In 2025, Embedded finance has taken over basically every consumer industry. Whether you recognize the term, you’ve almost certainly seen embedded financial platforms on your favorite e-commerce site or even at physical checkout.
Let’s dive into how embedded finance has changed the game, and how merchants of any size can use it to drive higher sales and happier customers.
What is Embedded Finance?
Embedded finance refers to the integration of financial services into non-financial companies. Basically, any time you do something at a website or store that would otherwise require a bank, this is a form of embedded finance.
A common example is Buy Now, Pay Later programs, which let customers split purchases into interest-free installments at checkout, making it easier to buy higher-priced items without using a traditional credit card.
Today, online shopping is where the embedded finance revolution is most apparent. As Investopedia notes, “Companies are incorporating banking, lending, insurance, and investment services with their customer offerings through application programming interfaces (APIs) that are linked to financial partners.”
In English, that means you don’t have to leave the store’s website to pay for a product or even get credit. Often, you don’t even need a bank account.
Paypal and Ebay: The Original Duo
As one of the first large-scale e-commerce platforms, eBay was also a pioneer in processing payments through embedded finance.
While it may seem simple today, it was a huge deal in the late 1990s and early 2000s to be able to safely make or receive payments online, whether using a credit card, a check, or a Western Union transfer. This was doubly true when it came to payments between two regular people, like a guy auctioning his autographed Kobe Bryant jersey to a winning fan in Wyoming.
For a long time, buyers and sellers had to work out payment between themselves, with eBay doing little to facilitate or secure payments. In the late 1990s, sellers on eBay had one month to ship an item after the auction ended, with the buyer typically mailing a check to pay for it. That’s hard to imagine in an age of same-day shipping!
Clearly, this system had plenty of room for improvement. While it made some progress early on, its 2002 acquisition of PayPal was the first major success story in embedded finance.
Ebay Payments: Early Embedded Finance
Source: The Internet Archive (2002)
As a recent story in Quartr explained, “PayPal’s integration into eBay’s ecosystem contributed significantly to both companies’ growth. PayPal benefited from eBay’s extensive user base, while eBay reaped the rewards of offering a robust and trusted payment solution, which in turn improved the user experience.”
Ever since, this has been the symbiotic relationship between companies and their embedded finance platforms. Embedded finance reduces friction and boosts sales by giving buyers purchase options, such as paying with a credit card, digital wallet, or installments. Companies give embedded finance providers a steady stream of revenue and data.
“Coopetition” With Traditional Banks
Consumers and businesses love embedded finance. It offers tailored solutions to niche problems, especially for people with less access to traditional forms of credit or other banking services.
Traditional banks, on the other hand, have stressed for some time that new platforms are “muscling in” on their financial territory. As it’s become apparent that the smartest move is to embrace this multi-trillion-dollar market, experts are referring to the new normal as “coop-etition” between embedded finance platforms and traditional finance.
As an editorial by the World Economic Forum explained, “Fintechs are nimbler, often better suited to solve hyper-specific problems quickly. Banks, on the other hand, offer scale, trust, and capital… the smartest players on both sides are shifting their mindset from rivalry to partnership.”
This partnership often takes the form of imitation or acquisition. As they grow, embedded finance platforms like PayPal and Affirm function more and more like traditional banks. Traditional banks try to bring these innovative platforms into their portfolio, as seen with Citi’s recent investment in Quantix.
In-House or Outside Help
There are two basic models when it comes to embedded finance. Companies can host another financial platform in their physical store or website. For example, Home Depot provides the option to “pay over time with Affirm” at checkout, including at the physical location. This is the simpler move.
Some larger companies also develop their own embedded finance solutions. Apple offers the Apple Card, a credit card built into Apple Pay with cash-back rewards, while Amazon has co-branded Visa cards that give users points on Amazon and Whole Foods purchases.
That’s great for a major tech company, but not every retailer needs a huge partnership or investment to take advantage of embedded finance.
Options for Mom and Pop
There are a lot of options for smaller storefronts, both virtual and physical, to take advantage of embedded finance. The result is a smoother experience and access to a bigger consumer market.
- Payment Integration
This is the easiest way to embed finance. By offering embedded payment options through a partner like COCARD, small businesses can streamline checkout, accept digital wallets, and even enable recurring payments without the need for complex banking solutions.
If your POS processor doesn’t support new solutions like pay-by-link or digital wallets, it’s time to switch.
- In-Store Money
In a sense, gift cards, store points, and rewards cards are a form of embedded finance.
Customers are able to manage store credit through an app or online account, encouraging repeat purchases and higher spend per visit. This is a great strategy for restaurants, salons, or local retailers with a loyal customer base.
- Prepaid Rewards Cards
Co-branded or prepaid debit cards let small merchants extend their brand while building loyalty. There are platforms that allow small businesses to launch co-branded debit or rewards cards with relatively low overhead, sharing in transaction revenue, and strengthening brand engagement. - Embedded Credit and Financing
Not every customer has or wants a credit card. Even smaller firms can now offer financing at checkout through API partners.
These services enable customers to pay in installments while the merchant still receives full payment upfront, increasing conversion and average order value.
Where COCARD Can Help
COCARD knows no processor can ignore embedded finance. These solutions are proven to expand sales by giving customers access to your incredible business. That’s why we make it simple for merchants of all sizes to integrate embedded finance into their pipeline.
From digital payments and loyalty cards to BNPL and co-branded rewards programs, COCARD provides the tools and APIs that allow even small merchants to offer a seamless, modern financial experience to their customers, driving sales and loyalty without the complexity of building in-house.
Get in touch today to bring your business into the next generation of payments!