Embedded finance is the seamless integration of financial services into non-financial platforms, enabling businesses to offer financial products without becoming financial institutions themselves. By embedding payments, lending, or insurance directly into their platforms, companies improve convenience and reduce transaction friction, resulting in enhanced user experiences.
Industries across e-commerce, SaaS platforms, and gig economy applications are leveraging embedded finance to unlock new revenue streams and provide greater value to customers. Adoption is not slowing down by any means, in fact by 2030, the European embedded finance market is projected to grow significantly, reaching an estimated value of €13.5 billion. This growth is made possible through APIs and Banking-as-a-Service (BaaS) providers, which allow businesses to integrate financial solutions without the need to build complex banking infrastructure from scratch.
This article explores the basics of embedded finance, including its components, benefits, and applications across industries. We’ll discuss how APIs and BaaS providers enable financial integration, the challenges businesses may face, and future trends shaping the financial landscape.
Examples of how businesses are adopting embedded finance
Embedded payments
Embedded payments integrate payment processing directly into platforms, allowing seamless transactions without redirecting users to third-party processors. This reduces checkout friction, improves conversion rates, and streamlines financial operations.
Examples:
- PayByPhone – Edenred Payment Solutions partnered with PayByPhone to transform the way parking payments are made. By implementing a seamless, cashless transaction system, Edenred Payment Solutions enhanced the user experience, making parking payments faster, easier, and more convenient for customers. This innovative solution replaced traditional payment methods, streamlining the process for both users and parking providers.
- Countingup – Edenred Payment Solutions collaborated with Countingup to deliver advanced business banking solutions designed to simplify financial management for small businesses. By integrating embedded payment flows, this partnership enabled better expense tracking, improved financial control, and a more efficient way for businesses to manage their banking needs. The result is a solution that supports businesses in staying organized and focused on growth.
How Edenred Payment Solutions helps
Edenred Payment Solutions provides customisable embedded payment solutions tailored to complex business payment ecosystems. Companies can control business expenses more effectively and manage employee transactions with ease.
Embedded lending
Embedded lending allows platforms to offer credit at the point of purchase, enabling customers to access financing seamlessly. This includes Buy Now, Pay Later (BNPL) options, instalment payments, and business lending solutions.
Example:
- Viabill – Edenred Payment Solutions partnered with Viabill to introduce seamless Buy Now, Pay Later (BNPL) solutions tailored to meet the needs of modern businesses. This collaboration empowers companies to enhance their sales by providing customers with flexible and convenient payment options, making purchases more manageable and accessible. By integrating BNPL into their services, businesses can improve customer satisfaction, drive conversions, and support long-term growth.
How Edenred Payment Solutions helps
Edenred Payment Solutions enables businesses to offer embedded POS alternative financing options through its advanced core payments technology, ensuring seamless integration into existing payment flows.
Embedded insurance
Embedded insurance integrates coverage options directly into platforms, allowing users to purchase policies at the point of need. This enhances customer trust and generates additional revenue for businesses.
Example:
- Eyst Technology – Edenred Payment Solutions has partnered with Eyst Technology to simplify the way insurance claim payouts are handled. By leveraging virtual card technology, this collaboration aims to streamline the claims process, allowing for faster, more secure, and more efficient payouts. The partnership simplifies the traditionally time-consuming and complex process of claim disbursements, benefiting both insurance providers and their customers by offering a seamless and hassle-free experience.
Benefits for businesses:
- Enhances customer trust by offering seamless protection at the time of purchase.
- Creates new revenue streams by monetising insurance offerings.
- Improves customer loyalty by integrating essential services within the platform.
Embedded finance benefits for businesses and customers
Enhanced customer experience
Embedded finance reduces friction in transactions, making payments, lending, financing, and insurance more accessible.
- Reduces checkout abandonment rates by providing seamless, in-platform transactions, allowing customers to complete their purchases without being redirected to external payment gateways. This smoother, friction-free experience encourages customers to finalise their purchases, boosting conversion rates.
- Builds customer trust by offering financial services within familiar platforms that users already know and rely on. By integrating these services directly into the platform, customers feel more secure and confident in their transactions, leading to stronger brand loyalty and repeat business.
- Enables personalised financial services, such as tailored lending options and payment plans based on user behaviour and preferences. By leveraging data insights, platforms can provide customised solutions that meet individual customer needs, enhancing their experience and fostering long-term engagement.
New revenue streams
Businesses have multiple opportunities to generate additional income by integrating financial services into their offerings:
- Interchange fees: By offering branded payment cards, businesses can earn a percentage of every transaction made by their customers. This provides a steady stream of passive income as customers use the cards for everyday purchases.
- Lending commissions: With embedded credit solutions, businesses can allow customers to access financing options directly through their platform. In return, they earn commissions on loans provided, creating a win-win for both the business and the customer by simplifying the borrowing process.
- Insurance referral fees: Embedded insurance solutions enable businesses to offer tailored insurance options to customers during the purchasing process. By partnering with insurance providers, businesses earn referral fees for every policy sold, while adding value to the customer experience through convenience and choice.
These strategies not only create new revenue streams but also enhance customer loyalty by delivering integrated, seamless financial solutions.
Increased customer retention
Embedding financial services within a platform enhances customer stickiness and encourages repeat usage.
- Offers customers a one-stop solution for their service needs, removing the hassle of seeking alternatives.
- Simplifies the user experience with integrated payment and financing options, fostering convenience and satisfaction.
- Builds trust by providing tailored financial products that align with customer needs and preferences.
- Encourages long-term customer relationships by making financial interactions effortless and intuitive.
- Strengthens brand loyalty through enhanced value propositions and comprehensive service offerings.
Embedded finance is reshaping how businesses interact with financial services
By integrating payments, lending, financing, and insurance directly into their platforms, companies can enhance customer experience, unlock new revenue streams, and improve retention.
For businesses looking to scale and innovate, solutions like Edenred Payment Solutions provide the technology and expertise to seamlessly integrate embedded finance into existing operations. As the financial landscape evolves, staying ahead with embedded finance is no longer an option—it’s a necessity.
Edenred Payment Solutions and embedded finance
We provide solutions that deliver tailored embedded financial services that enhance both operational efficiency and customer engagement. By leveraging our expertise, businesses can provide innovative payment options, streamline transactions, and create a more cohesive user experience.
Our bespoke solutions are designed to meet the specific needs of your business, ensuring a perfect fit for your business ecosystem.
Is your business ready to embrace embedded finance?
Get in touch with our experts and let them help you explore how we can easily integrate one or more financial products within your platform.
