Alternative finance provider CAN Capital is offering its payments industry partners a digital platform to give merchant clients a fast application process for funds.
By using CAN Connect's application interfaces, payment processors or point of sale terminal providers can use their websites, messaging services or call centers to enable merchants to apply for and receive a small-business cash advance.
A small business can find out quickly if it qualifies for a loan of up to $150,000 because CAN Connect uses the data already available through the merchant services provider to speed up the process, says Dan DeMeo, CEO of New York City-based CAN Capital.
"It's a platform which will make use of current information to help us make a funding decision and this establishes the communication link between us and the processor, and therefore the processor and the merchant," DeMeo says.
CAN Capital has provided merchant cash advances, which merchants pay back from future payment card receipts, as well as access to small business loans, through more than 120,000 transactions in the past 16 years.
"You can tell CAN Capital talks to its clients and is very much in tune with what their needs might be," says Scott Strumello of New York- and London-based Auriemma Consulting Group.
It would be inaccurate to view the CAN Connect service as targeting just a "niche" in the small businesses that its processors serve, Strumello says. It has the potential to be much bigger than that, he says.
"Small business is a huge and growing arena, and it gives CAN Capital some advantages in providing a service that helps its clients who want to play in this [offering funding] space reach those merchants," Strumello adds.
The interaction with the merchant depends on the processor using CAN Connect. "It could be in the form of some electronic medium, or it could be right in the POS system," DeMeo says. "It could also be a call center, or it could be a link to direct them right to CAN Capital. It all depends on how they are communicating with the merchant today or what the build-out is around them."
Current CAN Capital clients or new prospects should find the CAN Connect set of APIs beneficial for their merchants because it is becoming more common in the payments industry for providers to also have funding options available, DeMeo says.
"It's happening all around them with recent launches where working capital is sponsored by the processor," DeMeo says.
Square entered the merchant capital market in May when introducing Square Capital, which allows Square merchants to seek needed cash. Square bases its funding decision on the merchant's transaction history with Square.
In addition, PayPal expanded its Working Capital merchant credit program earlier this year, using a merchant's transaction history to help determine loan qualifications.
These companies can leverage their data and infrastructure to lending risk for a segment that banks generally don't target.
Square provides its capital request process "through a POS click environment" and CAN Connect allows CAN Capital clients to do the same if they prefer that communication method, DeMeo says.
CAN Capital empowers the process through the "Instant Quote" application interface, which leverages the data processors already possess, says Leigh Gross, vice president of business development for CAN Capital.
"They pass that information to us behind the scenes and we can respond back with instant quotes," Gross says. "The quotes don't require any personally identifiable information or any action on the part of the merchant."
The entire process helps CAN Capital's partners build stronger relationships with their merchants through the value-added service of access to working capital, Gross says.
"The processor knows who might qualify and they can reach out to them," Gross says.
CAN Connect provides a processor the opportunity to tell a merchant they might qualify for a certain amount of dollars and what the rate might look like, Gross adds. "It's a much more powerful tool when used in that way."
CAN Capital plans to roll out CAN Connect to new and existing partners over the next few months, DeMeo says.