# Why embedded finance will be integral in the future of B2B Marketplaces
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-06
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Future of B2B Embedded Finance: Trends &
Meta Description: Discover how embedded finance is transforming the B2B market with seamless integrated solutions like payments, lending, and insurance for efficient transactions.
URL: https://financedigest.com/why-embedded-finance-will-be-integral-in-the-future-of-b2b-marketplaceshtml

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_By_ **_Louis Carbonnier,_** _Co-Founder and Co-CEO of_ [_Hokodo_](http://www.hokodo.co)

Embedded finance services are on the rise. With a new audience within the B2B market, it is predicted that the [sector will be worth more than $7 trillion in the next 10 years](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors"), with more providers coming into the arena, and more adopters realising the potential of the offering. But what can embedded [finance bring to the business](https://www.financedigest.com/1-in-3-uk-businesses-looking-for-finance-are-finding-it-harder-to-get-a-loan.html "1 in 3 UK businesses looking for finance are finding it harder to get a loan") to business (B2B) marketplace? And what role will it play in its future?

**What is** [embedded finance?](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     ")

The term embedded finance refers to the integration of financial services or tools within the core services of a business that does not [work](https://www.financedigest.com/turning-a-blind-eye-wont-work-for-financial-firms-as-the-fca-tightens-its-grip.html "TURNING A BLIND EYE WON’T WORK FOR FINANCIAL FIRMS AS THE FCA TIGHTENS ITS GRIP") within the financial sector. An obvious example would be a white goods or tech retailer [offering Buy](https://www.financedigest.com/mfe-offers-to-buy-1-05-stake-in-mediaset-espana-from-vivendi-ahead-of-delisting.html "MFE offers to buy 1.05% stake in Mediaset Espana from Vivendi ahead of delisting") Now, Pay Later (BNPL) agreements to its customers, to spread the cost of a purchase. But there are many other [areas where embedded finance](https://www.financedigest.com/4-areas-of-finance-you-should-be-watching.html "4 Areas of Finance You Should Be Watching") is now finding a niche, from payments to insurance. And the potential for the B2B market is enormous.

**Where is embedded finance being used for B2B?**

B2B marketplaces are deploying embedded [finance for both physical and digital](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution") transactions in a range of forms.

**Embedded payments**

Cash had ceased to be King long before the pandemic hit, but Covid-19 sounded its death knell, with [contactless payments](https://www.financedigest.com/curating-a-fully-contactless-customer-experience-for-payments.html "Curating A Fully Contactless Customer Experience for Payments ") demanded everywhere. [Instant payments](https://www.financedigest.com/5-ways-to-maximise-the-value-of-instant-payments.html "5 ways to maximise the value of instant payments") are the next step forward. Available for a while now, the technology that integrates payment services with the infrastructure of an app or [e-commerce site](https://www.financedigest.com/5-reasons-why-e-commerce-sites-need-a-token-gateway.html "5 reasons why e-commerce sites need a token gateway") is now being widely adopted, allowing payments to be transacted at the touch of a button. [Digital wallets](https://www.financedigest.com/digital-wallets-bring-value-to-banks-and-retails.html "Digital wallets") perform a similar function, albeit working through a third party.

**Embedded lending**

This is where Buy Now, [Pay Later comes](https://www.financedigest.com/why-pay-by-bank-app-will-come-into-its-own-in-2022.html "Why Pay by Bank App will come into its own in 2022 ") into play. Already a major part of the consumer experience – with Klarna and Clearpay being the best-known providers – BNPL is only in the [early stages](https://www.financedigest.com/valuing-your-early-stage-startup.html "Valuing your Early Stage Startup") of B2B adoption. But the deferred payment system holds a huge amount of potential, allowing businesses to [access the goods they need without waiting to acquire the funds](https://www.financedigest.com/55-of-uk-smes-unable-to-access-all-funding-needed-to-grow.html "55% of UK SMEs unable to access all funding needed to grow") to pay for them. [Providing rapid decision](https://www.financedigest.com/fico-provides-decisioning-platform-for-smartphone-only-buddybank-in-italy.html "FICO Provides Decisioning Platform for Smartphone-Only buddybank in Italy") making with minimal paperwork, B2B BNPL delivers significant benefits for both business buyers and sellers.

**Embedded insurance**

Available at the point of purchase, embedded insurance can be found almost everywhere and for almost everything. Consumers can even access one-click [insurance for an array of digital](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") purchases – a quick look at Amazon.co.uk is enough to reveal the extent of its ubiquity. And it too is now being integrated into the B2B market, enabling businesses to insure their purchases without the time and tedium of updating existing policies, or researching new ones.

**Why is embedded [finance likely to play a greater role in the future](https://www.financedigest.com/enterprise-automation-is-the-future-of-finance.html "Enterprise automation is the future of finance") of B2B?**

Until now, B2B has been something of a secondary thought when it comes to fintech. Evolving products and [services have been focused on the consumer](https://www.financedigest.com/best-paying-jobs-in-finance-consumer-services.html "Best Paying Jobs in Finance Consumer Services"), and the backend. But having cut its teeth in the B2C market, embedded [finance has shown itself to be flexible enough to be applied to any company or industry](https://www.financedigest.com/theres-nothing-artificial-about-the-role-of-ai-and-data-in-the-finance-industry.html "There’s nothing artificial about the role of AI and data in the finance industry ") with a transactional element, allowing the businesses that serve the business sector to extend their facilities and their CX.

With customer experience increasingly important across the business ecosystem, and a digital-first attitude prevailing, organisations unable to offer what are rapidly becoming expected [financial services](https://www.financedigest.com/4-ways-high-performance-analytics-powers-financial-services.html "4 ways high-performance analytics powers financial services") – including embedded finance – will find themselves at a distinct disadvantage, with customers migrating to more amenable suppliers.

Embedded finance [changes the game](https://www.financedigest.com/exclusive-olympics-paris-2024-plans-games-relay-changes-fewer-torches-source.html "EXCLUSIVE-Olympics-Paris 2024 plans Games relay changes, fewer torches-source") for buyers and sellers alike. It [provides sellers with increased](https://www.financedigest.com/route-genie-partners-withnorsk-global-to-provide-retailers-with-increased-international-carriage-choice.html "Route Genie Partners WithNorsk Global To Provide Retailers With Increased International Carriage Choice") revenue, enhanced sales opportunities, and enlarged basket sizes. Meanwhile, scaling businesses can gain immediate [access to the goods and services they need](https://www.financedigest.com/what-needs-to-happen-to-improve-the-landscape-for-smes-trying-to-access-finance-options-in-the-uk.html "What needs to happen to improve the landscape for SMEs trying to access finance options in the UK"), selecting deferred payment to allow for more financial control, enjoying differing payment models to suit their present circumstances, and enhancing the lifetime of their purchases through instant, complication-free insurance. These are all services that are experiencing a surge in demand in the B2B sector.

Business to business e-commerce has long been overlooked, with fewer [services and less investment](https://www.financedigest.com/hermes-bolsters-sme-service-with-significant-investment.html "HERMES BOLSTERS SME SERVICE WITH SIGNIFICANT INVESTMENT"). But with B2B sales accounting for £1.7 trillion (44%) of the UK’s business turnover and raising £21.78 billion in [corporate tax](https://www.financedigest.com/top-north-east-financial-adviser-firm-talks-corporation-tax.html "Top North East financial adviser firm talks corporation tax") every year, it’s time to buck that trend. The UK’s B2B ecommerce [sales alone now total £159.3 billion and businesses](https://www.financedigest.com/the-ultimate-excel-sales-tracking-templates-for-businesses.html "The Ultimate Excel Sales Tracking Templates For Businesses") are looking for more and better services from the suppliers they are working with. Embedded finance is already carving a niche within B2B, helping to facilitate this growth,but it holds so much more potential than is currently being realised. If B2B suppliers wish to secure their place within this growth sector, they are going to [need to make sure that embedded finance](https://www.financedigest.com/7-finance-career-options-to-consider-and-what-you-need-to-know-about-each.html "7 Finance Career Options to Consider and What You Need to Know About Each") becomes part of their plan.

**_About Author:_**

**_Louis Carbonnier_** _is the Co-Founder and Co-CEO of_ [_Hokodo_](http://www.hokodo.co) _where he leads the commercial and product functions. Hokodo is a fintech startup that enables B2B merchants and marketplaces to offer a buy now, [pay later solution to their customers](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem")._


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