Revenue Forecast

The revenue estimate for the base year 2023 is $32.00 billion, with a CAGR of 19.6% for the study period 2023-2029.

The Impact of the Top 3 Strategic Imperatives on the Global Embedded Payments Industry

Transformative Megatrends

Why

• As commerce shifts toward digital platforms, the need for embedded payments becomes greater. Integrating payment capability into apps or websites streamlines payment processing for consumers and businesses.
• Businesses can capitalize on new opportunities within the digital space by embedding payments as part of their user experience.

Frost Perspective

• Embedded payments have become a selling point for software-as-a-solution (SaaS) platforms and banks. As competition intensifies, increased collaboration is likely between banks, SaaS, and financial technology providers.
• The collaboration allows them to offer various financial services beyond payments and capture new revenue streams in their respective platform ecosystems.

Innovative Business Models

Why

• Embedded payment services help businesses reduce their operational burden and focus on improving customer experience.
• In addition, businesses have access to technology that helps them collect customer data, enabling them to better serve their customers.

Frost Perspective

• With embedded payments, businesses across industries beyond retail or commerce can offer customers payment capability, enhancing service offerings while adding new monetization options to their existing business model.
• Embedded payments will lead to more data-driven strategies that help businesses personalize products and gain a deep understanding of customer behavior on their services based on customer preferences.

Disruptive Technologies

Why

• Embedded payments work through native integration in non-financial service businesses. Key components include payment gateway, tokenization, payment methods integration, and data analytics.
• Examples of embedded payment use cases businesses can capitalize on are consumer credit, point-of-sale (POS) lending, and wealth management.

Frost Perspective

• Embedded payments help businesses adapt to changing macroeconomic conditions and optimize operational processes, reducing expenditures and improving revenue streams.
• Businesses that utilize embedded payments can adapt swiftly to evolving payment trends (e.g., pay later, one-click payment), ensuring resilience and the ability to capitalize on emerging opportunities, fostering sustained growth.

Scope of Analysis

• Embedded payments are where payment processing capabilities are integrated into non-financial service platforms. Users typically find embedded payments during the checkout process on a site with digital commerce abilities.
• The embedded payments industry comprises applications or software that enable businesses to accept digital payments (e.g., digital wallet, account-to-account payment) in their digital stores.
• Frost & Sullivan will focus on the global embedded payments market in this analysis, sharing insights on opportunities and highlighting new regulatory and technical capabilities driving the market.
• Our analysis includes trends impacting the industry, the current state and outlook on embedded payments, growth drivers and barriers, and notable opportunities.
• We segmented verticals based on 3 end-user industries that utilize embedded payments: retail; public sector; and travel. The study focuses on growth opportunities for embedded payments in these industries

Growth Drivers

• The rapid growth of mobile apps and eCommerce drives the demand for embedded payments, especially for brands that have established customer relationships and want to integrate relevant payment capabilities into their customer journey.
• Embedded payment adoption in non-bank sectors such as retail and travel improves customer stickiness and positions companies more competitively. These positive impacts drive growth for more use cases (e.g., buy now, pay later [BNPL]; bill payments) in embedded payments across verticals.
• Embedded payments have found significant adoption in brands such as Apple, Google, and Walmart. Benefits such as increased customer conversion rates and transaction volumes have made embedded payments a tool for brands to create new revenue streams.
• The availability of next-generation technologies such as open APIs and cloud technology (e.g., on-premises, hybrid) has enabled payment providers to offer seamless and faster integration. The scalability provided by these technologies will boost embedded payment adoption.
• In the hyper-personalization era, end users demand easier configuration of embedded payment features (e.g., payment methods, subscription management, and biller preferences) so they can deliver services on time. Development approaches such as low and no-code solutions that offer faster deployment will be critical for driving the growth and adoption of embedded payments.

Growth Restraints

• The payments industry is subject to various cybersecurity risks that can affect business operations and potentially damage reputations.
• The substantial high initial investment costs (e.g., upfront technology, infrastructure, and training) of implementing embedded payments deter smaller companies and limit their ability to compete on technological efficiency.
• Integrating new embedded payments with existing legacy systems can be challenging due to compatibility complexities and will eventually require customized solutions that cost more.
• Concerns over limited industry-specific customization options can hinder brands’ ability to differentiate their products, hindering market growth.
• Governments across global regions have varying regulations and policies concerning data privacy, security, and financial crime prevention. This can delay commercialization as rules, frameworks, and standards become stricter.

Segmentation by Vertical

Global Embedded Payments Market

• Retail
  • Includes the following types:
  • Retailer stores
  • Marketplace
  • eCommerce platforms
  • Convenience stores
• Public Sector
  • Includes:
  • Government
  • Education
  • Utilities (gas, water, electricity)
  • Healthcare
• Travel
  • Includes:
  • Hotels
  • Tourism
  • Hospitality

Competitive Environment