What is embedded finance?

Embedded finance is the use of financial tools or services by a non-financial provider. This customer-centric process allows individuals to pay for an online purchase or take out a consumer loan, among other options, without entering their bank details. It is a way for traditional businesses to integrate financial mechanisms into their business offering.

The flexibility and efficiency that embedded finance provides has led it to be labelled as the as ‘future of the financial services industry’ and the benefits are clear for both merchant and consumer. Merging of online retailers with a financial service such as payment processing makes the checkout process far more streamlined for customers, inevitably leading to a higher conversion rate for the merchant and increased brand loyalty.

Integrating embedded payments

Embedded payments are when the checkout process for the end user occurs entirely on the merchant or solution provider’s ecosystem, without the need for the customer to be shown or taken to any third party in order to complete a payment. Embedded payments deliver merchants control over financial products and the added benefit of a seamless customer experience. According to recent data, 96% of companies said they were planning to offer embedded payments to customers in the next five years.

Depending on their business model, merchants and solution providers may want to partner with an established payments provider or build their own embedded payments solution. These days, customers expect streamlined and convenient payment experiences for all their purchases both in-person and online, but for many retailers setting up a digital wallet or payment scheme can be both time consuming and costly.

A cost-effective solution for a merchant or software vendor who wants to include embedded payments functionality in their solution is to partner with a payment processer who can integrate payment functionality into their software. An effectively integrated payment solution can provide customers with a personalised and intuitive experience to use the financial options they desire, whether that is a loan, BNPL programme or something else.

What are the benefits?

For consumers, payments are becoming less visible, and for merchants, more valuable. Embedded finance reduces friction during critical moments in the payments journey, helping reduce cart abandonment and improve customer loyalty.

Embedded payments also enable businesses to streamline payment processes, on the front end this means customers won’t need to leave the merchant ecosystem during the checkout process, and at the back end this refines processes for payment disbursement and collections and embeds rulesets which help manage fraud risk. Partnering with a payment processer who offers speedy reconciliation and transaction insights can also mitigate cash flow challenges for some merchants.


To find out more about embedded payments, get in touch with our team!