We’ve seen a rise of innovation in financial services over the past few decades, which has brought us to the current boom of the embedded fintech market. Embedded fintech is the integration of financial services with non-financial business infrastructures, without the need to redirect customers to traditional financial institutions. The technology can be applied to everything from payment cards to insurance to create greater efficiencies for businesses.

The market for embedded finance is growing rapidly to the tune of $22 billion in total revenue. The vast majority of B2B software companies are now offering some form of embedded finance solution, signaling this next wave of fintech is here to stay and adoption will happen faster.

Embedded fintech as core strategy

Embedded fintech has quickly become a core business strategy. According to Bain and Company, the total revenue of the embedded fintech market will double by 2026. Embedded finance is predicted to account for 10% of all payment transactions within the next three years, taking a significant market share away from traditional payment methods. This begs the question: What’s next for a space that’s already shown such significant growth?

Embedded lending, such as popular buy now, pay later (BNPL) services used by businesses, is showing significant growth in the embedded fintech space and gaining rapid adoption. Embedded lending enables businesses to offer customers loans directly, forgoing the need for touchpoints with high-cost financial institutions.

This is not just a moment in time; it’s the way forward because of its simplicity and efficiency. Merchants simply access embedded lending products directly from the software systems they use to run their businesses, which creates a sticky business model that scales quickly. With flexible APIs enabling seamless integrations, embedded lending can now send the future of fintech into spaces that have historically not had great access to modern financial products.

The future of embedded lending

BNPL has reached near ubiquity in e-commerce, setting the groundwork for the embedded lending model to thrive in other spaces.

We will see the adoption of embedded lending by in-person service providers — think home service companies, veterinary offices and auto repair shops. In-person services have been overlooked by leading embedded lending fintechs for years, creating a whitespace.

E-commerce is no longer the mainstay of embedded lending, in large part because in-person service providers are increasingly adopting software to drive their sales experience. The tides are turning as the in-person service businesses are seeing an opportunity to grow their customer base and boost revenues quicker by offering their customers flexible loan payments embedded during the sales process.

It is impossible to predict when you will need an emergency root canal or when your car will need a costly repair, which can leave consumers in a tough spot financially. However, now, in-person service companies can embed technology directly into their operating systems that offer flexible loan options with just a few clicks, giving consumers better customer service and much needed support.

The dollar value for such transactions averages $4,000 each — exponentially more than the BNPL transactions on the e-commerce side averaging $104 each.

With larger transaction sizes, embedded lending is a win for B2B companies, SMBs and consumers. It’s rapidly becoming the golden goose of fintech and is revolutionizing the way businesses can drive revenues and customer growth.

Bobby Tzekin is co-founder and CEO of Wisetack, the leading pay over time platform for in-person services.