaps the news about the restriction itself with the negative press around it was more painful for Modulr’s business, than the restriction itself.

Across the North Sea, German banking-as-a-service provider Solaris (formerly Solarisbank) has a similar “track record” with its regulator BaFin. This all started in 2021 when the very first issues have been identified, and since these issues were not resolved and others were added, BaFin sent a special commissioner in early 2023 to ensure that progress is being made. But instead of exiting this limitation, BaFin announced now that the mandate for the special commissioner will be extended and that additional fines are possible if AML controls are not put into place and other shortfalls are not taken care of (The Paypers). Solaris had already received a record fine of €6.5 million in March and can currently only onboard new customers with the approval of BaFin.

Job board

Are you a product manager with fintech experience and looking for a new gig? A German technology company from the sports industry is currently growing their fintech offering (payments and factoring). Hit reply if you want to know more!

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