We hosted our first Payments Surgery looking at 'How to win in Embedded Finance'.

Financial services products have been offered by non-financial services companies for years in the form of online payments, insurance through travel agents, or the provision of business loans, but the term Embedded Finance has gained significant buzz in the last year or so. With the help of expert panellists from Stripe, Payable and Wilson Sonsini, we uncovered why Embedded Finance is such a hot topic, and most importantly, how new entrants can take advantage of the opportunity while managing the risks involved.

Key Takeaways

• • Embedded Payments has become a requirement. Most SaaS businesses have already embedded payments to some degree, and are generating revenue from it. If you go to a checkout online in the UK that doesn’t have apple pay, it raises eyebrows. The next step is moving beyond payments, to lending, issuing, etc. Payments is just the start of a much bigger picture.

  • Operational requirements must be considered. Embedding payments is perceived to be easy, but it requires a strong strategy to get it right and operate it well. Software platforms looking to embed payments much understand how they are going to market with it, how they are going to compete with direct acquirers who have experience in the market, and they must have the right people owning the responsibility that understand the credit and fraud risk. If not, it will cost the business.

  • Embedded Finance is front and centre because of the opportunity for new revenue streams for all kinds of traditional, non-financial businesses.

  • Businesses are starting to exit embedded finance. Amazon recently exited small business lending that they invested huge resources in. They are now doing it directly; they are now enabling other fintech lenders to provide the service on their platform. The fact people are starting to restructure the way they offer embedded finance, is a reflection of the significant regulatory, commercial and operational challenges.

  • Regulatory risks are a major issue for platforms who are adding financial services products into their offering, due to variations across products and jurisdictions. More and more enforcement actions are being handed out to businesses, for something that occurred at one of their service providers. Partner due diligence is an important consideration to ensure the risks are understood.

The PSE Payments Surgery is an event we launched to support early stage PayTechs and Fintechs to support them through their growth and in return get first-hand experience of what's going on outside our typical enterprise client set. The event provides an insightful panel session, networking drinks as well as optional 1-2-1 time with consultants to support the next phase of growth or conquer upcoming challenges. If you would like to attend our next surgery on 'How to Win in Digital Consumer FX', then send us an email.