Two-Thirds of Businesses Will Switch for Embedded Finance

Software has already eaten much of the enterprise world, and now the digital revolution is coming for Main Street. Small and medium-sized businesses (SMBs), the heart and soul of commerce around the world, are ready and primed for it.

That’s according to PYMNTS Intelligence data in the June 2025 “Payments Optimization Tracker® Series” report, “ Platform Power: The Growing Importance of Embedded Finance to SMB Success ,” a collaboration with Worldpay, which highlighted an inflection point across the Main Street landscape: 91% of SMBs say software capabilities will be key to their growth strategies in 2025.

At the same time, 65% say they are willing to walk away from current vendors.

So, what’s the deal?

The reason isn’t cost or poor customer service, but the absence of embedded financial services like payments, lending and banking. As these digital-native features become critical, satisfaction with integrated finance capabilities is emerging as the top predictor of vendor retention.

Payments as a Retention Lever

In contrast to conventional assumptions that pricing is the key to customer loyalty, as digital rewrites SMB operations, the presence and quality of integrated payments capabilities have a more substantial impact on the lifetime value of a SMB customer.

For software providers, this means that neglecting embedded payments can directly correlate with higher churn rates.

With payments integration, SMBs can accelerate checkout experiences, minimize cart abandonment, and simplify financial reconciliation — benefits that go beyond operational efficiency and touch on customer satisfaction and topline growth.

In fact, SMBs with access to well-integrated payments systems can potentially experience revenue growth boosts ranging between 25% and 50%, depending on the sector. These gains are not marginal; they are transformational for small businesses operating with limited margins and intense competition.

Read the report: Platform Power: The Growing Importance of Embedded Finance to SMB Success

Embedded Finance Beyond Payments

The willingness of 65% of SMBs to change providers signals a low switching threshold when embedded finance expectations are not met. This puts pressure on platforms to evolve continuously and offer a broader suite of financial services to stay competitive.

And while payments integration leads the charge, embedded finance encompasses a broader ecosystem. This includes embedded lending, automated payroll, integrated invoicing, and real-time expense tracking. Each of these functionalities represents a shift from standalone financial tools to natively integrated features that operate within the core software environment.

The result is a more efficient, less fragmented user experience. For instance, embedded lending enables SMBs to access financing options directly from their POS or inventory systems, eliminating the delays and paperwork associated with traditional lending channels. In turn, this accelerates decision-making, improves liquidity, and allows businesses to respond more quickly to opportunities or disruptions.

The report also indicates that sectors such as healthcare, retail, logistics and hospitality stand to gain the most from these capabilities, as they tend to operate on tight schedules and low margins where financial delays can have outsized consequences.

The shift toward embedded finance reflects a broader evolution in how SMBs approach software. They are no longer content with tools that merely support their operations. They demand platforms that drive growth, reduce complexity, and offer financial capabilities that were once reserved for large enterprises.

And crucially, SMBs expect continuous innovation — 90% want proactive updates from tech partners. Providers that fail to do so risk becoming obsolete, not because of product failure, but due to stagnation.

In this context, embedded finance is not just a feature of software — it is a fundamental component of the modern SMB success story. And as the data suggests, the cost of ignoring it is not merely lost revenue, but potentially lost customers.