Dmitry Dolgorukov is the Co-Founder and CRO of HES Fintech, a leader in providing financial institutions with intelligent lending platforms. Choose a partner that has an outstanding reputation as an ethical provider with award-winning embedded payments examples support to build confidence and trust with current and future customers. It is essential to stay ahead and plan for increased transaction volumes, user growth, and potential feature expansions such as different forms of payment.

With a fast-paced development arc, embedded finance is attracting significant funding from venture capital and growth equity. The space will continue to be well funded as more use cases expand the addressable market. Platforms have the chance to maximize retention and unlock new revenue streams for relatively low costs. Those that own distribution will be able to offer unprecedented convenience to end users, sparking large new revenue streams. The key is to be practical and clear about monetization strategies, focusing on how to reach the volume necessary to justify the expense of building new capabilities.

Benefits of Embedded Payments for Software Vendors

As we survey the competitive landscape, platforms will continue to serve as the prime owner of the customer relationship, taking an increasing share of the embedded finance profit pool. Embedded payments are here to turbocharge your platform with many great benefits. Embedded finance challenges and risks include ensuring the security and protection of personal financial information, ensuring data privacy and regulatory compliance, and the risk of cyber attacks. By utilizing digital technologies such as blockchain and artificial intelligence, embedded finance can also improve the speed and efficiency of financial transactions. At the moment, there are several significant trends for BaaS and embedded banking that are critically important for banks to track to keep up.

These could be things like improving customer service, growing an existing customer base or launching a new venture to meet a specific target audience or a specific need. For example, if you are seeking to improve customer service and satisfaction, an embedded payment could be one method to explore. Embedded insurance could make it easier for you to become a one-stop-shop concept. But in order to pick the right solution, you first need to understand your needs.

Enhanced User Experience

With embedded payments, consumers don’t even need to be aware of the transaction if they don’t want to be. This makes shoppers much less inhibited when making low-cost purchases that don’t put a major dent in their account balance. By creating seamless user experiences that integrate multiple touchpoints, merchants can increase engagement with their unique services, which in turn boosts average order value and customer loyalty. While embedded payments offer many great benefits, implementing embedded payments on your own can be challenging. Payment processing requires the right infrastructure, as well as certain technical knowledge and payments expertise. WorkWave, which offers software for field service providers, enables workers to accept payments securely using mobile devices in the field.

• Consumer payments account for more than 60% of all embedded finance transactions.
• Embedded financial services include payment acceptance, bank accounts, lending, insurance, payroll, and more.
• The monumental shift to a seamless cab-hailing experience set a new precedent for travelers, transforming the entire industry.
• With the roadmap in this practical guide, your platform can harness the full potential of embedded payment solutions and deliver exceptional value to your customers in the digital age.
• The first one is investing in an additional offering into the brand’s digital platform.
• For example, if payments are built into a merchant’s website, customers won’t be taken to a third-party checkout page that the business has no control over.

The specifics of the implementation can vary depending on the platform and the payment gateway used, but the overall goal is to provide a smooth and secure payment experience for the platform and its users. Increased access to financial services for underbanked and unbanked populations is one of the most significant advantages of embedded finance. Embedded finance is defined as the integration of financial services into non-financial products and services, such as mobile apps, websites, and devices. It is a relatively new concept that has gotten a lot of attention in recent years because of its potential to change how people access, use, and interact with financial services. The move from mono-core architecture to microservices and containers made it technically easier to create dedicated services. By gradually bringing all their IT systems to a set of dedicated services and APIs, the same banks will find it easier to perceive the idea of providing their services in the form of White Label embedded financial products to other companies.

Why Businesses Can’t Thrive Without Digital Transformation

The era of embedded finance is taking hold, and with an estimated market value of over $138 billion in 2026, it’s clear that it’s not just a financial fad, it’s the future. A reported 76 percent of consumers were confused by bills from their health care providers in 2015. Now, with the health care market moving toward high deductible health plans (HDHPs), consumers are facing an increase in financial responsibility. Deepening relationships with business clients is vital to a software company’s success. Happy customers generate more lifetime value and the revenue earned from payments can be invested back into the ISV’s core software so they can continue to add enhancements that attract new business and drive scale. This is especially true for companies dedicated to serving specific industry verticals.

This means consumers are barely aware that a transaction is taking place at all – and that’s the whole point. Embedded payments are when a software provider integrates or “embeds” payment functionality into their platform, allowing their clients to accept payments. According to a study from Juniper Research, revenue from embedded payments is set to grow by 84% in the next four years.

Embedded Finance: What It Takes to Prosper in the New Value Chain

Qualifying for regulatory certification alone would be both excessively expensive and time-consuming. Since becoming a licensed insurer, the company also offers embedded insurance (EI) in a growing number of US states. For embedded-finance providers, success demands clear differentiation in the form of product breadth or depth, or the provision of ancillary program management services. Should that happen, enablers will continue to play an important part in helping platforms navigate complex regulatory, financial, and technological requirements. Even if they do not build it themselves, the specialist knowledge of fintech experts and engineers will be crucial to platforms’ ongoing success.

Below we will look at several options tailored to the needs of individual clients. Klarna has grown into a $5.5 billion company, enabling brands to offer innovative lending customized financial solutions at the time of purchase, such as through installment payments. As they expand their suite, they decide to include embedded finance as part of their platform. They build accounting software and a payment processing framework that their merchants can use instead of multiple third-party platforms (one for POS, one for accounting and one for payment processing). As a result, the merchant gets one provider for all their business functions, enabling them to deliver better customer experiences. Think of it like a closed ecosystem, with every application connected to streamline workflows in one place, with no need for outside services.

Maximize Your Platform's Payment Processing Capabilities with VoPay

It is important to note, however, that embedded finance has its own set of challenges and risks. One of the most difficult challenges is ensuring that embedded finance products and services are secure and safe from cyber attacks. Embedded finance removes these impediments by providing financial services directly through the products and services that people already use. In both cases, an error can lead to losses, and it is not yet known in which version they will be greater. Embedded Insurance is a type of insurance that is integrated into the purchase process of a non-insurance product or service.

This means customers can make fast, simple payments enabled by NFC (near-field communication) technology at quick-service restaurants and retailers. How do you decide which embedded payment provider is the best for your business? It is a trend that is likely to increase as companies elevate the user experience and convenience of their B2B payments to match that expected with consumer payments.

Learn more about PayJunction’s embedded payments model.

Because embedded payments decentralize the often-stressful checkout experience within ecommerce, it removes much of the friction involved with making digital purchases. In the era of mobile shopping and on-the-go transactions, this is an invaluable tool to get conversions over the line that you could lose otherwise. Embedded payments are important because they are essential for today’s software vendors. According to 451 Research, 75% of companies wish they could take advantage of embedded payments functionality from a software platform they already use. This adds value to the platform for its clients and allows them to offer their clients a better payments experience. Embedding payments into their platform can also enable software providers to control aspects of the relationship such as merchant applications, onboarding and funding timelines.