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The embedded finance sector is making its mark in the business-to-business (B2B) payments market – projected to reach $1.91 trillion by 2028. Having financial services built-in to online transactions is business as usual for B2C – think about the experience on websites like Amazon and eBay. Buyers in the B2C ecosystem have many options when it comes to payments – credit card, PayPal, Google Pay, Apple Wallet, among others – as well as a plethora of B2C BNPL options appearing in just about every e-commerce checkout flow. Now, it’s becoming the same way for the B2B sector as expectations around the online purchasing experience shift and top embedded finance companies are making their mark.
As the embedded finance ecosystem only continues to grow, there are companies popping up left and right hoping to fill the needs of B2B marketplaces, apps, and ecosystems looking to offer a seamless payments process. But before we look at the top embedded finance companies, let’s back up and discuss what embedded finance services are.
What Is Embedded Finance?
Embedded finance is about enabling non-fintech companies to include financial services or finance products in their own digital products. It makes buying products and services faster and easier for customers, while providing opportunities to streamline back-end processes for businesses.
It’s also giving rise to embedded fintech, which is when finance companies embed fintech options into their products and customer channels. And these are both different from the buy now, pay later (BNPL) trend that’s happening in the finance space. Whereas BNPL allows buyers to purchase a product immediately and pay for it over time in several regular instalments, embedded finance is about the payment solution being integrated with the platform, which solves challenges on all sides of the buying equation – for buyers, suppliers, and platforms.
What Are Embedded Finance Platforms?
Embedded lending platforms and providers allow marketplaces, apps, and ecosystems to offer financial services and financial products to their customer base. Embedded finance solutions provided by the top embedded finance companies mean that companies of all kinds can now offer financial services such as payment processing, lending, banking services, and more without customers having to leave their platform ecosystem.
Excluding payments from the digital experience decreases stickiness and value. Handling payments offline also makes it more complicated for the buyer to complete the transaction. This ultimately reduces the likelihood they will follow through and decreases platform stickiness.
Why Is Embedded Finance Taking Off?
Lightyear Capital estimates that embedded finance will grow to nearly $230 billion (in revenue) by 2025, up from $22.5 billion in 2020. While there isn’t a single factor to explain the rise of embedded finance and the top embedded finance companies, there are some key factors at play that are driving this meteoric growth.
Embedded finance options are now becoming expected, even for B2B purchases that have traditionally been handled offline. Prior to 2020, 70 percent of B2B decision makers reported being open to making fully self-serve or remote purchases valuing over $50,000 – with 27 percent of those open to spending more than $500,000. That number is only expected to continue growing as embedded finance takes off and buyers, sellers, and platforms reap its benefits.
According to Forrester, U.S. B2B e-commerce transactions are expected to reach $1.8 trillion by 2023. This would account for 17 percent of all B2B sales in the country. Places that handle digital B2B payments, including B2B marketplaces, apps, and ecosystems (MAEs), know that it makes sense to facilitate payments in any way possible, and are all trying to figure out how to navigate this hurdle and choose the right solution. In a lot of cases, it doesn’t make sense for these non-finance companies to become a fintech company themselves.
Additionally, the best embedded finance companies offer solutions that meet the needs of the customer expectation for flexible financing, seamless integration with plug-and-play systems for decreased barrier to entry, and the availability of new data sources that allow businesses to more effectively target and convert customers.
Top Embedded Finance Companies
FundThrough
We may be a little biased, but we think FundThrough is one of the top embedded finance companies. As the largest AI-powered invoice funding fintech in North America, FundThrough has established infrastructure, workflows, underwriting, and data, as well as experience across industries simplifying complex B2B payments typically done offline. With fast, flexible payments, you’ll be able to drive more volume, stickiness, and ultimately growth for your platform.
Benefits
- Get invoices paid in days
- Buyers pay on preferred terms
- Reduce risk; we can use your data to underwrite for you
- Customizable for large buyer workflows and different types of data
- Use your capital or ours
- Increase stickiness and transactions to grow
- Gather data insights for platform improvements and growth opportunities
- Collect a revenue stream from all transactions
Stripe
Stripe lets businesses launch financial services on their platform, by embedding financial products, including accounts, cards, and lending services. Businesses can integrate payments into their platform for a seamless user experience – from onboarding to payments acceptance to payouts, while also providing eligible customers easy access to financing to help them grow their businesses.
Balance
Balance offers B2B e-commerce payment services for merchants and marketplaces. They currently offer consumer-grade hosted checkout for businesses and buyers. They allow for multiple payment methods including ACH, credit cards, net-terms, payment automation, and payment financing. Automatic reconciliation makes for seamless invoice tracking and funds settlement.
Resolve
Resolve allows B2B manufacturers and wholesalers to get paid upfront, while their business customers can pay in 30, 60, or 90 days. Their product provides a complete net terms and credit management solution in one tidy package. They use a safe ‘quiet’ credit check to verify customer creditworthiness in minutes.
TreviPay
TreviPay specializes in payment and credit management for B2B companies. TreviPay integrates with e-commerce technology to provide payment terms and allow invoicing at checkout, bringing the B2B e-commerce experience into the future. Pricing varies, but their goal is to have financial transaction fees represent a 30% savings over credit card fees on average.
Parafin
Parafin provides an end-to-end fintech solution to offer one-click financing, enabling buyers to offer capital to their sellers. They provide everything from capital to underwriting and get businesses started handling transactions in less time. They are payment processor agnostic. Their user base appreciates the seamless origination experience and real-time performance tracking.
Plaid
Plaid allows businesses to quickly and easily verify bank accounts, analyze categorized transaction data, and verify assets for lending. Their APIs make it easy for users to connect their bank accounts to your app. It takes just a few lines of code to implement their solution, which boasts a streamlined onboarding process. Plaid makes it faster and easier to set up bank payments through a flow designed with the user experience and security in mind. Additionally, in the US, Plaid works with any ACH processor (including Stripe and Dwolla) to simplify bank-to-bank payments.
jaris
jaris delivers purpose-built, partner-branded embedded financial solutions that help POS systems, ISVs, SaaS businesses, and marketplaces drive engagement within a single platform. Their processor agnostic solutions work for all payment enabled software companies and payment providers.
What to Look for in an Embedded Finance Company Partner
They have the technology in place
When partnering with the top embedded finance companies, you want to ensure they have the infrastructure in place to handle your business. Is there a process in place when it comes to know your customer (KYC) vetting, fraud prevention, and available tech expertise in case of any issues?
They can scale with you as you grow
You ultimately want to grow your business to serve more customers, and any partners you bring on board should be able to meet those growth demands with you. You should be questioning any potential embedded finance partner about whether they have the necessary capital, staff, and infrastructure in place to grow with your business as you scale. The top embedded finance companies have the necessary infrastructure in place to scale with you as you grow.
They align with your values
Getting involved in any relationship – including business – entails ensuring both parties have similar values. The most successful top embedded finance companies take a partnership approach – working with you every step of the way, from the discovery call and onboarding process, right through to ensuring a seamless payment process.
They have experience in your specific vertical
The top embedded finance companies have experience in specific verticals – whether that’s energy or transportation and logistics, among others. Businesses also want to know that an embedded partner has experience working with large buyers and their workflows, different types of platforms, and their technology. This helps streamline the integration process.
They have enough capital
Apps, ecosystems, and marketplaces should ensure that any embedded finance provider they’re looking to partner with has access to the capital required to meet their needs. They should also ask about whether or not there are any minimum or maximum funding amounts – you don’t want to get caught trying to manage a million-dollar invoice yourself when you’d expected your partner’s capital to cover it. Additionally, you should discuss the source of capital, and whether (and when) you’d like to use your own. The top embedded finance companies don’t struggle with access to capital.
They make the integration easy
When looking for an embedded finance solution, ease of integration is often top of mind. Many platforms want a fintech solution that works with their API and other infrastructure already in place. You want the integration process to be as seamless as possible, so that all sides of the payment transaction have access to the terms and conditions they want. Ideally, when you partner with one of the top embedded finance companies, you should be able to customize a workflow based on your API.
The FundThrough Approach
Embedded instant invoice payments get invoices paid in days to unlock cash flow for you and your suppliers while allowing buyers to pay when they want. You can give suppliers fast payments and buyers flexible terms inside your platform with embedded invoice funding by FundThrough.
Embedding payments with FundThrough offer an easy way to get paid with 3 simple steps:
1. Choose funding.
AI technology creates customized funding options for the client to choose from.
2. Provide information.
Clients give us basic information to verify their identity, business and the invoice.
3. Confirm funding.
We get to work and communicate the next steps. Upon approval, clients can receive next-day payment.
Interested in Embedding FundThrough in Your B2B Marketplace? See What Embedded Finance Can Offer
Learn more about our approach to embedded invoice financing and talk to us about how to embed FundThrough today!
Ready to Fund an Invoice?
Get started by creating a free FundThrough account, or connecting your QuickBooks, OpenInvoice, or WorkBench account to start funding an invoice.