I have become fascinated by embedded finance companies and how they allow businesses to change how consumers interact with finance. Businesses can now create products that contain features such as payments, lending, insurance, and banking. This allows companies to own the entire customer journey when dealing with finance. For many, this creates a seamless, integrated experience when doing business with that company.
Something else I’ve found interesting is how embedded finance is no longer only available to large tech companies. Smaller companies can use similar technology to offer financial services to their customers. Many service providers allow companies to white-label their products to serve customers’ financial needs.
Of course, not all service providers are the same, and companies evaluating service partners need to understand how each provider integrates with a company, what each service provider charges, the security of the provider, what regulations the service partner works under, and how each provider aligns to serve a company’s long-term needs. Once companies weigh these, they will be better aligned to see which providers are leaders in the space and how they compare to direct competitors.
What Are Embedded Finance Companies?
Embedded finance companies allow businesses to integrate financial services into other, non-financial services. With the help of embedded finance companies, businesses can offer payment and financing options to their customers without having the customers leave the company’s website or app.
An example of embedded finance in action is an online retailer allowing customers to pay in installments while processing a purchase, or a business management application enabling customers to send invoices, get paid, and accept payments without needing to switch to a different application.
Depending on the circumstances, regulated entities such as banks may perform certain financial activities. Most importantly, embedded finance offers convenience. Businesses can provide more to their customers and gain additional income streams, while customers are able to access the financial tools they need in a convenient and timely manner.
On the other hand, not all embedded finance providers offer all financial services. Some are focused on payments while others are focused on banking, card issuing, lending, and insurance, to name a few. Knowing these distinctions helps in identifying the most ideal partner.
How Do Embedded Finance Companies Work?
Usually, a business locates a financial service it believes would improve its product and integrates a provider’s technology into its website, mobile app, or business software.
An API facilitates communication between systems and can be used, for instance, to enable a marketplace to accept payments, calculate its commission, and distribute the proceeds to its sellers.
Multiple parties can be behind the API. These may include the technology provider, a payment processor, and a licensed financial institution. Each party should have its functions clearly defined.
Let’s say a property management platform wants tenants to pay rent online. By integrating payments, its customers can avoid having to make transfers themselves and manually update payment records. It appears simple to the user, but a range of technologies, processes, and controls have to work in unison to provide the service.
Types of Embedded Finance Companies
There are multiple providers for different needs and, therefore, I would never consider every platform a direct competitor. The different segments include payments, banking as a service (BaaS) and infrastructure, lending, insurance, and cards.
- Embedded payments providers: Help businesses take customer payments, handle transactions and disperse funds. Examples are Stripe Connect and Adyen for Platforms.
- Banking as a Service providers: Link software platforms to banking infrastructure via technology and financial institution partnerships. “Look at Unit and Treasury Prime, for instance.
- Embedded lending providers: Provide financing options within shopping, software or business platforms. Klarna and Affirm are consumer installment payment players, while Parafin is for business and platform financing.
- Card issuing providers: Assist companies in creating virtual or physical payment cards. A notable provider in this space is Marqeta.
- Embedded insurance providers: Help businesses embed relevant insurance products into customer journeys.
Consider the actual business requirements first when choosing a category. A card issuing provider that is strong in that area may not be the best choice for international payment processing.
Top Embedded Finance Companies to Know
When evaluating embedded finance companies, I look at their key differentiators instead of going with a popular brand that may not work for a given business need. Following are some examples of companies for the year 2026. Their offerings and terms need to be checked for the market they are serving.
Stripe: Provides payment infrastructure,d marketplace payment tools and other financial products. Worthwhile for online businesses and platforms needing integrated payment solutions.
Adyen: Helps enterprises with their payments and marketplace operations. Its platform capabilities may work for businesses that manage payments across a range of channels and markets.
Marqeta: Specializes in modern card issuing and processing, making it relevant for businesses developing branded cards or configurable spending programs.
Unit: Offers financial infrastructure for software platforms that want to offer banking-related services, products and apps through integrations and financial institution partnerships.
Plaid: Focuses on connecting financial data, helping applications link to financial accounts to support a range of use cases.
Airwallex: Provides business financial tools, including international payments and multi-currency solutions.
These providers are not interchangeable. I would compare each company’s documentation, supported regions, onboarding requirements, and commercial terms before shortlisting candidates.
Benefits of Embedded Finance Companies
The main advantage is convenience. Users of embedded finance solutions can complete financial tasks without having to use a separate financial service they do not trust. Embedded finance can make a financial service feel more valuable to its users.
There are benefits for businesses too. Financial services can create additional revenue through eligible transaction fees, financing or premium product features.
For operational benefits, embedded finance can help reduce manual work and simplify reconciliation through integrated and automated transaction records and account information.
That said, one must not necessarily assume that each integration would definitely result in increased revenues and customer retention. There are many other variables to consider, such as pricing, product design, the job it is substituting for,r and customer needs,s to name a few.
Pursuing customer problems is the best approach. It’s better to genuinely solve customer problems, perhaps through a financial feature, before competitors do.
Industries Using Embedded Finance Solutions
There are multiple industries which can use financial features. It is often helpful to digitize financial transactions, payments and money management for customers through the different stages of the value chain.
eCommerce/Retail: Integrated checkout, payment options, and installment financing can allow customers to transact in one step or reduce the number of transactions needed.
Software as a Service (SaaS): Business applications can integrate payment collection, invoicing, and expense cards, as well as generate financial reports. As a product example, an accounting application could permit customers to pay invoices within the application.
Marketplaces/Gig Platforms: Marketplaces can process customer payments and disburse seller payments. Some Gig platforms may offer payment or financial products to their workers.
Travel and Hospitality: Some booking platforms may integrate payment processing, travel insurance, and financing options.
Healthcare and Professional Services: Some platforms may allow payment options and payment plans, as well as integration for collections.
I look for the biggest opportunities to integrate financial services in a way that most seamlessly supports existing processes. The goal is not to turn every business into a bank. It’s to remove unnecessarily circuitous processes for customers.
Choosing the Correct Embedded Finance Provider
Comparing feature lists is not enough to select the right partner. I’d start by determining what the exact financial service the business wants to offer, the customers they want to serve, and the countries in which they want to operate.
Next, evaluate the following factors:
- Integration: Look for documentation on API integration, develop test environments, and check for system compatibility.
- Pricing: What are the costs to set up and maintain the integration? Are there charges per transaction? Are there minimum commitments? What are the additional fees?
- Compliance: Which party is responsible for IDV (identity verification) and AML (anti-money laundering) controls, as well as licensing and other applicable obligations?
- Security: How does the provider protect customer data? What are the provider’s fraud controls and procedures? How does the provider control access to customer data? What are the provider’s incident response procedures?
- Scalability: Can the provider support the anticipated volume of transactions? Can the provider support the transactions in new markets? Can the provider support the transactions for new products?
- Support: How does the provider assist in the resolution of payment issues? What support and service is available?
For businesses comparing embedded finance companies, I would also examine contract terms, financial institution partnerships, settlement timelines, and exit arrangements. The lowest price is not always the best deal if integration is difficult or support is unreliable.
A Practical Example
Think of a rapidly growing marketplace that is processing payments manually. As sales increase, the team spends hours reconciling transactions and tracking payouts to sellers.
Instead of creating a payment system from scratch, the business reviews integrated payment systems, tests their APIs, evaluates the cost of transactions, and looks at how seller onboarding and ongoing compliance will be handled.
An integrated payment system may automate some back-office processes and create smoother experiences for buyers and sellers. The end result would still depend on various factors such as the volume of transactions, the provider, and the business’s needs, but the decision would be based on measurable needs, not popular opinion.
Risks and Challenges
Embedded finance can improve the customer experience, but it shifts liability to the business in a number of ways. Financial transactions touch on sensitive data. There is operational and legal risk associated with the type of financial service offered.
When using embedded finance, it is important to determine who is liable for AML and KYC, transaction monitoring, complaints, data protection, and reporting. Responsibilities for legal and regulatory reporting should be clearly spelled out.
A provider outage would impact a business’s ability to process payments. Service-level agreements and backup plans would help mitigate disruption. There are a number of other legal considerations based on where the service is provided.
Risk management should always be considered with new features offered by providers. Embedded finance provides a way to offer financially related features to customers, but a company should evaluate the provider’s long-term commitment to operating securely and reliably.
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What is Embedded Finance?
I anticipate the use of embedded financial services will continue to increase in B2B software and marketplaces. Further, I expect the integration of embedded financial services to increase in products that provide digital customer experiences.
Several important trends merit mention. API-based infrastructure continues to help businesses link financial products to existing applications. There is growing interest in the use of AI-assisted tools to help with fraud and risk detection, as well as to aid in other operational decisions. The use of such tools depends on the quality of data, governance, and appropriate controls and oversight.
Another area of interest is business-to-business (B2B) financial services. Providers are combining payment, working capital and other financial solutions within the software platforms customers use. There is a growing interest in digitizing financial workflows, particularly in the area of accounts payable and accounts receivable automation within companies.
Digital cross-border payments and digital settlement infrastructure are improving. While businesses can use these new technologies and infrastructure, they must take into account legal and regulatory frameworks as well as commercial viability.
The best opportunity in embedded finance is the ability to create great customer experiences while ensuring that the underlying infrastructure is reliable and regulatory processes are clear. Competitive advantage will be based on the ability to offer a comprehensive product, along with reliable and secure infrastructure and differentiated customer experience.
Frequently Asked Questions
What services do embedded finance companies offer?
Embedded finance companies offer businesses the opportunity to incorporate payment services and other banking-related services, card issuing and processing, lending, and insurance services in their products.
What companies offer embedded finance?
Examples of embedded finance companies are Stripe, Adyen, Marqeta, Unit, Plaid, and Airwallex.
How do embedded finance companies make money?
Embedded finance companies make money using a variety of methods. These methods include charging fees for transactions, membership fees, software fees, and financial services fees.
What is the difference between embedded finance and Banking as a Service?
Embedded finance encompasses a greater scope than Banking-as-a-Service (BaaS). BaaS provides financial institutions the ability to offer their services to companies that are not eligible to provide banking services.
What is the process for integrating embedded finance?
Assess the necessary financial services and features. Compare providers. Analyze obligations for compliance. Assess the costs and technical integration of providers. Monitor reliability, costs, and customer feedback, and test operational performance after going to market.
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