Everything you need to know about B2B embedded finance

Embedded finance refers to integrating financial services, such as payments and banking, into non-financial platforms. For SaaS platforms, this means offering financial products or services within their existing offering, providing a seamless experience for users. This approach addresses the growing demand from SMBs while helping platforms stand out in a competitive market.

Relying solely on subscription fees can limit growth. Embedded finance unlocks new revenue streams for SaaS platforms by integrating payment processing and financial services like financing. This not only adds value for customers and strengthens loyalty but also creates a more sustainable business model that fuels long-term growth. In fact, platforms that go beyond payments to offer embedded financial products can increase their revenue up to 3-4 times their current subscription income.

Embedded finance comes in many forms, each designed to enhance user experience and drive platform revenue. Here are some key examples of how SaaS companies integrate financial services to serve SMBs better.

Embedded payments

Embedded payments allow users to complete transactions within the platform without redirecting to third-party services, creating a seamless experience that increases user satisfaction and loyalty. 

Platforms that have adopted embedded payments have seen significant revenue growth. Some already generate more than 50% of their income from these services. 

Atlas partnered with Adyen to power their embedded payment solution, AtlasPay, to simplify complex operations for hundreds of F&B users. They achieved a 118x increase in gross merchandise value, and more.

Embedded bank accounts* 

Offering business bank accounts within a platform allows users to manage finances without leaving the platform. This convenience provides SMBs with faster access to their funds, enhancing their overall financial management. 50% of SMBs express a high likelihood of utilizing a full suite of embedded finance products in the near future. 

Issuing branded payment cards* 

Platforms can provide physical or virtual payment cards, allowing users to instantly receive and spend funds. This service enhances the user experience and opens additional revenue streams for the platform. 

Embedded financing* 

By offering financing options like capital directly through their SaaS platform, SaaS providers make it easier for SMBs to access the funds they need. This is crucial, as traditional financial institutions often overlook SMBs, leaving a significant portion of the market untapped.

*not available in Singapore yet

While both embedded finance and BaaS involve offering financial services through non-traditional channels, they differ in execution. BaaS provides the infrastructure and regulatory compliance for non-banks to offer financial products. In contrast, embedded finance focuses on integrating these services directly into a platform's user experience, making financial transactions a natural part of the workflow.

Open banking and embedded finance differ because open banking allows third-party developers to build applications and services around a financial institution. 

Embedded finance, however, integrates financial services directly into platforms that users are already engaged with, offering a more cohesive and streamlined experience. This integration benefits SMBs, simplifying financial management by consolidating services within a single platform.

Integrating financial services into platforms offers several benefits for SMBs:

• Improved cash flow management: With faster payouts and integrated financial tools, businesses can better manage their cash flow, reducing the time between earning and accessing funds.

• Access to capital: Embedded financing options provide SMBs with quicker and more flexible funding solutions than traditional loans, addressing a critical need for growth and stability.

• Data-driven insights: Platforms can offer analytics and insights based on financial data, helping businesses make informed decisions and optimize operations. Hear from one of Fresha’s small business customers about how an all-in-one experience helps them.