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Modulr glossary

Lending-as-a-Service (LaaS)

Lending-as-a-Service (LaaS) is a fintech model where businesses integrate lending capabilities into their platforms via APIs. This allows non-bank companies to offer credit products without managing loan infrastructure directly. An example of this could be BNPL offered at checkout to help consumers purchase high value goods via payment plans.

Applications

E-commerce:

Reduces fraud in online card payments by verifying the cardholder's identity

Banking and fintech:

Helps issuers and payment providers comply with Strong Customer Authentication (SCA) requirements.

Advantages

  • Enhanced security: Reduces unauthorised transactions by verifying that the genuine account holder is authorising the payment
  • Fraud prevention: Helps reduce chargebacks related to fraud.

Challenges

  • User Experience: Additional authentication steps can cause friction and increase checkout abandonment
  • Implementation complexity: Requires integration with card schemes and issuer systems.

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