Embedded Finance Is the Force Multiplier for PayFacs and Software Platforms

Download the Study Business Platform Survey: Why Embedded Finance is the Next Big Bet

Payment facilitators (PayFacs) are transforming how and where we conduct commerce. Entities such as independent software vendors (ISVs) and online marketplaces offer services and products, but they need additional help to be able to receive payments. PayFacs can provide that help.

New embedded finance solutions enable the direct integration of banking and credit products into retail platforms. This integration presents the opportunity for new revenue streams. PYMNTS Intelligence’s data shows that ISVs and marketplaces offering two core types of features — payment acceptance and embedded finance features — are the most likely to report payment processing fees make up a greater share of the revenue they generate.

ISVs and marketplaces — like PayFacs — increasingly recognize the value of offering both payment acceptance and embedded finance features. Top features on their innovation plans include buy now, pay later (BNPL) and loyalty and rewards programs. PYMNTS Intelligence finds differences in emphasis among the innovation plans of PayFacs, ISVs and marketplaces.

These are some of the key findings explored in this edition of the “Business Platform Survey: Why Embedded Finance is the Next Big Bet,” a PYMNTS Intelligence and Carat from Fiserv collaboration. This report explores the characteristics, sentiments and behaviors of PayFacs, marketplaces and ISVs regarding payment acceptance and embedded finance. We surveyed 280 executives — 40 at PayFacs, 120 at marketplaces and 120 at ISVs — between May 28 and July 30, 2024, to determine how they facilitate payment and embedded lending processes for their customers.

Inside “The PayFac, ISV and Platform Commerce Report: Why Embedded Finance is the Next Big Bet:”

Insight into the benefits of offering both payment acceptance and embedded finance

Changes in firms’ payment offerings in the last year

How expanding these offerings can increase revenue and market expansion for PayFacs, ISVs and marketplaces

How PayFacs can support ISVs and marketplaces meet regulatory requirements, reduce security risks and alleviate operational constraints in payment processing

What embedded finance features PayFacs, ISVs and marketplaces show interest in innovating and enhancing

Innovation timelines for PayFacs, ISVs and marketplaces

The report explores the crucial benefits of adding and enhancing capabilities. This report features nine charts of insightful data that details the opportunity for PayFacs, ISVs and marketplaces. It also explores the reasons market leaders should enhance embedded finance offerings. In addition, it provides insight into possible challenges to avoid. Download the report to learn more.