Embedded finance is rapidly changing the way consumers and businesses alike interact with financial services. As traditional banking processes are replaced by more integrated financial solutions, companies across industries are embedding payment processing, lending, insurance, and investment services directly into their platforms.
As The Fintech Times continues its focus on embedded finance in April, Sarah Koch, director of marketing and communications at Aevi, the in-person payment expert, outlines the growing importance and necessity of embedded payments, particularly in the retail and mobility industries.
The payments landscape is undergoing a seismic shift, and as digital-first solutions continue to set the pace across different verticals, embedded finance has emerged as critical in reshaping how consumers and businesses engage with money exchange. While much attention has been given to its rise in digital ecosystems, such as e-commerce, its growing influence on in-person transactions signals a pivotal shift in the way we think about physical commerce.
At the forefront of this evolution are embedded payments, which enable financial transactions to occur within non-financial environments. Whether it’s paying for a ride, a coffee, or a retail purchase, the expectation for fluid and integrated, digital-first experiences now heavily applies to the physical world.
Digital expectations in the physical realm
Consumers are increasingly demanding the same convenience and speed in physical transactions that they experience online. This shift in consumer behavior has in no minor part contributed to a decline in traditional high street shopping, with an estimated 8,543 retail stores closing across the UK in 2024.
In response, businesses are re-evaluating their payment infrastructure, seeking solutions that offer better and far more integrated financial services across both digital and physical channels. For developers and independent software vendors (ISVs), this evolution presents both challenges and opportunities: integrating payments into their offerings in a way that feels natural and markedly enhances the user experience is now vital.
Banking-as-a-Service (BaaS) models, alongside open APIs and cloud-native infrastructure, have laid the groundwork for this transformation. An abstraction of the complexity of traditional banking, BaaS empowers companies to integrate everything from payment acceptance to lending directly into their customer journeys, so that what was once the domain of legacy providers or mainstream financial institutions (i.e. global banks) is now open to independent innovators who can embed payments into the fabric of everyday interactions.
Embedded payments in context: mobility
The application of embedded payments in fuel retail and electric vehicle (EV) charging offers a pretty striking case study. As mobility transitions to electric, the payment experience must evolve in tandem. Drivers expect to locate, charge, and pay, all within a single digital interface that is easy to use.
However, challenges persist; a recent Harvard study analysing over one million EV charging station reviews found that charging stations in the US have an average reliability score of only 78 per cent, meaning about one in five chargers are non-functional. The study also references a ‘Wild West’ charging pricing, which is largely a symptom of a fragmented and outdated payment infrastructure that lacks standardisation, transparency, or user integration. All this is leading to significant driver frustration and to a rethinking of payment integration at the charging point, with contextual payment experiences replacing clunky, standalone transactions.
Such changes are not hypothetical, they are already reshaping the industry. By embedding payment capabilities directly into the charging infrastructure or mobile apps, businesses are able to meet customers where they are!
Embedded payments in context: retail
Similarly, in brick-and-mortar retail, embedded payments are redefining the checkout experience. Traditional POS systems are giving way to flexible, cloud-connected solutions that integrate with broader commerce ecosystems, enabling features like pay-by-link, contactless, and even invisible payments by blurring the lines between in-store and online experiences.
For ISVs, embedding payment functionality is fast becoming central to the value proposition. The ability to offer customised payment flow, to manage transaction data, and access scalable infrastructure has never been so critical, but delivering this in a physical environment, with all its complexities, demands a novel approach than digital-only solutions.
This is where the convergence of payment gateways, omnichannel platforms, and modular financial services becomes crucial. The more forward-thinking ISVs should benefit from platforms that allow them to build tailored experiences without compromising on control or security.
What comes next? Payments as an embedded utility
As we look toward the future, embedded payments will continue to move from novelty to necessity. The most successful implementations will be those that remain as invisible as they are integral and see payments not as an isolated function, but as an embedded utility behind everyday interactions.
In order to achieve this, a close collaboration between fintech innovators, ISVs, and infrastructure providers will be essential. The ultimate goal is to move beyond the ‘processing’ side of transaction and into a complete reimagining so that customer experience is measurably enhanced through a fluid, digital-first layer.
