Report: An Uncertain Economy Weighs on Embedded Finance Innovation for Marketplaces

Logistics and wholesale trade businesses exhibit robust demand for embedded finance innovations. For example, most payment facilitators (PayFacs), independent software vendors (ISVs) and marketplaces are very or extremely interested in digital wallet innovations.

Many players in this sector prioritize operational improvements, such as faster transaction processing, above other areas for innovations. Fifty percent of PayFacs and 36% of marketplaces surveyed place operational enhancements as a top innovation.

These are just a few of the insights explored in “The Embedded Finance Ecosystem: Logistics and Wholesale Trade Edition,” a PYMNTS Intelligence and Carat from Fiserv collaboration. This report examines the growing significance of embedded finance in the logistics and wholesale trade sector. It draws on insights from a survey of 282 executives working at PayFacs, ISVs and marketplaces conducted from May 10, 2023, to Aug. 25, 2023.

Other findings from the study include:

This sector shows broad interest in embedded finance innovations.

Logistics and wholesale trade businesses show high demand for embedded finance innovations. Eighty-three percent of PayFacs, 80% of marketplaces and 64% of ISVs in the sector express strong interest in innovating digital wallets. A sizeable share already offer digital wallet, and many are highly interested in enhancing these even further.

Another embedded finance innovation these businesses want to offer is flexible installment plans. Two in 3 PayFacs have yet to introduce installment plans. However, half of this subset shows strong interest in offering these plans. While 70% of marketplaces lack this option, 37% express keen interest in providing it.

Businesses in this sector face many hurdles to innovation.

PayFacs, ISVs and marketplaces serving the logistics and trade segment want to invest in embedded finance solutions but face challenges. Roughly two-thirds of ISVs and marketplaces say economic conditions are bigger impediments than market factors or workforce issues. Meanwhile, half of PayFacs say workforce issues represent their biggest challenge.

As the logistics and wholesale trade sector heightens its focus on optimizing embedded finance solutions, demand for innovative features such as digital wallets, installment payments and BNPL options has surged. Download the report for further insights into why embedded finance innovations are key to operational efficiency and customer satisfaction.