Embedded finance integrates financial services into non-financial platforms. It allows companies to offer banking, payments, insurance, or lending directly within their user experience. A question that many ask themselves: how does embedded finance make money?
This integration creates several monetisation avenues and reshapes how financial services reach consumers.
1.Transaction fees as core income
The most common way embedded finance make money is transaction fees. Platforms earn a small percentage on each payment processed. For example, e-commerce sites offering embedded payments collect a fee on every sale. These fees may be shared between the platform and its financial service partners.
Over time, as transaction volumes grow, these seemingly small percentages create substantial revenue streams. Businesses benefit from enhanced payment convenience while capturing ongoing income without adding friction to the customer experience.
2.Lending and credit income
Embedded lending enables platforms to offer credit directly to customers or businesses. They generate revenue through interest margins. By leveraging user data, platforms assess risk more accurately, allowing better credit decisions and competitive rates.
Some providers partner with banks, earning a share of the loan interest. Credit underwriting becomes more personalised, often improving approval rates and customer satisfaction. As lending volumes scale, the interest income becomes a significant contributor to total revenue.
3.Insurance commissions
When platforms embed insurance products, they receive commissions on policies sold. For instance, travel booking sites may offer trip insurance during checkout. These additional services enhance customer value and drive incremental revenue.
Insurance bundling at the point of transaction increases conversion rates, as customers are more likely to add coverage when it is contextually relevant. Over time, these commissions create a reliable ancillary income stream that complements core products.
4.Subscription and SaaS models
Some embedded finance providers adopt subscription-based pricing. Platforms pay monthly fees to access embedded finance infrastructure. This model ensures predictable recurring income, especially attractive for B2B platforms integrating multiple financial products.
As businesses scale and require additional services, subscription tiers can be expanded, further increasing average revenue per customer. SaaS pricing also facilitates long-term relationships and upsell opportunities, creating a stable financial foundation.
5.Interchange fees in card issuing
Platforms issuing cards, either physical or virtual, earn interchange fees from card networks. Each time a cardholder uses the card, the platform receives a small percentage from the transaction. These fees can scale significantly with high transaction volumes.
Additionally, offering branded cards helps build brand loyalty, deepen customer engagement, and create marketing opportunities. The combination of interchange income and increased brand touchpoints strengthens overall profitability.
6.Data monetisation potential
Embedded finance platforms collect valuable financial and behavioural data. While direct monetisation of data may face regulatory constraints, insights can improve cross-selling, customer retention, and product development. These indirect benefits contribute to long-term profitability.
Companies can leverage data to personalise offers, optimise pricing models, and anticipate customer needs, creating a virtuous cycle of customer satisfaction and revenue growth.
7.Revenue sharing with partners
Many embedded finance models involve partnerships with regulated financial institutions. Revenue is often shared between the platform, the licensed bank, and technology providers. Well-negotiated partnerships can create mutually beneficial revenue streams.
These partnerships also allow platforms to focus on user experience and product innovation while relying on partners for regulatory compliance, capital requirements, and operational resilience.
8.Customer lifetime value uplift
Beyond direct fees, embedded finance improves customer retention and lifetime value. Offering seamless financial services reduces churn, increases engagement, and boosts overall spending per customer.
Integrated financial services often lead to stronger brand attachment, as customers find greater convenience and trust in a single provider that meets multiple needs simultaneously.
Conclusion
Embedded finance monetises by capturing value at multiple points: transactions, credit, insurance, subscriptions, interchange, data insights, and customer loyalty. Its diverse revenue model makes it increasingly attractive for both startups and established businesses integrating financial services.
As adoption accelerates, embedded finance is positioned to become a central pillar of digital business models worldwide.
