Not long ago, going cashless felt novel. Today, tapping a card—or clicking “Pay now”—barely registers. Expectations have shifted quickly, and by 2025, consumers largely assume payments will run themselves. The commercial pressure is real: merchants lose an estimated $18 billion per year to abandoned carts, and every failed transaction costs roughly $12 in direct and indirect losses. Any extra step introduces friction, and any decline erodes revenue and trust.
Embedded payments are designed to address both problems. They sit beneath the surface of digital products, removing friction and allowing payments to function as a native feature rather than a separate event. When designed well, the customer barely notices the transaction at all, yet the underlying infrastructure is doing far more work than it appears. The new baseline is simple: the payment disappears into the product.
Payments without banks—at least from the user’s point of view
Today’s customer does not expect to interact with a bank. They expect the transaction to complete instantly and intuitively. Behind a single button press, however, a cascade of systems activates at once. Issuers verify credentials. Acquirers interpret the merchant request. Fraud engines run risk assessments. If lending, foreign exchange or tokenization are involved, additional layers come online.
All of this has to happen in milliseconds. When it does, the commercial impact is tangible. Companies using embedded finance report two- to five-times higher customer lifetime value and up to 30 percent lower acquisition costs. Simplified payment flows increase conversion, reduce friction and open new revenue streams. In some models, a well-built embedded payments experience can add approximately $70 per customer per year.
Reliability is the second, less visible benefit. When a basket is full and a customer is ready to pay, the system must complete the transaction. A failure at checkout does more than lose a single sale. It damages confidence, often sends customers to a competitor and, in many cases, ends the relationship altogether.
Why every company is becoming a payments company
Embedded payments now sit far outside the fintech sector itself. Most users do not consciously register the change, but nearly every major digital service already relies on them.
Marketplaces once depended on manual reconciliations and delayed settlements. Today, embedded financial services manage escrow, seller payouts, instant transfers and even on-platform lending. Tax and compliance checks run automatically in the background. What looks like a simple transaction is, in reality, a network of coordinated financial processes running in parallel.
“Buy now, pay later” is one of the most visible outcomes of this shift. A single click can trigger an installment plan without redirecting the user or breaking the checkout flow. That convenience increases affordability and lifts conversion, explaining why adoption spread so quickly.
The creator economy has moved just as fast. Viewers can instantly tip or subscribe to a streamer, with funds settling to the creator’s card in near real-time. Lower friction translates directly into higher earnings, helping drive a sector projected to grow from $30 billion in 2024 to roughly $284 billion by 2034.
Physical environments, like sports venues, are also adapting, recognizing the commercial value. Long queues reduce spending. Cashless stadiums reduce wait times and increase transaction throughput and drive higher per-fan spend. Payments have become a core part of the fan experience itself.
Even vehicles are becoming payment endpoints. According to Parkopedia, 100 percent of U.S. drivers and 93 percent of German drivers say seamless in-car payments improve their overall experience. Cars, in effect, are evolving into connected payment devices.
The reality check: rapid progress coupled with uneven regulation
Despite these advances, embedded finance brings real challenges. Global regulation remains fragmented. Requirements vary country by country, and in the U.S., state by state. A payment model compliant under California’s Digital Financial Assets Law may still require a money transmitter license in Washington state. These inconsistencies make it difficult to deliver a truly uniform experience at scale.
There is also a behavioral dimension. When credit, subscriptions and financial commitments are embedded deeply inside apps, some users can lose visibility into what they have agreed to. Overspending becomes easier, and platform lock-in more likely. Convenience has introduced a new category of consumer risk that regulators are still working to address.
What comes next
Despite these constraints, the trajectory is clear. By 2026, payment systems will increasingly route transactions autonomously, selecting optimal paths without human intervention. Tokenized credentials will improve accuracy and reduce fraud. Machine learning will take on a greater share of real-time decision-making.
The boundary between financial and non-financial services will continue to blur. Payments will sit underneath most digital products by default. Customers will not think about them, and that invisibility will be the measure of success. The infrastructure fades from view, but its impact on revenue, retention and experience only grows stronger.
Alpesh Patel is a Strategic Partnership Director at Cartex, a new-gen fintech marketplace. He is a senior executive with over 25 years of experience in fintech, cryptocurrency, card issuing, and payments sectors in the UK and globally.
Observer
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