For merchants, their service providers and as a result the consumer at large, Embedded Finance (EF) is way more than mere payment acceptance.
Embedded Finance represents a rich, evolving world in which merchant businesses can, and are becoming, central to consumers’ digital lifestyles – according to a new white paper from Visa.
Increasingly, there are connected devices that create hybrid environments in which the checkout process is becoming decentralised – embedded into a device where it becomes invisible and sometimes even automatic.
It’s a challenge that comes with myriad routes to success and a plethora of potential benefits for merchants who wish to maximise its potential.
Increased customer and partner touchpoints mean more data to keep growing and improving those new relationships but also to boost the bottom line, health and future of the business.
Projections for Europe show that the EF market will increase by 148% from 2024 to €228 billion in 2028, by some estimates (Juniper Research).
Greater differentiation and disintermediation in financial services at the hand of Open Banking means a greater range of potential partners and providers for merchants to work with.
In turn this extends the opportunity to other segments and indeed peers, as a parallel growth in new online business gives rise to demand for B2B lending services, should merchant appetites stretch that far.
Online retail research has suggested that the growth in e-commerce businesses created in 2023 was nearly double that of 2020, when there was an almighty surge due to the sudden digital shift and income ramifications brought on by the Covid pandemic.
This presents a twofold future opportunity because, as per estimates from the ONS, online retail sales in the UK to date only represent 26% of total retail sales.
Hence, there is a huge offline market to be tapped into through EF, as well as a steadily growing new online business segment.
There is clear evidence that merchants are beginning to view the checkout as a strategic lever, realising the potential of payment optimisation.
According to an Oliver Wyman study, 60% of merchant respondents said they “actively managed their form of payment mix”.
This trajectory of change is heading towards international commerce as cross-border payments become more relevant.
There are extended EF opportunities here for merchants to enrich their offering and grow internationally, incorporating preferential FX rates and personalised packaged offers, and shipping options to boot, for example.
Great leaps forward are anticipated for merchant services and Embedded Finance over the next year, and those that are ready to drive the change are poised to reap great benefits indeed.
Download a free copy of “Embracing the Future of Financial Services – Insights into credit and payments for Merchants”, the new white paper from Visa.
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