64% of Marketplaces Reduce Churn and Boost Revenue with Embedded Finance

Over the past decade, online marketplaces have steadily integrated payments and financial tools into their platforms. Once seen as an experimental feature, embedded finance has now become central to how these marketplaces compete, grow, and retain customers.

A new report, “Embedded Finance Grows Up: How Online Marketplaces Can Retain Customers and Boost Revenues”, sheds light on how embedded finance tools are no longer optional add-ons, but integral parts of marketplace strategies. The study surveyed 37 senior executives across marketplaces in industries like retail, travel, finance, and business services, revealing that these tools are directly linked to customer retention, revenue generation, and operational growth.

Key Takeaways: Embedded Finance in Marketplaces

Key Finding	Data/Statistic	Details
Reduction in Churn	64%	Embedded finance tools help retain customers.
New Revenue Streams	51%	Marketplaces unlock new revenue through financial tools.
Regulatory Challenges	81%	Compliance is a major concern, emphasizing vendor expertise.
Fraud Prevention	75%	Fraud management is critical in vendor selection.
Customer Experience	~80%	Embedded finance enhances the shopping experience.
Operational Efficiency	50%+	Marketplaces improve efficiency by streamlining processes.

Embedded Finance in Action: Key Findings from the Survey

1. Reducing Churn with Embedded Finance

A striking 64% of online marketplaces reported reduced churn by integrating embedded finance tools, illustrating how these offerings are not just transactional, but relationship-building tools. By providing financial solutions directly within the marketplace, companies are strengthening their engagement with both customers and suppliers.

2. Opening New Revenue Streams

In addition to reducing churn, 51% of marketplaces stated that embedded finance tools helped open new revenue streams. These tools, including digital wallets, streamlined payouts, and consumer financing, allow marketplaces to retain more financial activity within their ecosystem, improving cash flow and creating new ways to generate income.

3. Regulatory Challenges and Vendor Selection

As embedded finance tools become integral to business operations, regulation has emerged as a dominant concern for marketplaces. 81% of companies cited regulatory challenges, highlighting how complex compliance is when incorporating financial tools into digital platforms. For 92% of executives, regulatory compliance remains the top factor in selecting vendors.

Marketplace executives are increasingly focused on choosing vendors that bring both regulatory expertise and robust fraud risk management capabilities. With fraud prevention ranking as a major hurdle for 75% of firms, embedded finance solutions are now evaluated not just for their functionality, but for their ability to safeguard financial transactions.

From Experimentation to Strategic Necessity

The report reveals that embedded finance has shifted from an experimental feature to a strategic necessity for online marketplaces. Companies no longer view it as a side project but as a central element of their operational framework. The ability to offer tools such as lending products, working capital loans for suppliers, and instant payouts is now viewed as a key differentiator in a competitive marketplace.

“Embedded finance is not just about supporting transactions anymore; it’s about creating a closer relationship with our customers and improving the financial flow of our sellers,” says one survey respondent.

As marketplaces continue to evolve, collaboration between product and compliance teams becomes increasingly important. Companies with strong internal collaboration report higher confidence in customizing tools and adapting them to their needs, while those with weaker communication tend to rely more on vendor-supplied fraud prevention systems.

The Future of Embedded Finance in Marketplaces

With nearly 80% of marketplaces stating that improving customer experience is a primary goal of expanding embedded offerings, the future of embedded finance is clearly centered around enhanced engagement. As these tools streamline operations and offer better data insights, marketplaces can deliver more personalized experiences for their customers, which will continue to boost revenue and reduce churn.

Other Key Trends:

• Customer Experience: Nearly 80% of companies see embedded finance as a means to improve the shopping experience.
• Operational Efficiency: Over half of the firms believe embedded finance tools help make their operations more efficient.
• Risk Management: Compliance and fraud prevention are top priorities in vendor selection for most marketplaces.

Conclusion: A Strategic Move for Future Growth

Embedded finance has clearly matured into a strategic discipline for online marketplaces. As companies move away from experimenting with isolated financial tools, they are integrating these solutions into their core business processes. The marketplaces that embrace this transition will not only retain customers more effectively but will also position themselves for sustained growth in the evolving digital economy.

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