What is Embedded Finance?

Unlocking New Revenue: How to Make Money with Apps 

The fusion of technology and finance has given rise to a groundbreaking concept: Embedded Finance. Embedded finance emerged as businesses and developers looked for innovative ways to monetize their applications. By seamlessly integrating financial services into non-financial platforms, businesses can enhance user experience and discover untapped revenue streams. Let Rapyd show you how to make money with apps using embedded finance.

In this article, we’ll answer the question, “What is embedded finance?” We will also break down the different types of embedded finance, show you how your business can use it to make revenue and provide real-world embedded finance examples.

So, What Exactly Is Embedded Finance?

Embedded finance is the integration of financial services like lending, payment processing or card issuing directly into nonfinancial business infrastructure without the need to redirect to traditional financial institutions. This streamlines administration and enhances the user experience, making financial transactions more intuitive and accessible within familiar platforms. 

For instance, when you book a ride on a ride-sharing app and pay within the app without ever visiting a checkout screen, that’s embedded finance in action. Similarly, ecommerce platforms that send payouts to sellers on their platforms immediately after a purchase are leveraging embedded finance for B2B transactions. These integrations not only simplify transactions, they also add value to the user. With embedded finance, apps become comprehensive ecosystems catering to a user’s every need – superapps.

Unlock New and Diverse Revenue Streams

By integrating financial services directly into their platforms, businesses can monetize touchpoints in the user journey, such as earning transaction and FX fees at checkout. This diversifies their income and enhances customer retention, as users find more value and convenience within a single platform that bundles financial services and payments with other capabilities.

The Benefits of Embedded Finance

• Enhanced customer loyalty
• Streamlined financial operations
• Increased revenue streams for businesses

Types of Embedded Finance

Embedded finance can be broken into four categories. Banking as a Service (BaaS), Payments, Lending, and Insurance.

Banking as a Service (BaaS) allows businesses to offer bank-like services without the need to establish a full-fledged financial institution. This could include creating user accounts, holding funds and issuing cards. 

Integrated Payments streamline the transaction process. Payment APIs and partnership programs, like the ones offered by Rapyd, allow businesses to create their own unique checkout and payment experiences and transform payment processing from a cost to a revenue generator. 

Lending allows businesses to offer credit solutions, like personal loans, buy-now-pay-later or purchase financing, directly to their users. 

Insurance integrates protection and coverage services, offering users tailored policies for their specific needs.

Fintech Trends: The Future of Embedded Finance

Embedded finance is poised to reshape the landscape of technology and finance in unprecedented ways. Here are three trends shaping the future of embedded finance:

1. Hyper-Personalized Financial Offerings: With the availability of data and advanced analytics, businesses will be able to offer hyper-personalized financial services tailored to individual user preferences and behaviors. Whether it’s a loan offer based on a user’s shopping habits or an insurance policy customized to a traveler’s itinerary, the future of embedded finance will cater to each user.
2. Decentralized Finance (DeFi) Integration: As the world warms up to the idea of decentralized finance, look for its integration within non-financial platforms. This will allow users to access services like lending, borrowing, and staking directly within their favorite apps, further blurring the lines between traditional banking and everyday digital experiences.
3. Sustainability-Driven Financial Solutions: With the global push towards responsible consumption, embedded finance will play a pivotal role in promoting green and eco-friendly behaviors. We can expect to see financial incentives integrated within platforms that encourage sustainable practices and look out for rewards for eco-friendly purchases or green loans for sustainable projects.

By anticipating these trends and making strategic preparations, businesses can position themselves at the forefront of the embedded finance revolution, unlocking new opportunities for growth and innovation. 

Rapyd Is the Embedded Finance Leader

Rapyd stands at the forefront of the embedded finance revolution, offering a comprehensive suite of fintech solutions tailored for modern digital businesses. As a global fintech-as-a-service platform, Rapyd empowers businesses to seamlessly embed a wide array of financial services into their platforms. With our global payments network, international payments and disbursements are fast and easy. 

Rapyd’s powerful API allows developers to connect their existing sites and applications to robust fintech infrastructure, eliminating the complexities of integrating multiple systems. By partnering with Rapyd, businesses can transform their platforms into income-generating ecosystems, enhancing user experience and unlocking new revenue opportunities.

Embedded Finance Examples

Here are real examples of how Rapyd customers use embedded finance. 

Kadmos leveraged Rapyd’s platform to streamline its payment processes, enabling seamless transactions for its global shipping clients and their international workforce. 

Kontempo utilized Rapyd’s capabilities to optimize its payment infrastructure, ensuring efficient and secure buy-now-pay-later transactions for wholesale businesses throughout Mexico. 

Littlepay transformed public transportation by offering an alternative to cash payments for public transit.