Embedded Finance Use Cases

We studied the most common use cases of embedded finance from emerging and established players in the market.

And because the market is broad, we grouped them into categories and sub-categories.

Also, note that the use cases outlined below are not exhaustive, and companies may combine multiple use cases in their embedded finance strategy.

Without further ado, let's dive into the different use cases of embedded finance.

Embedded Payments

Embedded payments enable merchants to facilitate online or in-app payments without involving a payment service's paywall. They provide better checkout times, cash-on-delivery, and easy fraud detection.

1. Checkout

Some embedded payment use cases happen after checkout. This means the financial institution supports the payment process but does not control it. Examples include:

● Braintree: Braintree is a PayPal company that enables businesses to accept payments online and via mobile.

● Stripe: Stripe is a leading online payment processing platform for businesses. It has customizable payment APIs and can unlock new markets such as China, Eastern Europe, and Africa through Alipay and WeChat Pay integrations.

2. In-App Payments

In-app payments streamline the purchasing process within an application, allowing users to make transactions without leaving the app. This enhances user experience and can drive higher conversion rates for businesses. Examples include:

● Uber: Uber integrates in-app payments, enabling users to pay for their rides directly within the app using stored payment methods.

● Amazon: Amazon’s in-app payment system allows customers to purchase goods seamlessly without navigating to an external payment gateway.

Embedded Lending

Embedded lending integrates loan or leasing-facilitating technology into non-financial service providers, offering customers easy, fast and, often, mobile access to credit right then and there at the moment of need.

1. Pay later

This type of embedded lending use case defers payment for an online purchase, where a customer can pay the entire balance several weeks later or pay it off via installments. Examples include:

● Affirm: Affirm is a fintech company that offers installment loans to consumers at the point of sale, especially for big-ticket items like furniture and electronics.

● Klarna: Similar to Affirm, Klarna offers short-term financing options with lower annual percentage rates for products or services purchased online. They also provide costless installment plans for online purchases across several merchants, even in an instant.

2. Merchant Financing

Merchant financing is another form of embedded lending where businesses can access loans or lines of credit directly through platforms they already use for daily operations. Examples include:

● Square Capital: Square Capital provides small businesses access to loans based on their card sales processed through Square, offering quick funding to help businesses grow and manage expenses.

● Amazon Lending: Amazon Lending provides short-term business loans to qualified Amazon sellers, allowing them to invest in inventory and other business needs to increase sales.

3. Personal Loans

Embedded personal loans are offered directly through platforms that users already engage with for various services. This allows quick and convenient access to personal financing without navigating traditional banking channels. Examples include:

● SoFi: SoFi offers personal loans to users, which can be accessed directly through their platform. These loans can be used for various purposes, including debt consolidation, home improvements, and large purchases.

● Upgrade: Upgrade offers personal loans that focus on providing a simple and transparent borrowing experience. Users can apply online and receive funds quickly for various personal financial needs.

Embedded Insurance

Embedded insurance integrates insurance products into the purchase process of goods or services, making it easy for consumers to obtain coverage without needing to seek out insurance providers separately.

1. Point-of-Sale Insurance

Point-of-sale insurance provides coverage options directly at the point of purchase, allowing customers to add insurance to their cart and their primary purchase. Examples include:

● Allianz Partners: Allianz offers travel insurance that can be added during the booking process on travel websites and platforms. It provides coverage for trip cancellations, medical emergencies, and more.

● Cover Genius: Cover Genius offers embedded insurance solutions for various industries, including retail, travel, and logistics, allowing customers to purchase coverage at checkout.

2. Embedded Health Insurance

Embedded health insurance integrates health coverage options within platforms that users already engage with for other services, simplifying obtaining health insurance. Example include:

Oscar Health: Oscar Health partners with various healthcare providers and platforms to offer embedded health insurance options, streamlining enrollment and providing users with access to comprehensive coverage.

Embedded Banking

Embedded banking integrates banking services directly into non-financial platforms, allowing users to access banking functionalities without interacting with traditional banks. This includes everything from opening bank accounts to accessing credit and managing finances, all within the apps and platforms they already use.

1. Digital Wallets

Digital wallets securely store users' payment information and allow them to transact directly through their devices, often incorporating additional banking services like account management and credit access. Examples include:

● Apple Wallet: Apple Wallet lets users store credit and debit card information, boarding passes, tickets, and more. It also integrates with Apple Pay for seamless transactions both online and in-store.

● Google Pay: Google Pay offers a digital wallet and online payment system, enabling users to store their payment information and make secure payments through their Android devices.

2. Banking-as-a-Service (BaaS)

Banking-as-a-service platforms provide the underlying technology and banking infrastructure fornon-financial companies to offer banking services. This allows businesses to embed financial products into their offerings seamlessly. Examples include:

● Solaris bank: Solaris bank provides a range of BaaS solutions, including account management, payment processing, and lending services, allowing companies to integrate banking features into their products.

● Marqeta: Marqeta provides an open API platform for card issuing and payment processing, enabling companies to offer customized banking and payment solutions within their apps.

Conclusion

Embedded finance is here to stay. According to Juniper Research, the embedded finance market is expected to reach $850 billion in revenue by 2026. This surge is driven by the growing demand for seamless financial services integrated into everyday applications.

We can expect even more innovative applications as adoption continues, driving global convenience, efficiency, and financial inclusion.