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From making grocery or retail runs to having your items delivered to your doorstep, online retail shopping has become a way of life for modern consumers.
In the middle of the rise of online retail shopping is the consumer’s need to make these checkout processes better, quicker, and more convenient.
As an answer, what’s driving this innovation is retailers' capacity to integrate payment schemes and services into their platforms through embedded finance.
While not entirely new, this shift has seen tremendous benefits to many retailers, especially with the rise of online purchases and the need for more payment-integrated transactions.
This article will discuss embedded finance, what it is, and how it is changing the tides of the retail industry today.
What is embedded finance?
Embedded finance, also referred to as BaaS or Banking as a Service, makes customer check out and buying experience easier by integrating payments right into a business’ product or service platform.
Through embedded finance, customers are given enhanced financial services at the point of sale, or in simple terms, when they check out or buy a product or service.
Benefits of embedded finance
Some of the benefits of embedded finance for retailers include:
- Boost sales through expanded payment options. Payment options, including buy-now-pay-later and installment plan schemes, would give customers more flexibility and convenience helping them in their purchasing decisions than if these options were not available.
- Building customer loyalty. Giving your customers a flexible and more diverse way to pay increases customer retention and loyalty because they can make transactions and payments faster and easier on your platform.
- Increased visibility and promotion. Building on your customer’s word-of-mouth marketing, having embedded finance options would make your business more visible in the industry.
- Competitive advantage against other retailers. Compared to other retailers with no embedded finance options, your business can get a bigger market share as compared to your competitors.
- Wider market reach. The availability of cross-border payments makes it easier for customers even outside your country to make purchases on your platform.
Examples of embedded finance
A study from Juniper Research has found that the embedded finance market is projected to increase to $228 billion by 2028, up 148 percent from $92 billion in 2024, driven by increased consumer confidence in fintech and market maturity.
Today, embedded finance is widely used in the retail industry, significantly contributing to the global growth of the embedded finance market.
1. Embedded banking
Embedded banking allows retail store customers to make transactions or payments through a retailer's branded debit account or a nonfinancial provider's branded debit account.
With embedded banking, customers can deposit, hold money, earn interest, and pay through these accounts to the retailer's account, mimicking that of a typical personal, corporate, or LLC bank account feature.
The advantage of embedded banking is that retailers offering these features on the platform offer special perks and benefits only available to those using their embedded banking feature, such as cashback, special promotions, discounts, etc.
Features of embedded banking help make transactions seamless for customers while giving them exclusive perks and benefits, increasing customer loyalty and experience.
2. Embedded payments
One of the most important features of embedded finance is making payments easier and less hassle for customers.
Did you know that, according to a study, 70% of consumers say that the availability of their preferred payment method influences their online store choice? Simply put, ease of payment is a critical factor for customer loyalty.
3. Branded cards
Embedded finance through branded or embedded cards can be identified when your retail store offers cards that bear the logo of a financial and a nonfinancial institution to provide perks and benefits to loyal customers of a particular retailer while also giving them all the functions of a credit or debit card in one card.
These branded cards include the Costco Anywhere Visa Card, the Victoria’s Secret Credit Card, and the Amazon Visa Card. These co-branded cards offer features like cashback points for specific retail store purchases, no annual fees, gift cards, or store points.
4. Embedded lending
Rodger Desai, CEO of Prove, says, “While traditional banking lending methods heavily rely on credit scores to extend loans, embedded lending uses the power of AI to get a complete picture of a customer’s online behaviour, allowing for easier access to funds and borrowings.”
Many customers want to be able to make flexible payments, either through Buy Now Pay Later (BNPL), instalments, or credit methods. For retailers without embedded lending features, customers must go through their banking institutions to convert these purchases into instalments or take advantage of other promotional lending schemes.
Through embedded finance, customers can now avail themselves of flexible loan options right at the point of sale. This means that before checkout, you can offer flexible payment options for your customers through 3, 6, or 12-month instalment options. More flexible payment and lending options would help increase overall sales in the long run.
How embedded finance is transforming retail
1. Expanding payment options
According to a study by PYMNTS, 30% of Millenial and Gen Z shoppers would most likely abandon their carts if BNPL options were unavailable due to increased credit card burdens.
As an alternative to looming credit card debts, most millennials and Gen Z would rather have BNPL as a deferred payment option for purchases they would like to make today.
Expanded payment options like instalment sales, digital wallet linking, and the ability to save credit and debit card details on your retail store allow your consumers to make faster and more seamless payments with more purchase options without linking to a third party, making the entire buying experience a breeze in the park.
2. Increased customer experience
Aside from your business’s primary products or service offerings, ensuring your customer gets an enhanced customer experience from beginning to checkout is critical in any industry, and retail is no exception.
An excellent online shopping experience for your customers should:
- Have fast website loading times
- Have easy store navigation
- Have reliable and legitimate customer reviews
- Make contacting you easy
- Make checking out simple and easy—including checkout interface and payment pages.
3. Customer loyalty
Customers are hard to find, but guess what? They’re even more challenging to maintain.
Customer preferences and behaviour remain fickle, and with thousands of online retailers popping up at every opportunity, customer loyalty is a goldmine for any kind of business.
Brooke Webber, Head of Marketing at Ninja Patches, says, “There are many ways and reasons for a customer to remain loyal to your business, but from a bigger perspective, it will always boil down to the customer’s entire purchase journey—from the moment they step onto your platform until the check-out and delivery process.
In between this journey, embedded finance plays a massive role in ensuring that the time the customer spends browsing for the right products on your platform is well-supplemented by a seamlessly integrated financial service that makes paying a breeze and a no-brainer.
These embedded payment and lending methods give customers flexible options, which leads to higher sales and increased customer loyalty.
4. Boost sales
Here are just some of the ways integrating embedded finance can help significantly increase your overall business revenue:
- Embedded BNPL and installment payment options without the need for third-party intervention. Giving options for BNPL and installment payments directly on your platform makes purchasing easier and more convenient for customers rather than doing it through a third-party.
- Increased loyalty from customers results in better word-of-mouth marketing. Loyal customers become your own personal marketing team, advocating for your expanded payment options and generating new customers.
- Offering branded debit or credit cards with retail-specific perks. Features like no annual fees and cashback points of branded debit and credit cards will increase customer loyalty and boost sales from these perks.
- Greater competitive advantage over retailers without embedded finance strategies. Customer now put convenience at the top of their list when making online retail purchases, and retailers with embedded finance options makes this process a lot easier for them.
- Eliminating the need for bank intervention. Purchases involving bank intervention can be a hassle for many customers, so having embedded finance options for purchases eliminates bank intervention making the purchasing process a lot quicker.
Conclusion
Embedded finance is more than just a convenience—it’s a game-changer for retailers looking to meet evolving consumer expectations.
With seamless payment experiences, flexible financing options, and embedded banking, retailers can boost sales, increase customer loyalty, and stay ahead of the competition.
At Planet, we empower retailers with integrated payment solutions that enhance the customer journey at every stage.
Our payment and tax-free shopping integrations connect seamlessly with leading retail POS platforms like Cegid, Oracle Xstore, and ICG, making embedded finance effortless. From enabling Buy Now, Pay Later (BNPL) and multi-currency payments to offering branded cards and tax-free refunds, Planet provides retailers with the tools to optimize transactions and improve customer experience.
In a fast-paced digital economy, adopting embedded finance isn’t just an advantage—it’s a necessity.
Retailers that invest in integrated payment solutions today will be the ones leading the market tomorrow. With Planet’s retail and payment solutions, businesses can unlock new revenue opportunities, streamline operations, and deliver the seamless shopping experience that modern consumers expect.
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