Experts are predicting a significant surge in the adoption of embedded finance solutions, with transactions projected to reach a staggering $7 trillion by 2026. The latest edition of the Accounts Payable Payments as a Service Tracker® Series Report by PYMNTS Intelligence highlights the potential of this market, estimating it to be worth $51 billion by the same year.
This growth is driven by the seamless convenience embedded finance offers to businesses and consumers, opening up a new revenue stream for software companies that previously depended solely on their own products for all their revenue.
When it comes to addressing the complications and delays often encountered in accounts payable (AP) processes, embedded finance solutions hold significant value for business-to-business (B2B) payments. According to the PYMNTS report, over 60% of businesses face delayed payments, resulting in suppliers waiting an average of 43 days to receive payment. These delays lead to 80% of offered discounts going unclaimed. Additionally, 70% of firms experience attempted payment fraud, highlighting vulnerabilities in their AP systems.
Embedded finance solutions offer a range of advantages, including transforming the way businesses handle financial transactions and streamlining their operations to create a more efficient and cost-effective ecosystem. The integration of payments directly into platforms with invoicing and procurement capabilities also reduces manual data entry, minimizes errors and saves time on administrative tasks.
Furthermore, businesses can also reap financial benefits by reducing the need for paper-based processes and manual reconciliation, thereby avoiding late-payment penalties. Embedded finance solutions also provide robust security measures to protect sensitive financial data, mitigating the risk of fraud, data breaches and financial losses. These advantages enable businesses to focus on their main activities while enjoying the benefits of a modernized financial ecosystem.
Meanwhile, separate research from PYMNTS Intelligence shows that shifting millennial and Gen Z payment needs are influencing the evolution of B2B payments, creating an opportunity for embedded finance growth and the overall modernization of the B2B ecosystem.
As noted in The Embedded Finance Tracker, a PYMNTS Intelligence and Galileo Financial Technologies collaboration, “more than 60% of millennials in the workforce are now in management positions, giving them direct influence on and responsibility for their companies’ operations and organizational processes.”