Embedded finance is on the rise. 

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If you’re not sure what that is, it’s essentially non-financial companies offering financial services. Think store-branded credit cards, one-click payments on an app, and splitting an online payment into smaller monthly payments.
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Embedded finance is set for such significant growth, that it may even redefine how both consumers and businesses build relationships with financial services. 
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It seems to already be on the right track, as it was reported that 88% of companies that implemented embedded finance saw a significant increase in engagement, with 85% of them reporting better customer acquisition. 

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Five types of embedded finance
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• Embedded payments
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The purpose of embedded payments is to provide an easier process of paying for goods or services - connecting and saving a payment method, with just one click. This saves the customer from having to take out cash or a credit card physically.
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Example: Amazon has a “Buy now” option. Anyone who has an account and their payment information saved can skip the lengthy checkout process and pay for an item immediately, without needing to fill in the relevant information. This method has since been implemented within the Starbucks and Uber apps, among others.

• Embedded banking
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This refers to non-financial companies offering their own branded checking account to hold funds and make payments. This is most beneficial for sellers and service providers who conduct business within a certain platform. 
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Example: Shopify offers embedded banking within their platform, called “Shopify Balance”. This enables sellers to get paid faster through a separate business account on the platform, rather than using their personal bank account.

• Embedded lending 
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Before, when it came to big purchases, a customer would have to either pay with their credit card or apply for a loan at the bank. Now, thanks to embedded lending, there are much more flexible options. 
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Example: Klarna is a prime example of embedded lending. It offers customers the option to either split a single payment into three monthly payments or to “buy now and pay later”, in which customers are given 30 days to pay for something in full. 

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• Embedded insurance 
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While embedded insurance existed before the inception of fintech, it has since further grown to digital markets. Before the digital age, embedded insurance existed through taking out travel insurance before taking a flight, or purchasing extended warranty over the checkout on expensive appliances. In the digital world, customers can now purchase insurance separately while checking out or booking.
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Example: Ticket sales and distribution company Ticketmaster offers customers to opt-in to “Missed Event Insurance” during checkout, which refunds them if they are unable to attend an event, including illness, travel delay, or jury service.

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• Branded payment cards
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Branded payment cards are something else that existed before the digital era, as customers could get branded credit cards from their favourite stores for some time now. However, fintech has expanded this ability and boosted its use cases, particularly for B2B. Specifically, through B2B card providers, companies can offer their employees branded payment cards for business expenses, rather than relying on their personal bank accounts. 
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Example: Lyft offers its drivers a checking account and associated debit card, allowing them to get paid instantly for every ride, rather than waiting for a monthly payment for every roundup trip.

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How much is it predicted to grow?

Embedded finance is already high in popularity, so it’s no surprise that it’s only predicted to grow further in the upcoming years.
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Research conducted by Plaid estimates that embedded financial services will generate revenue of $230 billion by 2025 - a huge step up from the $22.5 billion revenue in 2020. 
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Further data from Bain & Company also shows that embedded payments and lending will be the two most significant segments of embedded finance. It was reported that current consumer payments account for 60% of all embedded finance transactions and that this is expected to reach $3.5 trillion by 2026. 
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Even cryptocurrencies are considered to be part of embedded finance. Veronique Steiner - executive director, head EMEA high growth tech and head EMEA technology, media and telecom at JP Morgan - commented that e-commerce marketplaces, or “super apps”, are offering a wider range of financial solutions, including the ability to pay by cryptocurrencies.

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How does Baanx play its part in this revolution?

We’re glad you asked!
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We’re all for the future of payments, and if you haven’t guessed already, all things Web3.
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So, here’s how Baanx will embrace the future of embedded finance through our own offerings.

• Crypto payments
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Cards powered by Baanx let users hold their crypto in their account until they spend them, as their assets are automatically converted to fiat at the point of purchase. This means they don’t have to worry about converting their crypto before making a purchase.

• Cryptodraft & Stableloans
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We also offer easy and flexible borrowing through our Cryptodraft and Stableloans products. With no paperwork involved, users can take out a line of credit, while using their crypto as collateral. This allows users to take out extra funds to spend, without having to sell their assets.
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It also gives control to the user by allowing them to choose how much they want to borrow, and for how long. Additionally, users can lower their monthly percentage rate (MPR) by adding further collateral to their Cryptodraft or Stableloan at any time.

• Cashback Program
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At Baanx, we’re committed to revolutionising how you earn and spend crypto. With Baanx you can earn cashback on every purchase, whether online or in-store. Earn 1% cashback in BTC or USDT, or 2% cashback in BXX on your purchases. More crypto cashback options are set to roll out, making it easier for you to get rewards in the crypto you love. We already have a range of top companies and entities signed up, including MetaMask, Ledger, 1inch and others.

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Enter Web3 with Baanx

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Looking to enter the world of Web3? Look no further
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Want to offer your customers embedded finance options? If you like what you read above, drop us a line today and see how we can help expand your business offerings further.

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