Embedded finance is giving businesses a faster way to move money, but its next stage of growth may depend on how well companies build security into the transaction before it begins.
That is the central message of “Embedding Security: Designing Fraud Risk Out of Business Transactions,” a March Business Payments Tracker Series report from PYMNTS Intelligence and WEX. The report finds that embedded payments are moving from a useful feature to core business infrastructure, with transaction value projected to exceed $7 trillion, up from $2.6 trillion in 2021.
By placing payments inside the software platforms businesses already use, companies can improve cash-flow visibility, reduce costs and gain more control over how money moves. The challenge is that fraud risk is also moving into those same workflows, creating pressure for companies to rethink prevention as part of payment design rather than a last-minute defense.
The optimistic read is that embedded finance does not just create new risk. It also gives companies more places to stop fraud earlier. When payments are built directly into operational systems, companies can attach controls to identity, permissions, spending limits and authorization rules before funds leave the account. That makes embedded payments a potential security upgrade, not only a convenience tool.
Three data points show why that shift is becoming urgent:
- 2x to 3x: Fraud attempts targeting embedded finance products are estimated to be growing two to three times faster than fraud attempts in traditional banking channels. That reflects the speed and complexity of platform-based payments, where risk can spread across software layers, APIs, third-party partners and payment workflows.
- 35%: More than one-third of organizations have delayed embedded finance and banking-as-a-service initiatives because of fraud concerns. That delay shows that demand for embedded finance remains strong, but many companies are not comfortable scaling it until they have clearer visibility and stronger controls.
- 74%: Embedded finance users say the model can significantly reduce fraud risk when controls are built into workflows. That finding points to the upside of design-led security, especially when companies combine identity checks, role-based permissions, multifactor authentication, real-time monitoring and configurable payment tools such as virtual cards.
The report argues that traditional fraud systems were built for a slower and more centralized banking model. In many cases, those systems rely on fixed rules, known risk markers and manual review. That approach can produce false positives, slow down legitimate transactions and leave companies reacting after suspicious activity has already started. Embedded finance changes the timing. Instant approvals, one-click transactions and API-based execution can compress the fraud detection window to seconds.
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That is why payment design is becoming the first line of defense. Virtual cards, for example, can restrict how, where and when a payment is used. Spend limits, merchant controls and dynamic authorization rules can align payment access with the purpose of the transaction. AI can add another layer by monitoring activity in real time and triggering stronger authentication or blocking transactions when risk rises.
The broader opportunity is to make secure payments feel less like a hurdle and more like part of everyday work. Companies that centralize visibility across platforms, automate enforcement and anchor controls at identity and access can reduce risk while still giving users the speed and simplicity embedded finance promises. Fraud is becoming more adaptive, but embedded payments give businesses a way to make security more adaptive too.
At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
