Software as a service , where software services and licensing are accessed online via subscription, has become the backbone of modern business operations, with its value reaching
Amid this struggle, embedded finance offers innovative solutions to address these challenges. In this article, I’ll explore how embedded finance can impact SaaS companies and the challenges they’ll need to overcome to successfully incorporate it into their products.Embedded finance integrates banking and payment capabilities into nonfinancial ecosystems.
For instance, a substantial portion of Shopify’s revenue is derived from what it terms “merchant solutions”—essentially, embedded finance. In March 2023, Shopify reported a threefold increase in revenue—, a 31% rise year over year—from merchant solutions. This starkly contrasted with their software-only revenues, which stood at $384 million and grew at 11% year over year.
SaaS providers must navigate regulatory complexities, including compliance with financial regulations such as know your customer and anti-money laundering regulations. Businesses unfamiliar with KYC and AML will need to choose their embedded finance service partners carefully and ask about how these partners can eliminate the regulatory burden and maximize compliance.
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