Embedded Payments to Generate EUR 277B of Revenue in Europe Over Next 5 Years

Embedded Payments to Generate EUR 277B of Revenue in Europe Over Next 5 Years

by January 10, 2022

In Europe, companies of all sizes and from all sectors are waking up to the embedded finance opportunity with most planning to the join the movement by integrating seamless payment capabilities, a new study by paytech and banking-as-a-service (BaaS) specialist OpenPayd found.

The survey, conducted in mid-2021, polled 150 decision makers from companies in the UK, France, Germany, Italy and Spain to understand their views on embedded payments and gauge their interest in implementing these solutions.

Results from the survey show that although only a few companies polled (4%) indicated currently offering embedded payment capabilities, nearly all (96%) are planning to provide such functionalities to their customers within the next five years or are seriously thinking about doing so.


Almost a quarter (22%) indicated having embedded payments in development, and three quarters said they expect to take products to market within the next two years. Eagerness to embrace embedded payments will push total revenue generated by such solutions to a total of EUR 277.46 billion by 2026, OpenPayd estimates.

Embedded payment adoption in Europe, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

Embedded payment adoption in Europe, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

Customer demand will be driving the trend, with 70% of respondents citing changing consumer views as the main reason to implement embedded finance. Other key drivers cited include new revenue streams (67%) and improved customer experiences (63%).

Drivers of embedded finance, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

Drivers of embedded finance, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

Embedded finance takes off

Payment isn’t the only area companies are looking to capitalize on, the research found. After embedded payments, European firms are also looking to embrace embedded banking (94%), embedded short-term lending (69%) and embedded insurance (69%).

European firms with plans regarding embedded finance, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

European firms with plans regarding embedded finance, Source: OpenPayd, Dec 2021, via Embedded Payments and the Reinvention of Customer Experiences

Embedded finance is one of the hottest trends in the fintech industry, a sector which Juniper Research predicts will be worth at least US$138 billion by 2026, soaring from just US$43 billion in 2021.

Fueling this growth of over 215% will be the increasing availability of APIs from financial services vendors, the firm says, coupled with the rise of buy now, pay later (BNPL) arrangements, which are set to account for over 50% of the embedded finance market in 2026.

Investors are also helping fuel the momentum, pouring millions into startups in the space. Just two weeks ago, investment platform Anthemis Group announced that it had raised US$700 million to fund embedded finance startups and early stage fintechs.

The fundraising came on the back of the closing of Mambu’s massive EUR 235 million Series E funding round, which brought the company’s valuation to EUR 4.9 billion. Dutch startup Mambu offers APIs and analytics to support the development of banking, lending, and deposit products. The company serves more than 200 business customers including Raiffeisen Bank, N26, and ABN Amro, and 53 million end-users.

Tapping Europe’s underserved SME market

In Europe, small and medium-sized enterprise (SME) banking is a area where embedded finance is set to make waves. Though an essential piece of the European economy, SMEs have long been an underserved segment for banks due largely to the difficulties of assessing their credit risk and subsequent challenges in lending to and creating true additional value for these clients.

Tapping into this market opportunity, fintech startups and platform players are increasingly using embedded finance to target small businesses and entrepreneurs, providing them with cloud-based accounting, financial management, productivity, and collaboration solutions that are seamlessly integrated into their day-to-day workflow.

Non-bank pioneers in embedded finance include Stripe Capital, which provides end-to-end lending APIs for platforms like Shopify to offer financing options to SME customers, Square, an online payment specialist that’s evolving into an SME solutions and services ecosystem, and Intuit’s QuickBooks accounting software brand, which has expanded into business banking accounts and other banking and financial management capabilities.

Accenture estimates that embedded finance could expand the SME banking market and generate growth of up to US$92 billion in revenue by 2025. Embedded finance could capture up to 26% of the global SME banking market, representing nearly US$124 billion in value by then, the firm says.

The global market for embedded financial services is projected to be worth $124 billion by 2025, Source: Accenture, Dec 2021, via Embedded finance for SMEs- The ultimate collaboration of banks and digital platforms

The global market for embedded financial services is projected to be worth US$124 billion by 2025, Source: Accenture, Dec 2021, via Embedded finance for SMEs: The ultimate collaboration of banks and digital platforms

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