Embedded finance companies are expanding their market share through product innovation PayNXT360

Embedded finance companies are expanding their market share through product innovation

With the growing shift in the demand for banking products outside the four walls of a bank by the consumers, the embedded finance industry is on an upward trajectory. This is majorly driven by the transformation in consumer trends for digital-first payments, and thus, retailers, banks, card networks all are emerging with new products to meet the growing expectation of certain payment options.

According to PayNXT360, around 55% of European businesses are looking to enter the space of embedded finance to expand their market share. From car showrooms to cosmetic surgery clinics, more opportunities will be seen to utilize embedded finance offerings in the next quarters. Therefore, new businesses are approaching the space through investments and partnerships as they find a role for embedded payment services in their customer journeys. For instance,

In January 2022, Germany-based wholesale company Metro partnered with digital payments provider Mastercard to launch its embedded finance product, Metro FS card, for the hospitality industry. It is a debit card that offers a cashback and also buy now, pay later (BNPL) option to the customers.
The BNPL function, which is integrated into the card, facilitates its catering customers with the flexibility to pay the outstanding balance within 60 days or convert the payment to an installment purchase. Further, the company allows an installment of 48 months for its customers to repay the loan amount. The users need not open an additional account but can link an existing account to the Metro FS card via open banking.
The company, as a part of the campaign, will reward the first customers of the card with 1% cashback on their purchases. However, there is a regular 0.5% cashback on all purchases made with the card, whether the product is purchased from Metro or not.

Since credit has taken center stage in payments, B2B commerce has undergone a radical transformation in recent years, helping these embedded finance companies to attract investments globally. With the start of 2022, existing businesses are also attracting investments globally. For instance

In January 2022, Indian B2B embedded finance company, Rupifi, raised US$25 million in a Series A funding round. Bessemer Venture Partners and Tiger Global led the funding round, followed by Quona Capital, Ankur Capital, and Better Capital. The company, in particular, provides B2B buy now, pay later (BNPL) and SME-focused card solutions without any financial documentation.
According to the company, the fund will be used to develop a complete B2B checkout product for marketplaces and omnichannel mobile-first B2B payments solutions for merchants, distributors, and sellers.
Similarly, in January 2022, Estonian fintech start-up Tuum raised €15 million in Series A funding. Portage Ventures, a global investor dedicated to supporting fintech companies, led the funding round, followed by Blackfin Tech and Tallinn-based Karma Ventures.
Tuum has developed a flexible, lean, and modular core banking platform that helps banks, fintech companies, and traditionally non-financial companies to bring financial products and services. Notably, the company will be using the funds for product innovation and also will expand its presence in Europe.