Embedded finance: What it is and how it works (2026 guide)

Key Takeaways:

• Embedded finance lets non-financial businesses offer banking, payment, lending, or insurance services directly within their existing product, without becoming a licensed financial institution themselves.

• It's distinct from Banking-as-a-Service, the licensed infrastructure that often powers it, and open banking, a separate regulated framework for bank data-sharing.

• Airwallex's Platform APIs let businesses embed accounts, cards, and payment infrastructure directly into their own product, without the delays of building this in-house.

Embedded finance is changing how businesses offer financial services.

Instead of sending customers to a bank or third-party provider, companies can now integrate payments, business accounts, cards, lending, or insurance directly into their own products and platforms.

For businesses, it opens up new revenue opportunities, strengthens customer relationships, and removes friction from key workflows.

In this guide, we'll explain what embedded finance is, how it works, how it differs from Banking-as-a-Service (BaaS) and open banking, and why more software companies and platforms are adopting it in 2026.

What is embedded finance?

Embedded finance is the integration of financial services into a non-financial company's product. Instead of sending customers to a bank or a separate payment provider, the business offers the service itself, inside its own app or website.

You've likely used this without noticing. For example:

• A ride-hailing app that stores your card details and pays drivers automatically. An eCommerce platform that lets you buy now and pay later.

• A software tool that issues a debit card to its users.

In each case, a financial service is built into the product experience, not bolted on as a separate step.

This works because of application programming interfaces (APIs). A non-financial company partners with a licensed financial provider, then uses that provider's API to offer the service under its own brand. The customer never has to leave the platform or deal with a separate bank.

Embedded finance vs. Banking-as-a-Service vs. open banking

These three terms get used interchangeably, but they describe different things. Here’s a quick overview:

A simple way to think about it is this: embedded finance is the customer-facing product, Banking-as-a-Service provides the licensed infrastructure behind it, and open banking enables secure financial data sharing.

Depending on what you're building, you might use one, two, or all three.

What is Banking-as-a-Service?

Banking-as-a-Service (BaaS) is the licensed infrastructure that sits behind many embedded finance products.

A regulated bank or financial institution gives another company access to its banking capabilities (such as accounts, cards, payments, lending) through an API.¹

The BaaS provider handles the regulatory compliance, security, and risk management in the background, while the non-financial business builds the customer-facing product on top.²

What is open banking?

Open banking is a regulatory framework that lets banks securely share customer financial data with authorised third parties, with the customer's consent, through standardised APIs.³ In Singapore, this is overseen by the Monetary Authority of Singapore.

Open banking is primarily about data-sharing, not about a non-bank offering financial products directly.

A practical example: selling a car with and without embedded finance

To see how embedded finance works in practice, compare these two versions of the same transaction.

Selling a car the traditional way

A consumer sells their car through an online marketplace. Dealers submit bids, the consumer accepts one, and the dealer pays the seller outside the platform through a bank transfer.

Once the sale is agreed, the marketplace loses visibility. It can't see when payment is made or whether the transaction has been completed.

Selling a car with embedded finance

Now imagine the marketplace offers built-in wallets for both buyers and sellers.

The dealer transfers funds directly within the marketplace, allowing the platform to confirm payment instantly and notify the seller as soon as the money arrives. The seller can then withdraw the funds or keep them in their wallet to spend on other services within the marketplace.

By embedding financial services into the transaction, the marketplace gains real-time payment visibility, creates a smoother customer experience, and opens up new opportunities to generate revenue, all without sending users to a third-party bank or payment provider.

How embedded finance works

Embedded finance runs on a combination of API-accessed infrastructure, licensing, and compliance services that plug directly into non-financial platforms. Here's a breakdown of the components and processes that make it work:

Technical infrastructure

• API integration: Application programming interfaces (APIs) sit at the heart of embedded finance. They let different software systems communicate and share data quickly, without manual work on either side.

• Cloud computing: Cloud-based systems give embedded finance the scalability and flexibility to handle complex financial transactions, along with the data storage and retrieval that comes with them.

Licensing and compliance

• Financial licensing: Businesses must make sure any product built with embedded finance holds the necessary financial licence. Most non-financial businesses rely on their embedded finance provider's licence rather than obtaining their own.

• KYC and AML: Know Your Customer (KYC) and Anti-Money Laundering (AML) checks are core components of any embedded finance solution.

• Data protection: Strict adherence to data protection regulations, such as the General Data Protection Regulation (GDPR), is essential when handling financial information.

• PCI compliance: If debit or credit card data flows through your embedded finance payment solution, your provider needs to be compliant with the Payment Card Industry Data Security Standard (PCI DSS).

User experience

• Product integration: Financial services are designed to feel like a natural part of the host product or platform, so they read as a white-labelled solution rather than a bolt-on.

• Intuitive interfaces: User-friendly designs make complex financial transactions accessible to everyone, not just financially savvy users.

• Contextual offerings: Financial services appear at relevant points in the user journey, rather than as a separate destination the user has to seek out.

Data flow and management

• Secure data sharing: Information moves securely between the host platform, the embedded finance provider, and financial institutions.

• Real-time processing: Transactions and updates happen in real time, giving users instant feedback rather than delayed confirmations.

• Data analytics: Providers analyse user data to improve services and offer more personalised financial products.

Monetisation models

• Transaction fees: Businesses can earn a percentage of each financial transaction processed through their platform.

• Subscription models: Some embedded finance solutions run on a subscription basis, charging for ongoing access to services.

• Data monetisation: Insights gained from financial data can support targeted upsells, marketing, and product development.

7 types of embedded finance

Embedded finance covers a range of financial services that can be built into non-financial platforms and products. Each type serves a different need and offers distinct benefits.

1. Embedded payments

Embedded payments are the most widely recognised form of embedded finance, since most other types still need some way to move money on and off the platform.

• Key features: Fast checkout experiences, multiple payment options, real-time transaction processing, and recurring payment capabilities.

• Examples: One-click purchasing on ecommerce platforms, in-app payments for ride-sharing services, and automatic payments via connected devices like smart fridges.

• Benefits: Reduced cart abandonment for businesses, a more convenient experience for consumers, and stronger security through tokenisation and encryption.

You can see this in practice on Airwallex's Payments for Platforms solution, which lets marketplaces and software platforms embed payment acceptance and payouts directly into their product.

2. Embedded credit and loan products

Embedded credit and loan products provide financing options at the exact point a customer needs them.

• Key features: Instant credit decisions, flexible loan terms, and alternative credit scoring methods.

• Examples: Buy Now, Pay Later options in online stores, financing built into B2B platforms, and microloans for small businesses offered through ecommerce dashboards.

3. Embedded insurance

Embedded insurance offers relevant insurance products at the exact moment someone is buying a related good or service.

• Key features: Instant quotes and policy issuance, coverage customised to user data, simple claims processes, and usage-based insurance options.

• Examples: Travel insurance offered during flight bookings, product protection plans for electronics, and pay-per-mile car insurance through connected vehicle apps.

4. Embedded investments

Embedded investments build wealth management services into other platforms, making investing more accessible. They usually need some form of embedded payments alongside them, to handle account creation and funding or withdrawals.

• Key features: Fractional investing, robo-advisory services, automated savings tools, and access to a range of asset classes.

• Examples: Round-up investing in personal finance apps, stock trading within social media apps, and crypto investing inside payment apps.

5. Embedded foreign exchange

Embedded foreign exchange (FX) solutions offer currency conversion and international payment capabilities directly within a platform.

• Key features: Real-time currency conversion, multi-currency wallets, international payment processing, and FX risk management tools.

• Examples: Currency conversion in travel booking platforms, multi-currency accounts for ecommerce sellers, and integrated FX for payroll systems.

6. Embedded compliance

Embedded compliance is what makes embedded finance possible in the first place, by ensuring regulatory requirements are met.

• Key features: Automated Know Your Customer (KYC) processes, Anti-Money Laundering (AML) screening, transaction monitoring, and regulatory reporting tools.

• Examples: Identity verification during account opening, automated sanctions screening for international transactions, and real-time transaction monitoring.

7. Embedded payroll

Embedded payroll builds salary processing into broader business management platforms.

• Key features: Automated salary calculations, tax withholding, employee self-service portals, and integration with time tracking and HR systems.

• Examples: Payroll processing built into accounting software, gig economy platforms with integrated payment systems, and embedded payroll inside small business management apps.

The importance of embedded finance in 2026

The embedded finance market is valued at around US$155.96 billion in 2026, and one estimate projects it will reach US$454.48 billion by 2031, growing at a 23.84% compound annual growth rate.⁵

The reason is simple: customers increasingly expect financial services to be built into the products they already use. Instead of switching between multiple providers, they can pay, borrow, or manage money without leaving the platform they're already on.

For businesses, that creates several advantages:

• Improve the customer experience by keeping financial services within the product.

• Create new revenue streams through payments, cards, lending, or foreign exchange.

• Increase customer retention by making the platform more valuable and harder to replace.

• Expand into new markets faster by building on existing financial infrastructure instead of developing it from scratch.

Risks and challenges of embedded finance

While embedded finance offers significant opportunities, it also introduces new operational and regulatory considerations.

Regulatory compliance

Financial services are highly regulated. Businesses need the right licences or a regulated partner to meet compliance requirements.

Integration complexity

Embedding financial products requires integrating APIs, payment flows, and operational processes into an existing product.

Choosing the right provider

Not every embedded finance platform offers the same geographic coverage, products, or compliance support. Choosing a provider that can support your long-term growth can help avoid costly migrations later.

3 examples of embedded finance companies

Embedded finance companies come in all shapes and sizes, and they often specialise in different areas. Here are three worth knowing:

Airwallex

Most embedded finance providers built their infrastructure for a single domestic market, then expanded outward. Airwallex took the opposite approach: it built for global coverage from the start, holding 80+ financial licences and permits globally.

That matters if your customers, suppliers, or users span more than one market, since you don't need a different provider for every country you operate in.

Businesses like Navan and SHEIN build on Airwallex specifically for this reason. A single integration gives them consistent functionality everywhere they operate, and the flexibility to expand into new markets without switching providers later.

Airwallex's embedded finance offering spans three areas:

• Global Treasury for collecting and holding funds across currencies

• Payments for Platforms for embedding payment acceptance and payouts

• Banking-as-a-Service for embedding accounts, cards, and lending directly into a product

Stripe

Stripe is best known for its online payments platform, but it also offers embedded finance products.

These include Connect for marketplace payments, Issuing for virtual and physical card programmes, Capital for embedded business financing, and Treasury, which lets platforms offer financial accounts through banking partners.

Unit

Unit builds financial infrastructure that lets software platforms embed accounts and wallets, money movement, card issuing, and capital products directly into their own applications.

Embedded finance use cases

Embedded finance can support a wide range of business models. Here are three examples of how companies use Airwallex to embed financial services into their products:

Navan: streamlining global reimbursements

Navan offers a corporate travel and expense solution, and needed a global partner to manage and speed up payouts to its customers' employees worldwide.

Through Airwallex's Global Treasury solution, Navan manages employee reimbursements for multinational customers at scale. A single API integration handled local top-ups, managed FX risk, and used local payment rails to disburse reimbursements globally, quickly and cost-effectively.

Stake: facilitating global share trading

Digital trading platform Stake needed a reliable global technology partner to support share trading, hold funds across multiple jurisdictions, and make timely, programmatic payouts.

Stake used Airwallex's embedded finance solution to collect, hold, convert, and pay out funds in multiple currencies through a single API deployment. This let Stake's customers trade shares in new markets, helped the team roll out new functionality quickly, and made it easy to track real-time, high-volume money movement and balances.

SHEIN: managing end-to-end marketplace payments

Global fashion e-retailer SHEIN needed an end-to-end global payments solution to support its growth, handling payment acceptance, currency conversion, and payouts across multiple geographies.

Airwallex's Payments for Platforms solution let SHEIN collect online payments globally across multiple currencies and payment methods, cut conversion costs through like-for-like settlement, and simplify payouts to its global seller base. This helped accelerate SHEIN's growth worldwide.

Why use Airwallex for embedded finance solutions

Building embedded finance from scratch means navigating licensing, payments infrastructure, compliance, and global money movement. Airwallex provides the APIs and regulated financial infrastructure that let you embed financial products into your platform without becoming a bank.

Whether you're launching in one market or many, Airwallex is built for global businesses, with 80+ financial licences and permits worldwide. Our embedded finance solutions include:

• Global Treasury: Embed multi-currency accounts so customers can collect, hold, and move funds globally.

• Payments for Platforms: Accept payments, split funds, and automate payouts directly within your product.

• Banking-as-a-Service: Embed accounts, cards, and lending without building your own regulated financial infrastructure.

With one platform, you can launch embedded financial products faster and scale internationally without stitching together multiple providers.

Frequently asked questions (FAQs)

What is embedded finance in simple terms?

Embedded finance is when a non-financial business builds a financial service, like payments, lending, or insurance, directly into its own product. Instead of sending you to a separate bank or provider, the company you're already using handles it for you, usually by partnering with a licensed provider behind the scenes.

What is the difference between embedded finance and Banking-as-a-Service?

Embedded finance is what the customer sees and uses: a financial service built into a non-financial product. Banking-as-a-Service is the licensed infrastructure that often sits behind it, giving the business access to banking capabilities through an API without becoming a bank itself. You can think of embedded finance as the outcome, and Banking-as-a-Service as one common way to build it.

What are examples of embedded finance?

Common examples include Buy Now, Pay Later options at checkout, in-app payments on ride-sharing apps, and business cards issued directly through accounting software. Airwallex, Stripe, and Unit are examples of companies that provide the infrastructure behind these kinds of products.

Is embedded finance the same as fintech?

No. Fintech is a broad term for technology-driven financial services, including companies that build and sell financial products directly to consumers. Embedded finance is more specific: it's when a non-financial company embeds a financial service into its own product, usually by partnering with a fintech or bank behind the scenes.

What are the risks of embedded finance?

The main risks are data privacy exposure, unclear compliance responsibility, and technical integration complexity. Because financial data flows through a non-bank platform, businesses need a partner with strong security and compliance practices, not just a working integration. Customers can also get confused about who's responsible if something goes wrong, the platform or the provider behind it.

How does a business start offering embedded finance?

Start by identifying one clear friction point in your product where a financial service would help, rather than trying to embed everything at once. From there, choose a provider that covers the markets you operate in and can handle the compliance and licensing burden for you. Airwallex, for example, lets businesses embed payments, accounts, and cards through a single integration rather than building this from scratch.

Sources:

1. https://www.pwc.com/gx/en/issues/technology/baas-banking-as-a-service.html

2. https://stripe.com/resources/more/what-is-banking-as-a-service-baas-what-businesses-need-to-know

3.  https://developer.tech.gov.sg/products/categories/data-and-apis/mas-api/overview

4.  https://www.airwallex.com/global/report/scaling-embedded-finance

5.  https://www.mordorintelligence.com/industry-reports/embedded-finance-market