- What are the emerging payments trends across Europe?
- What is driving the adoption and need for embedded finance services?
- What should traditional banks do to ensure increased revenue in 2024?
- What are the benefits of merchants working with banks that offer embedded services?
The European payments industry is undergoing an accelerated evolution. Payments trends are revealing that, whether it is due to geopolitical influences like the Russia-Ukraine war, Covid 19, or evolving social mores, account to account (A2A) based finance, debit cards and shorter-term alternative financing options are gaining ground against credit card use. Most of these services are operating in a currently unregulated manner, causing concerns for consumer bodies and regulators alike.
By removing the need for a credit card issuer in the mix, Embedded Finance newcomers have enabled the rapid expansion of their products and services. Where integrated experiences are desired on the demand side, they have increasing basket size and assisted the closure of incremental and even ‘casual’ sales. On the supply side, traditional lenders are waking up to this development, seeing reduced card spend, interest, and interchange income, accompanied by a commensurate increase in the number of direct debits that are funding these new short term lenders. With combined banking revenues declining as a result, banks must redefine their business models and offer future-proof Lending as a Service (LaaS) to SMB’s fintech companies and merchants.
Waking up to this trend, Merchants across the entire ecosystem, operating domestically or internationally, will soon be able to recognise clear benefits from working in partnership with a bank and their current merchant acquirer, where possible, in order to access streamlined payment acceptance and embedded finance solutions. At this time, following the development of a merchant centric payment acceptance and lending solution merchants will be better able to manage geographic overlaps, with a single settlement and reconciliation process that can now include new lines of credit for cashflow and funding for themselves and their B2C or even B2B customers.
In this increasingly dynamic environment, banks should be actively investigating partnerships with technology companies and card acquirers that can provide multi-currency, multi-jurisdiction. LaaS solutions with fully integrated; onboarding, loan management, servicing, collections and reporting platforms.
Only solutions that can tick these boxes are going to be able to ensure the delivery of a regulated business model that can be digitised efficiently and protect the merchant and their brand in a post-regulation world.
Sign up for this Finextra webinar, hosted in association with FIS, to join our panel of industry experts who will discuss what is driving the adoption and need for embedded finance services.