We’ll start by stating the obvious: embedded payments have shown the template works. Recent research from Boston Consulting Group (BCG) notes that in North America, more than half of relevant independent software vendors were already offering embedded payments by 2025. 

That’s because they work. Embedded payments show a 2.5× lower attrition rate versus non-embedded – giving platforms a repeatable monetisation lever without forcing users to ‘go to the bank’ mid-task. 

An article from McKinsey frames the broader direction of travel: embedded finance generated an estimated €20bn - €30bn in Europe in 2023 (about 3% of banking revenues), and volumes have grown three times as fast as directly distributed loans over the last decade. Rather than the exact number, the point here is the channel shift: distribution is moving to wherever the customer journey lives.

The real money is in ecosystems – but ecosystems have to earn trust

The business model behind embedded finance is simple to describe and hard to execute. You use a platform’s workflow to originate demand, then take a share of economics across multiple products.

McKinsey describes two delivery archetypes. The most common is partnership: a customer platform teams with a financial services provider. The alternative is ‘built and owned’, where large merchants invest to control the full economics and data. 

Both models can work – but both break when value chains are immature. McKinsey notes that benefits can be shared unevenly, incentives can misalign, and some offers (such as ‘0 percent interest, pay later’) have become unsustainable as funding costs rise. 

What needs to improve? 

BCG offers a diagnosis for why embedded finance is slow beyond payments. It’s that most embedded products haven’t delivered enough material value to SMEs versus their existing banks, and sticky banking relationships make switching painful.  

That’s why a huge portion of the market remains up for grabs: focusing on the North America and Europe markets, BCG estimates a roughly USD $185 billion total addressable market across payments, capital solutions, accounts, and card issuing (against current penetration at around $32 billion). 

The execution traps are familiar. One is to distribute widely and hope for the best: pre-approved batches of offers blasted through a few digital channels (BCG calls this a ‘spamming’ approach) which predictably drives low uptake. Another is shallow integration: if finance is a pop-up, customers treat it like an ad.

On the customer journey point, McKinsey notes that one retailer saw cart abandonment jump from 5% to 30% when an embedded lending option was harder to use. Embedded finance is not forgiving – friction kills revenue.

The Middle East twist: distribution is here – now prove the economics

In the Middle East, the market is scaling fast. The Research and Markets databook page projects the embedded finance market will grow strongly (8.5% CAGR from 2026-2030 – reaching about $45.7 billion by 2030). 

But growth forecasts don’t guarantee healthy business models – they just guarantee competition. 

The models that are really working are the same ones that have worked elsewhere in the world. They embed financial tools where people already transact, and use data plus workflow context to underwrite smarter and serve narrower niches. 

Embedded finance is graduating from a nice bolt-on feature to a serious business line. The companies that do best out of this transition will: 

• Treat payments as the wedge (not the ultimate destination)
• Stop spamming offers and start designing contextual, lifecycle-based propositions
• Engineer win-win economics across partners (or if they’re big enough, build and own their own embedded services)

These strategies are all built from an understanding of the global and regional demand for embedded finance options. 

And that’s important – because to execute successfully in this space, understanding the market is critical. So we’re curating this conversation for Money20/20 Middle East 2026 – bringing industry leaders and innovators together to rethink how MENA platforms, banks, and fintech infrastructure players can execute and distribute embedded finance. 

If you want to be in the room for that conversation, get your pass now.