Over the past years Payments have been disrupted and transformed like NO other business in financial services. Embedded Finance is now triggering a new metamorphosis, changing the name of the game across the entire value chain.
As traditional payments have been ceding market share to online and software-led channels, players like Stripe, Block (ex Square), Adyen or PayPal have taken a dominant position.
Dominant players are pursuing a multi-level strategy
1) They drive their ecosystem play
2) They strengthen profitability (increase net take rate and alternative monetization) though payments is NOT a profitable business in EU (not like US :) )
3) They diversify their revenue model
4) They lock-in businesses not on price but on value-added.
This is one of the many ways in which embedded finance is completely transforming business and financial services as we know them.
It is not just about processing (or acquiring) anymore, but about end-to-end merchant propositions that extend to all kinds of merchant needs.
In this direction, players (like adyen, paypal, stripe), provide now an additional connecting layer between the payments’ infrastructure and their merchants, acting as an indispensable partner that embeds additional offerings (Lending, issuing, payroll, treasury, tax and Insurance are value-added services (VAS)) into an ECOSYSTEM, that drive differentiation and retention.
Adyen & Stripe for Platforms offers the main functionalities that a platform might need
- Onboarding, payment processing, payouts,
- Packaged into a customizable,
- Out-of-the-box solution together with issuing, capital and account embedded finance capabilities
Platforms and marketplaces are clearly the business model to dominate business and finance, now and in the future.
If Banks, FIs can offer their market participants not only payments but also onboarding, payouts, cards, accounts, fraud management, lending – based on their transactions that process – and a dozen of other services that not only make customers life easier but also help Banks, FIs to generate more business.
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