EMBEDDED FINANCE
DON ’ T MISTAKE BNPL FOR EMBEDDED FINANCE
It ’ s a common misconception that
BNPL ( Buy Now Pay Later ) and embedded finance are the same things . However , embedded finance provides access to financial services , such as lending products , and BNPL is a type of lending product . It is the point at which embedded payments meet embedded lending . BNPL has been very popular with younger consumers , partly because it offers a more digital , frictionless approach to accessing credit .
“ Embedded finance is going to play a huge part in the future of fintech – particularly in terms of bringing regulated financial services products into everyday life . This could be something as simple as Uber issuing payment cards ( linked directly back to an app ) to their drivers to pay parking charges at airports , or Amazon offering Earned Wage Access through rapid instant payments to their staff .”
He continues , “ We saw the beginning of this with the emergence of ‘ Buy now , pay later ’ a few years ago as a means of integrating short-term loans for consumers at checkout . This concept is only going to expand and diversify : it ’ s a great revenue stream for non-financial institutions , and there are lots of fintechs , including Equals Money , that have spent the last few years growing , building their license footprint and connectivity , and developing a fantastic suite of APIs that can support this massive growth .”
Hyett believes embedded finance will be at the forefront of fintech services within a decade , with payments leading the way . She says , “ Embedded payments - that enable businesses to process their own payments - will drive this widespread adoption , as it represents the largest piece of the embedded finance pie .”
She says that in an increasingly competitive software market , SaaS vendors are also looking to capture new revenue streams , and help their merchants do the same by monetising their payments .
Hyett adds , “ As more businesses adopt embedded payments solutions , and consumers become used to the seamless checkout experience , demand will increasingly become intertwined with this combination of superior convenience , personalisation , and cost .”