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Embedded finance in retail has been gaining prominence as one of the main strategies to improve customer experience and drive results. By integrating financial services such as credit, payments, and digital accounts directly into the shopping journey, retailers can make the experience more fluid, convenient, and personalized, without needing to become a bank or rely on multiple intermediaries.
For small and medium-sized retailers, this evolution is even more relevant. With the support of models such as Banking as a Service (BaaS), APIs, and strategic partnerships, companies of different sizes can incorporate financial solutions into their ecosystem and become true service hubs. The result is higher conversions, new revenue streams, and a closer relationship with consumers.
In this article, you will understand what embedded finance is, how it works in practice, its main benefits and challenges, and how to apply it as a growth strategy for your business.
What is embedded finance and why is it relevant in retail?
Embedded finance consists of a solution that enables the integration of financial services into non-financial companies and platforms. In retail, this translates into offering options such as consumer credit, installment payments, digital wallets, and even issuing
In other words, with embedded finance, customers do not need to access other platforms or rely on third parties to access financial services. Everything is done within the same shopping environment, in a simple, integrated, and frictionless way.
This model has been growing rapidly and transforming the retail sector by solving two major challenges: payment friction and limited access to credit. By offering financial services directly within their platforms and apps, retailers reduce friction in the shopping journey. This change has a direct impact on customer experience, making it more convenient and increasing conversion rates.
Additionally, this integration enabled by embedded finance facilitates access to credit operations, allowing consumers to spend more and shop more frequently. Naturally, this strengthens the relationship between companies and customers and increases loyalty.
How embedded finance works in practice
Retail companies that want to offer financial services within their business ecosystem do not need to build a financial infrastructure from scratch or become a bank. There are models that enable this type of operation, such as:
APIs
The integration of financial solutions into the retail environment is done through Application Programming Interfaces (APIs).
This mechanism is provided by financial institutions or white-label fintechs and allows small and medium-sized retailers to connect different financial solutions to their ecosystem in an agile and scalable way. From more traditional options such as in-house credit and loans to customized offerings like financing, private label cards, and insurance.
BaaS
The concept of embedded finance is directly linked to Banking as a Service, a business model that provides the necessary architecture for non-banking companies to offer financial and digital services to their customers under their own brand, without the need to obtain a license from the Central Bank.
n other words, BaaS operates as the financial back-end, enabling the technology and regulatory infrastructure required to implement embedded finance. In turn, embedded finance relies on BaaS to deliver financial solutions and an integrated experience to the end customer.
Partnerships
Another way to implement embedded finance in retail is through partnerships with companies operating in the financial sector. While the retailer provides the financial services, the partner company is responsible for regulatory, compliance, and operational aspects.
Benefits of embedded finance for retail
Data from Precedence Research shows that the global embedded finance market is expected to grow exponentially, reaching US$1.732 trillion by 2034. In Latin America alone, the market is projected to grow 27% per year through 2029. In retail, Deloitte data indicates that embedded finance could generate R$18.3 billion annually.
These figures reinforce that embedded finance is not just a passing trend. It represents a structural transformation that is becoming the new standard in retail, enabling companies to benefit in several ways.
Higher conversion rates
Retailers that offer credit, PIX, digital wallets, and other financial solutions at the point of purchase allow consumers to find everything they need in one place, without being redirected to external banking apps.
This makes the experience more fluid, barrier-free, and context-driven, leading to fewer cart abandonments and higher conversion rates.
Increased average ticket size
With easier access to credit and more flexible payment options, consumers tend to spend more. As a result, this increases the average ticket size and boosts retail revenue.
New revenue streams
By enabling non-financial companies to offer financial services, embedded finance creates new revenue streams through transaction fees, credit interest, and other value-added services that would otherwise go to financial institutions.
Customer loyalty
The integration of financial services into retail ecosystems allows companies to invest in branded cards, loyalty programs, discounts, and cashback offers. This approach enables more personalized experiences, strengthening customer relationships and increasing loyalty.
Challenges: what to consider before implementing
Implementing embedded finance brings significant advantages for small and medium-sized retailers, but it also comes with challenges.
A successful implementation requires a deep understanding of the customer journey, allowing companies to tailor their offerings more effectively and reduce friction points in the checkout process, resulting in a simpler and more intuitive experience.
Additionally, other aspects require careful attention, such as regulatory compliance, data protection, and integration with multiple payment methods. In this context, establishing strong partnerships and robust compliance practices is essential to ensure efficiency and trust.
Strategy and technology: the combination that drives results
The success of embedded finance in retail depends on the combination of strategy and technology. Simply offering multiple payment and credit options is not enough if the company cannot map the customer journey, identify key experience touchpoints, and ensure efficient risk management and regulatory compliance.
In this context, technology acts as a key enabler, allowing companies to test, scale, and optimize financial solutions with agility. More than implementing tools, the real differentiator lies in how these solutions are integrated into the customer journey, ensuring simple, secure, and relevant experiences.
As embedded finance continues to evolve in retail, it becomes increasingly important to follow trends, understand changes in consumer behavior, and evaluate how these innovations can be applied strategically. If you want to dive deeper into this topic and stay up to date with key market trends, subscribe to our newsletter and receive exclusive content.
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