Merchant Cash Advance Industry Report 2025

We take a look at the key market trends, growth drivers, and emerging developments shaping the global merchant cash advance (MCA) market in 2025.

Market Growth

The MCA industry is on a sharp upward trajectory. Valued at $17.9 billion (£13.3 billion) in 2023, the market is projected to reach $32.7 billion (£24.3 billion) by 2032, growing at a CAGR of 7.2%. This rise is driven by increasing demand for alternative finance, especially among SMEs struggling to access bank lending.

Key growth drivers:

• Digital payment adoption: The rise of card, contactless, and mobile payments makes MCA repayment models easier to implement and manage.
• Tech-driven underwriting: Lenders now use AI, open banking, and real-time data to speed up approvals and assess risk more accurately.
• Greater awareness of non-bank funding options: SMEs are increasingly aware of non-bank funding options, thanks to fintechs, brokers, and industry initiatives.

Who’s Using MCAs?

Retail and eCommerce businesses are currently the biggest users of merchant cash advances by revenue share. These sectors process high volumes of card transactions, making the daily repayment model a natural fit. Meanwhile, IT and telecom companies are emerging as fast-growing users, as digital SMEs seek agile funding to support innovation and expansion.

Top industry sectors:

• Retail & eCommerce (highest usage): High transaction volumes and seasonality make these businesses ideal MCA users.
• IT & Telecom (fastest projected growth): Driven by SME growth and limited access to traditional finance, this sector is turning to MCAs as a flexible funding alternative.
• Other sectors: Manufacturing, energy & utilities, travel & hospitality, and healthcare are also popular users of MCAs.

Changing Repayment Models

While the traditional MCA-split model remains dominant, there's a clear and growing shift toward ACH-style repayments (known in the UK as direct debit). This model suits businesses with lower or less predictable card sales, making MCAs accessible to a wider range of industries.

Repayment model trends:

• MCA-split: Still the most common, especially in card-heavy sectors like retail. Flexible and sales-based, but can complicate cash flow planning.
• ACH / Direct Debit: Gaining popularity globally, it offers fixed, predictable repayments which is ideal for SMEs with steady income but fewer card sales.
• Hybrid models starting to appear: Emerging hybrid options blend card-linked and fixed repayments, offering more flexibility based on business cash flow.

Global Market Trends

North America currently leads the merchant cash advance market in terms of size and maturity followed by Europe. However, the Asia-Pacific region is expected to outpace others in growth by 2032. The region’s rapid digital transformation, combined with rising SME activity and limited access to traditional banking, makes it a hotspot for MCA expansion.

Regional insights:

• North America: Still the largest and most mature MCA market, especially in the U.S., where MCAs originated.
• Asia-Pacific: Expected to be the fastest-growing region through 2032.
• Africa: Emerging as a promising market for MCA innovation

Innovation & Industry Developments

The MCA sector is evolving fast, thanks to tech innovation and strategic partnerships. Embedded finance is also becoming more common, where MCA offerings are built directly into digital platforms that SMEs already use.

Recent developments:

• SumUp launched an MCA product with $100M in funding
• Yabx & PayCliq rolled out MCAs to support over 40 million Nigerian SMEs
• YouLend & Paysafe partnered to offer integrated MCA solutions

Conclusion

The merchant cash advance (MCA) sector has firmly transitioned from niche to mainstream, playing a vital role in today’s alternative finance ecosystem. With the global market set to surpass $32 billion (£24.3 billion) by 2032, MCAs are becoming an increasingly attractive option for SMEs seeking speed, flexibility, and accessibility in funding.

What This Means for UK SMEs

For the UK, this global growth trajectory signals a maturing domestic market where non-bank finance continues to fill the gap left by tightening traditional lending. British SMEs, particularly in retail, eCommerce, hospitality, and tech, are embracing MCAs as a fast and reliable solution to short-term cash flow challenges.

Importantly, the rise of fixed repayment methods like direct debit (ACH-style) options is reshaping the MCA landscape. These predictable, bank-account-based repayments are becoming the preferred choice, especially for businesses without heavy card sales. This shift not only broadens the appeal of MCAs to a wider range of industries but also reflects a broader trend toward flexibility and borrower-centric models.

As the UK continues its digital finance evolution and SMEs seek faster, data-driven funding options, merchant cash advances are set to play a central role in supporting business resilience and growth across the country.

Source: Allied Market Research