Examples of Embedded Finance: Building the Future of Financial Management

Embedded finance is the seamless integration of financial services, products, or features into a non-financial platform's core offering. This integration occurs at the platform level, providing users with financial capabilities without leaving their primary software environment. The key distinction is that these services become an intrinsic part of the platform's functionality, rather than an external add-on or redirect.

Rather than accessing financial services through traditional channels or banks, users can seamlessly access these services within the software platforms they already use for their business operations. The embedded finance sector is experiencing remarkable growth, with industry analysts projecting significant expansion over the next decade. This growth is driven by increasing demand for integrated financial services, technological advancements, and the growing recognition of the value these solutions bring to both platforms and their users. Embedded finance is projected to produce $230 billion in revenue in 2025, and it's expected to grow to $385 billion in 2029.

What Isn't Embedded Finance?

To fully understand embedded finance, it's important to clarify what it is not. Embedded finance is not:

• Building your own financial service from scratch.
• Acquiring a financial services provider.
• Third-party integrations that redirect users to external platforms.
• Partnership opportunities that break the user experience by sending customers to separate portals.
• Simple API connections that don't provide a unified experience.

The Technical Foundation of Embedded FinanceEmbedded finance solutions are built on two primary technical components:

1. APIs (Application Programming Interfaces): These serve as the backbone of embedded finance, enabling secure communication between the platform and financial service providers. APIs handle everything from payment processing to account management. They ensure seamless data flow and transaction execution.‍
2. SDKs (Software Development Kits): These tools provide developers with the necessary components to implement financial features effectively. SDKs include pre-built interfaces, security protocols, and coding frameworks that streamline the integration process.

Examples of Embedded Finance for SMB Platforms

Embedded Payments

Embedded payments represent the cornerstone of embedded finance, serving as the initial innovation that catalyzed the broader embedded financial services revolution. At its core, embedded payments enable non-financial platforms to seamlessly integrate payment acceptance capabilities without shouldering the traditional burdens of technical infrastructure, operational complexity, or regulatory compliance.

The embedded payments ecosystem consists of three primary elements:

1. Payment Processing: Traditional payment processing requires businesses to maintain separate payment systems, merchant accounts, and compliance frameworks. Embedded payments consolidate these functions directly within the platform where SMBs already operate. This implementation eliminates the need for separate payment portals or redirects, creating a unified experience for both SMBs and their customers. One of the most successful examples of this is Shopify’s partnership with Stripe, embedding Stripe’s payment processing directly in Shopify’s platform and branding it Shopify Pay.
2. Embedded Banking: Building upon the payment infrastructure, embedded banking allows platforms to offer deposit accounts, additional money movement capabilities beyond basic payment processing, and interest-bearing features directly within their interface. This extension empowers businesses with real-time account creation and management capabilities, alongside seamless fund transfers and reconciliation processes. Platforms can offer interest-earning opportunities on stored balances, while providing automated cash flow management tools through direct integration with payment processing systems. Leading providers in this space, such as Unit, Adyen and Stripe, have developed comprehensive solutions that combine traditional banking services with an embedded API-driven infrastructure.
3. Embedded Payment Cards: Embedded payments extend even further through embedded payment cards, which allow platforms to issue branded physical and virtual payment instruments directly to their SMBs. These solutions enable spending controls and limits, while providing real-time transaction monitoring capabilities. Organizations can implement programmatic card management systems and integrate them directly with their expense management infrastructure. Enhanced security features through virtual card numbers add an additional layer of protection for transactions.

The combination of embedded payment processing, banking capabilities, and payment cards provides platforms with a comprehensive foundation for money movement. This unified infrastructure eliminates traditional payment complexities while enabling seamless transactions, account management, and card issuance  — all through a single addition. As the original catalyst for embedded finance, embedded payments continue to demonstrate how financial services can be elegantly woven into existing software platforms.

‍Example Providers: Stripe, Adyen, Unit, Finix, Rainforest, Payabli, JustiFi, Tilled, Moov

Embedded Bill Pay

Embedded bill pay solutions represent a significant advancement in financial process automation, enabling platforms to seamlessly integrate accounts payable and receivable capabilities into their existing software. At its foundation, embedded bill pay eliminates the traditional complexity of payment operations by consolidating previously fragmented billing workflows into a unified system.

These solutions transform how businesses handle their payment operations by providing sophisticated payment routing, approval workflows, and reconciliation capabilities directly within their primary software platforms. Platforms can offer their customers comprehensive bill payment features including recurring payment scheduling, multi-payment method support, and automated reconciliation with accounting systems. This integration extends beyond simple payment processing to include advanced features such as early payment discounts, payment status tracking, and detailed audit trails.

For platforms, embedded bill pay creates natural engagement points throughout the monthly payment cycle while addressing critical business operations. By handling both payables and receivables, these solutions create a complete payment ecosystem that serves both sides of every transaction. Leading providers like Melio, Routable, and Mercoa have developed robust APIs that enable platforms to offer these sophisticated billing capabilities while maintaining their existing user experience.

The embedded bill pay infrastructure includes key elements such as smart payment routing to optimize for speed and cost, automated approval workflows for enhanced control, and seamless integration with accounting software for real-time reconciliation. This comprehensive approach to bill payment automation represents how embedded finance can transform essential business operations through thoughtful platform integration.

Example Providers: Melio, Routable, Mercoa

Embedded Payroll

Traditional payroll processing for SMBs can be an overwhelming and time-consuming task, often requiring hours of work per pay period. The complexity multiplies when businesses need to manage multiple state payroll taxes, various employee classifications including W2 and 1099 workers, part-time and full-time staff, different pay rates and schedules, benefits administration, time tracking integration, and ever-changing compliance requirements.

Embedded payroll solutions transform this complex landscape by integrating comprehensive payroll processing capabilities directly into business management platforms. This integration streamlines workforce management and ensures accurate, compliant payroll processing while dramatically reducing the time and effort required from business owners and managers.

Embedded payroll solutions deliver significant advantages by automating and streamlining the entire payroll process. These systems dramatically reduce administrative burden through comprehensive automation of tax calculations, filings, and time tracking integration, while maintaining robust compliance across multiple jurisdictions. Built-in validation checks and automated reconciliation processes help prevent errors and ensure accuracy in all payroll operations, from tax calculations to overtime rules and deduction limits.

Example Providers: Gusto Embedded, Check, Salsa, Zeal

Embedded Accounting

Embedded accounting integrates financial management capabilities directly into business operations platforms, eliminating the need for separate accounting systems. This integration allows businesses to manage their finances, track transactions, and generate reports within their primary operational software, replacing traditional standalone solutions like QuickBooks or Xero.

The practical impact of embedded accounting becomes clear in daily operations. When businesses process transactions or manage inventory in their main platform, the accounting components automatically capture and categorize this data. This direct connection reduces data entry errors and provides real-time financial insights without manually transferring information between systems.

Toast could strengthen its platform by embedding accounting capabilities directly into its core system. Each payment transaction (i.e. money in) and labor hour (i.e. money out) would automatically generate accurate accounting entries while maintaining compliance with restaurant accounting standards. Restaurant owners would see their profit margins, labor costs, and inventory valuations directly in their Toast dashboard, as revenue recognition and reconciliation processes run continuously in the background. This would let operators manage all financial tasks within their existing Toast interface, removing the need to manually transfer data between separate accounting systems.

The technical architecture of embedded accounting prioritizes adaptability and seamless integration. These solutions typically use white-label frameworks that match the host platform's design and functionality. For example, an e-commerce platform can incorporate accounting features that mirror its existing interface, making financial management feel like a natural extension of the core platform rather than an added component.

This approach also enhances data accuracy and financial control. When accounting functions are embedded within operational systems, businesses can set up automated workflows that reduce manual intervention.

Hurdlr demonstrates the power of embedded accounting through our APIs and SDKs designed for SaaS platforms that work with SMBs. We enable platforms to embed automated expense monitoring, revenue tracking, and financial reporting capabilities directly into their existing business platforms. This allows providers to offer their SMB customers sophisticated accounting tools without leaving their platform. By leveraging Hurdlr's embedded accounting infrastructure, platforms can enhance their value proposition while maintaining focus on their core business offerings.

Embedded Lending/Capital 

The traditional lending landscape for SMBs has long been characterized by complex, time-consuming processes that often create significant barriers to accessing capital. Historically, SMBs seeking additional funding have had to navigate through extensive paperwork, multiple touch points with traditional financial institutions, and lengthy waiting periods for loan decisions. This conventional approach not only consumes valuable time and resources but can also hinder business growth and adaptability in rapidly changing market conditions.

Embedded lending represents a shift in how businesses access capital. By integrating lending capabilities directly into platforms and services that SMBs already use for their daily operations, embedded lending solutions streamline the entire borrowing process. These platforms leverage their unique position of having direct access to crucial financial data, transaction histories, and business performance metrics to facilitate faster, more informed lending decisions.

Embedded lending delivers specific advantages to businesses seeking capital. Lenders can approve funding in hours instead of weeks by using automated data collection and analysis to replace manual paperwork. The direct access to business performance data improves risk assessment accuracy and speeds up decision-making. Businesses can customize repayment schedules based on their actual revenue patterns and cash position. The integration into existing business software means companies can request, receive, and manage funding through platforms they already use daily.

For example, through their platform, Toast Capital offers eligible restaurant customers quick access to loans ranging from $5,000 to $300,000, all seamlessly integrated within their existing Toast account.

Example Providers: Pipe, OatFi, CapitalOS

Embedded Insurance

Embedded insurance enables providers to integrate coverage options into external platforms and digital ecosystems, placing insurance solutions directly in customers' regular digital environments. This integration removes the barriers of seeking separate insurance coverage, allowing customers to secure protection within platforms they already use.

The effectiveness of embedded insurance comes from its precise placement and timing. When businesses incorporate insurance options into their customer's purchase journey, they establish a logical connection between the product or service and its protection. This positioning enhances the customer experience and improves insurance adoption rates by presenting coverage at the moment it's most relevant.

The workforce management platform Gusto demonstrates this capability through their integrated workers' compensation insurance. Their solution automatically adjusts coverage based on workforce changes. When businesses hire new employees or modify existing roles, the platform updates insurance coverage and adjusts monthly premiums in real-time. This automation reduces administrative work and ensures consistent coverage as teams grow and change.

This approach benefits both providers and customers. By offering insurance within established platforms, providers can use existing customer data to offer specific, relevant coverage options. E-commerce platforms can provide shipping insurance based on product value and destination, while ride-sharing apps integrate trip protection insurance. This contextual awareness helps providers deliver targeted protection while making the selection process clearer for customers.

Example Providers: Boost, Slice, DigiSure, Cover Genius, Companjon, Kanopi, Tint.ai

Benefits of Embedded Finance

The embedded finance market represents a substantial revenue opportunity for platforms seeking new business models. According to BCG and Adyen's research, the United States total addressable market (TAM) for embedded finance in 2024 is $185 billion. With current market size at $32 billion, 80% of this potential remains unexplored. This gap between market potential and current adoption indicates significant room for growth in the financial services industry.

The disparity between current market size and total addressable market reflects the early stage of embedded finance adoption. As more businesses recognize the revenue potential of integrated financial services, this underserved market segment offers opportunities for platforms to develop solutions that reshape how companies deliver financial services to their customers.

Strategic Benefits for SaaS Companies

For Software-as-a-Service (SaaS) companies, embedded finance capabilities offer three specific advantages that affect business metrics and market position:

Enhanced Average Revenue Per User (ARPU)

By incorporating embedded finance solutions, SaaS companies can substantially increase their ARPU without the traditional overhead of developing financial infrastructure from scratch. This revenue expansion comes through multiple channels: transaction fees, subscription upgrades for advanced financial features, and value-added services that complement the core product offering. 

Strengthened Customer Retention

Embedded finance improves retention by integrating essential financial services into daily operations. When customers rely on a platform's financial capabilities, they become more invested in the complete solution. This integration increases the cost and complexity of switching to alternative services. As customers use more financial features within the platform, the service becomes increasingly essential to their operations.

Increased Product Stickiness

Embedded finance strengthens user engagement through practical financial tools. By adding financial services to core features, SaaS platforms create comprehensive solutions that serve multiple business needs. Users who adopt integrated payment systems, lending services, or automated financial processes incorporate these tools into their standard workflows. This integration transforms the platform from a single-purpose tool into an essential business system that handles both operational and financial requirements.

Beyond Integration: The Business Impact of Embedded Finance

The growth of embedded finance demonstrates how financial services integration creates measurable business value. As platforms adopt embedded finance solutions - from payments and banking to insurance and lending - they establish new revenue streams while solving practical operational challenges for their customers. The data shows substantial room for growth, with only 20% of the $185 billion embedded finance market currently captured.

The success of embedded finance stems from its ability to address specific business needs through strategic integration. Payment processing becomes more efficient when embedded within existing workflows. Lending decisions improve through direct access to business performance data. Insurance coverage adjusts automatically based on real-time business changes. These practical applications demonstrate why platforms are expanding beyond their core offerings to include financial services.

For SaaS platforms specifically, embedded finance provides clear paths to increased revenue per user, improved customer retention, and deeper product adoption. These benefits emerge not from simply adding financial features, but from thoughtfully integrating them in ways that enhance existing business processes. As more platforms recognize these advantages, embedded finance will likely continue its expansion across different business sectors and use cases.

The future of embedded finance depends on ongoing collaboration between platforms, financial service providers, and technology partners. As the market matures, we can expect to see more sophisticated integrations, improved user experiences, and new applications that further demonstrate the value of bringing financial services directly to where businesses operate. Understanding both the technical requirements and business implications of embedded finance will be crucial for platforms looking to implement these solutions effectively.