with YouLend.
Small and Medium Businesses (SMBs) are the backbone of the global economy, driving innovation, employment, and growth across industries. However, access to timely and flexible financing remains a persistent challenge for these enterprises. As PayU looks to strengthen their value propositions, developing a robust credit product portfolio – centered around solutions like Merchant Cash Advances (MCA) – has become a strategic imperative.
A Merchant Cash Advance (MCA) is an alternative form of business financing where a company receives an upfront sum of cash in exchange for a percentage of future sales revenue. Merchant Cash Advances offer SMBs a lifeline, providing fast, flexible funding tied to their revenue streams. Traditionally, these solutions have relied on manual processes, which can be time-consuming, error-prone, and limit scalability. The introduction of automated MCA solutions, powered by our partnership with YouLend, is revolutionizing how PayU delivers financing to SMBs.
This article explores the journey from manual to automated MCA solutions, highlighting how automation enhances efficiency, improves merchant experiences, and empowers SMBs with the financial agility they need to thrive in an ever-changing market.
Through a manual process, we analyzed merchants’ turnover every month to determine their creditworthiness for business financing. Information with the solution Provider was exchanged via encrypted connections and using anonymized data, thanks to which the process was appropriately secured. We used the pre-qualification data received from Provider to send an email campaign (personalized with the pre-limit amount). Traffic from the mailing was directed to the landing page in the supplier’s environment. This process made it impossible to fully analyze the activities effectiveness. We received information about the financing granted as an email notification and could then launch procedures on our side to enable merchants to repay the amount from their balance at PayU. These actions took up to 5 days, depending on the number of notifications. Additionally, due to manual process in daily repayment settlements, merchants could withdraw their funds only the next day.
Such a time shift in the merchant’s financial liquidity, combined with the growing popularity of embedded financing solution among our clients and the limited ability to analyze the effectiveness of sales activities, caused us to start planning process automation.
The decision to automate Merchant Cash Advances (MCA) was driven by the immense potential automation unlocks for efficiency and scalability. Traditional manual processes, though functional, often create bottlenecks, limit outreach, and slow down funding timelines. Automation transforms these limitations into opportunities for growth by introducing features like automatic prequalification, lead creation, and seamless repayment mechanisms. Just in the first month after automation, we achieved a TPV all-time high (ATH), and with each passing month, our revenue keeps growing.
Automated MCA solutions leverage advanced algorithms and real-time data analysis to prequalify merchants based on their transaction history and revenue patterns. This proactive approach not only identifies eligible merchants instantly but also eliminates the need for time-consuming manual assessments. Automated lead creation ensures that merchants are engaged at the right time with tailored financing offers, increasing the likelihood of conversions.
Automation extends to repayment processes, enabling funds to be directly deducted from the PayU merchant’s balance. This ensures a seamless and stress-free repayment experience for merchants, aligning repayments with their cash flow cycles. For PayU, this mechanism reduces the risk of missed payments and enhances operational efficiency, all while fostering trust and long-term relationships with merchants. Additionally, merchants benefit from faster access to their funds, as the automated process ensures that money reaches their bank accounts much earlier.
By automating critical aspects of the MCA lifecycle, PayU can deliver faster, more personalized financing solutions, positioning ourselves as indispensable partners in the growth journey of SMBs.
Automated system is configured to accommodate daily revenue-based repayments: merchants repay a percentage of their daily revenue, ensuring payments remain proportional to their income. This is particularly beneficial for businesses with seasonal or fluctuating sales.
The new automated repayment system is a game-changer for merchants. By aligning repayments with their PayU balances, merchants no longer need to worry about managing schedules or unexpected cash flow disruptions. This ensures peace of mind and allows merchants to focus on growing their business rather than managing loans.
From the first days after the systems integration, we heard voices of satisfaction among our merchants. They appreciated the fact that they could find information on embedded financing in their PayU management panel, but above all, a simpler way of submitting applications. The API connection allows the application to be prefilled with information such as the name and tax identification number of the company, contact details or even basic financial information. Among our merchants, we have companies that have benefited from embedded financing many times over the years of cooperation between PayU and YouLend, and appreciate the change in the form of submitting applications and the speed of their processing. Since the API integration, together with our supplier, we have provided 2x more financing than in the manual process. Our clients could spend the funds received for any business purpose – hiring new employees, promotional expenses or purchasing fixed assets – without fear of a delay in the financial liquidity.
After making the offer available to our merchants in the PayU panel, we see a significant increase in interest in this product. Already in the first month after the system’s integration, we collected 5x more leads and we doubled the number of the fundings. Thanks to automation, we can track the conversion at every step.
Already about 20% of merchants who can apply for financing from YouLend actively use a specially prepared tab in the PayU panel. After monthly automatic calculation, the prelimit is presented to customers in the panel and system notification is being sent directly to firm email.
After loan is funded, repayment details and the loan balance are visible in Financing tab – merchants don’t have to log in in two places – they immediately receive information about their financing in YouLend and can also apply for renewal if most or all the liability is repaid. Thanks to the API connection, almost immediately after sending the complete application, the merchant is presented with 3 financing options, and the contract is signed online. As a result, after integration, we reduced the average service time from lead to contract by more than half. The average value of financing granted via API compared to the manual process is 70% higher.
More and more companies are looking for flexible financing for their business. After the manual pilot phase of delivering one of the best solutions in the market, we decided to automate the process and make it even more straightforward. Application process and industry-leading APIs enable >90% approval rate with same day offers and funding in as little as 24 hours.
With a proven track record and a commitment to innovation, PayU continues to empower merchants to grow and succeed.