Embedded Finance Solutions: How Platforms Are Bringing Payments In-House

Most business owners see finance as something that happens after the sale. You deliver a product or service, send an invoice, and a bank processes the payment.

But the boundaries between software and financial services are steadily dissolving.

Embedded finance is the integration of financial services directly into the digital platforms customers already use. In many cases, this begins with simple in-app payments, where transactions happen inside the platform instead of through an external gateway. Increasingly, companies are not just selling products. They are building financial functionality into the core of their platforms.

When implemented thoughtfully, this shift can improve customer experience, increase revenue, and strengthen long-term growth.

What is Embedded Finance?

Embedded finance is the integration of financial services into non-financial platforms.

Instead of redirecting customers to banks or third-party payment pages, businesses incorporate services such as payments, digital wallets, installment options, or insurance directly into their own systems.

The result is simple: customers do not leave your platform to handle money.

Importantly, most companies do not become banks. They partner with licensed financial institutions and infrastructure providers that manage compliance, fund custody, and regulatory requirements. The platform retains control over the user experience

Finance becomes a built-in feature of the product rather than a separate external step.

Why Embedded Finance Solution is Gaining Momentum Globally

In the past, if a customer wanted to pay you, they often had to step away from your brand. They would pull out a physical card, open a separate banking app, or be redirected to a third-party checkout page. Digital platforms acted only as intermediaries.

Today, several shifts have changed that:

• Global adoption of digital payments
• Rise of API-driven financial infrastructure
• Growth of platform-based business models
• Increased consumer comfort with managing money digitally

As customers expect seamless digital experiences, financial interactions are naturally being absorbed into the platforms where commerce already happens.

Embedded finance is less about disruption and more about integration. It brings financial functionality closer to the moment of transaction.

Why Are Businesses Bringing Financial Services In-House (Top Benefits)

For companies, embedded finance is not just about convenience. It changes the economics of their platform.

1. Higher Conversion Rates

Every additional step in a checkout process increases the risk of abandonment.

When customers can:

• Use stored payment methods
• Complete purchases in one tap
• Avoid switching apps

Transactions become faster and more reliable. Fewer interruptions translate directly into higher conversion rates.

2. Stronger Customer Retention

When users store funds, subscribe through your billing system, or access platform-based credit, they are more likely to return.

• Wallet balances are reused.
• Installment options encourage repeat purchases.
• Recurring billing creates predictable engagement.

The platform becomes part of the customer’s financial routine rather than a one-time destination.

3. New Revenue Streams

Embedded finance opens additional sources of income beyond the core product.

Revenue may come from:

• Transaction fees
• Interchange revenue from issued cards
• Lending margins
• Insurance commissions
• Earnings on stored balances

For large platforms, these streams can meaningfully diversify revenue.

4. Increased Transaction Value

Installment options and embedded credit often lead to higher average order values.

When customers can spread payments over time, they may choose higher-value products or services. Embedded finance can influence purchasing behavior in measurable ways.

The Main Types of Embedded Finance Models

Not every business needs a full financial suite. The right approach depends on your structure and customer behavior.

1. Embedded Payments

This is the foundation of most embedded finance strategies.

Embedded payments often referred to as in-app payments allow businesses to process transactions directly within their platform without redirecting users to third-party payment gateways or banking apps.

Marketplaces, SaaS platforms, e-commerce businesses, and booking systems benefit from controlling billing, refunds, subscriptions, and payouts within their ecosystem.

For marketplaces, embedded payments allow:

• Split settlements
• Vendor payouts
• Internal dispute handling

Control over the payment layer creates operational efficiency.

2. Digital Wallets and Stored Value

Digital wallets allow customers to store funds directly within your platform.

They are effective for:

• Marketplaces
• Gaming platforms
• On-demand services
• Loyalty-driven ecosystems

Stored value reduces friction and increases repeat usage. However, wallets often carry regulatory obligations that must be managed carefully.

Some platforms also extend wallet functionality to include:

• Interest-bearing balances
• Micro-investment features
• Rewards systems

This shifts the app from transaction processor to financial hub.

3. Embedded Lending and Installment Payments

Many platforms now offer short-term credit or installment options at checkout.

• For consumers, this improves affordability.
• For businesses, it can increase average order value.

Marketplace operators may also offer working capital loans to sellers based on transaction data. Access to real-time sales data allows more informed risk assessment, though most companies partner with regulated lenders rather than issuing credit directly.

4. Embedded Insurance

Insurance is most effective when offered at the point of need.

Examples include:

• Travel coverage during booking
• Shipping protection at checkout
• Product insurance for electronics

When aligned with the transaction, insurance feels helpful rather than intrusive.

How Companies Integrate Embedded Finance Solutions

Most businesses offering financial features rely on structured partnerships.

Typically:

• A licensed bank or lender manages regulatory compliance.
• A financial infrastructure provider enables technical integration.
• The platform designs and controls the user experience.

This model allows companies to integrate financial services without holding full banking licenses.

However, while infrastructure partners manage compliance mechanics, accountability for transparency and customer trust remains with the platform.

Risks and Challenges To Consider Before Embedding Financial Services

Embedded finance creates opportunity but it also introduces responsibility. Once financial services become part of your product, they become part of your strategic risk profile.

1. Regulatory Responsibility

Financial services are heavily regulated across jurisdictions. 

Depending on your offering (payments, wallets, lending, or insurance) you may need to comply with laws related to:

• Consumer protection
• Data privacy
• Anti-money laundering
• Lending standards

Global expansion increases complexity. What works in one market may require structural adjustments in another. Strong legal guidance and reliable financial partners are essential.

2. Risk Management and Credit Exposure

If your platform includes lending or installment payments, credit risk must be carefully managed.

Even when working with regulated partners, unclear underwriting standards or poorly explained terms can create reputational damage.

You must ensure:

• Responsible eligibility criteria
• Clear repayment structures
• Transparent pricing

Financial services require discipline. Growth should never come at the expense of clarity or fairness.

3. Clear and Transparent Communication

Financial products must be simple to understand.

Users should clearly know:

• Fees
• Interest rates
• Repayment schedules
• Coverage limitations
• When terms are buried or unclear, trust erodes quickly. Clarity strengthens long-term customer relationships.

4. Data Security and Customer Trust

When customers store money, connect bank accounts, or access credit through your platform, trust becomes central to your brand.

Security breaches or unclear fund management can damage reputation quickly.

Embedded finance increases the sensitivity of the data you manage. This requires:

• Strong security infrastructure
• Transparent policies
• Clear communication around data usage

Trust must be treated as a strategic asset.

5. Operational and Infrastructure Impact

Financial features affect internal operations, including:

• Customer support
• Fraud monitoring
• Accounting systems
• Dispute resolution

Organizations must ensure operational readiness before integrating financial services at scale.

Many businesses work with experienced technology partners, such as Softices, to integrate financial capabilities securely while maintaining compliance and platform performance.

When Embedded Finance Makes Strategic Sense

Embedded finance works best when:

• Transactions are frequent
• Customers rely on your platform regularly
• You operate a marketplace or subscription model
• You manage recurring payments
• You possess meaningful transaction data

If purchases are infrequent or low in value, the added complexity may not justify integration.

Embedded finance should reinforce your core business model, not complicate it.

The Broader Shift in the Financial Services 

Across global markets, roles are evolving.

• Technology platforms increasingly manage the customer experience.
• Financial institutions provide regulated infrastructure in the background.

This shift does not eliminate banks. Instead, it redistributes responsibilities.

The financial layer is becoming embedded within digital platforms rather than accessed separately. For businesses, this offers greater control and greater accountability.

Finance is Becoming Part of the Product Experience

Embedded finance changes how businesses think about transactions.

Payments, credit, and protection are no longer separate from the product journey. They are integrated into it.

For growing companies, the real question is not whether finance matters. It always has.

The question is whether financial interactions should happen outside your ecosystem or seamlessly within it.

Handled carefully, embedded finance can:

• Improve conversion rates
• Increase customer retention
• Create additional revenue streams
• Strengthen long-term platform value

But it requires disciplined execution, regulatory awareness, and a sustained commitment to customer trust.

Finance is no longer just what happens after the sale. For modern digital businesses, it is part of the product itself.