The payments industry is undergoing a profound transformation, driven by the rise of embedded finance. This innovative approach is redefining the way businesses and consumers interact with financial services, blurring the lines between traditional banking and everyday transactions. As the industry experts PYMNTS interviewed reveal, the time for action and implementation has arrived, with three key themes emerging: trust building, merchant sales optimization, and B2B integration.

Unlocking the Potential of Embedded Finance: A Seamless, Trusted Future

Trust and Ecosystem Building: The Foundation of Embedded Finance

Trust is the cornerstone of embedded finance, as merchants and service providers build their own financial ecosystems that consumers actively want to be a part of. By creating a seamless, trusted experience where every interaction feels natural and integrated, these businesses are fostering loyalty and engagement like never before. Tribh Grewal, head of FinTech partnerships at Discover Global Network, explains that embedded finance is about providing consumers and businesses access to essential financial services without ever leaving the app or portal they're already using. This data-driven approach, enabled by open banking, allows firms to develop innovative use cases tailored to their customers' needs.

Identity and Data: The Pillars of Secure, Efficient Transactions

As the digital commerce landscape evolves, identity is becoming the linchpin of a secure and efficient payment system, and a cornerstone of trust. Mary Ann Miller, vice president of client experience at Prove Identity, emphasizes that the real innovation isn't just in how we pay, but in verifying who is paying. Businesses are realizing that the way they manage customer identity could be the difference between a seamless transaction and a stalled one. By seamlessly integrating identity verification into the payment process, embedded finance is transforming the customer experience and driving trust.

Solving the Cart Abandonment Puzzle: Embedded Finance's Merchant Superpower

One of the key challenges facing merchants is cart abandonment, where customers add items to their cart but fail to complete the purchase. Embedded finance offers a powerful solution, making the checkout process so smooth and frictionless that consumers can't resist hitting the "buy" button. Doug Brown, chief product officer of digital banking at Candescent, explains that embedded finance solves a pain point for both merchants and issuers, reducing the risk of lost transactions. Eric Foust, vice president of banking partnerships North America at Trustly, echoes this sentiment, stating that embedded finance should make the payment process so fluid and seamless that it's no longer a decision point for the consumer.

Offering Consumers Financing: Embedded Finance's Conversion Boost

Embedded finance is also transforming the way consumers access financing, with platforms offering lending, insurance, and investment options seamlessly integrated into the customer journey. Nandan Sheth, CEO of card-linked installment solution provider Splitit, emphasizes the importance of offering these financing options early on, rather than just at the final stages of the purchase. This approach, combined with a truly seamless experience, can drive significant sales conversions. As Ingo Payments Chief Innovation Officer Joseph Akintolayo points out, consumers today value convenience above all else, and embedded finance delivers on that expectation.

B2B Embedded Finance: The Next Frontier of Innovation

While the consumer-facing applications of embedded finance have been widely discussed, the real value and innovation lies in the B2B sector, according to WEX Chief Digital Officer Karen Stroup. B2B transactions are often more complex, involving multiple parties, large amounts, and intricate payment terms. Embedded finance can simplify these processes by automating workflows and ensuring alignment between buyers and suppliers. As Daniel Artin, head of FinTech partnerships at Boost Payment Solutions, explains, the volume of embedded B2B payments is expected to grow from $2.5 trillion today to $6.5-$7 trillion within the next two to three years, underscoring the immense potential of this market. Partnerships with specialized FinTechs are essential to unlocking the full benefits of embedded B2B payments, as they can help SaaS platforms navigate the complexities of the industry.