- Key insight: Banks risk falling behind rivals in offering embedded payments.
- What's at stake: Embedded payments will soon become ubiquitous, creating a need to offer the service at scale.
- Forward look: Small businesses are increasingly looking for one-stop shops, a provider that will help them with all things from appointment setting, appointment confirmations, payments and inventory management to employee scheduling.
In the fast-moving world of payments, three to five years can seem like a lifetime. But several trends are evident today that will shape the future of
Juniper Research predicts that the global embedded payments market will grow by 134% between the end of 2024 and 2028. Yet many banks are still playing catch-up. Slightly more than half of banks polled by KPMG named embedded finance as a banking priority in a 2025 technology
Here are five predictions for embedded payments in the next few years:
Embedded payments will be more ubiquitous
"You will see it more and more often because the technology is allowing us to integrate it much easier," said Jeroen Hölscher, global head of payment services at Capgemini.
"Banks once dominated the merchant value chain. They issued cards, owned payment rails, and facilitated the movement of funds. But that dominance is eroding fast," Capgemini wrote in its 2026
About 40% of small and midsize merchants said they planned to switch from banks to paytech providers within 12 months, citing faster onboarding and more integrated service delivery, according to the report, which gathered data from May 2025 to October 2025.
Because banks are so highly regulated, they need to make embedded payments a bigger priority immediately so implementation can happen over the next three to five years, Don Apgar, director of merchant payments at Javelin Strategy & Research, told American Banker. Fintechs are moving swiftly, though not always cautiously. However, for a bank, simply standing its ground isn't a good option. "Banks need to figure out what they need to do to be competitive because it's not like they can just sit back and say 'If we weather the storm this whole fintech thing will go away,'" Apgar said.
Increased competition for payments business
More software companies that work with businesses are realizing the payment component of their product is lucrative and "drives extreme stickiness," KeyBank's Girard said. "I think more software companies are waking up to the fact that payments may be a sleeping giant within their product."
As the percentage of new merchant accounts opened through software platforms compared with a bank branch continues to grow, banks have to do more to compete, he told American Banker.
They might partner with software platforms to offer white-labeled services to customers. They could also seek to be the provider's bank behind the scenes. "We believe that more and more banking services are going to be purchased through non-bank entities, so it necessitates that we're a player in that ecosystem," Girard said.
One approach is to partner with software companies that focus on specific verticals the bank may want to target, such as veterinarians, doctors or orthodontists, said John Badovinac, senior vice president of embedded commerce at Flute, a payments platform. These partnerships can create new revenue streams through shared fees. It also increases customer stickiness and strengthens the banker-merchant relationship, he told American Banker.
Current merchant operations are inefficient, requiring multiple systems for a single transaction, he noted, offering the example of an antique shop's checkout process, which involves looking up inventory on an Excel spreadsheet, manually keying the amount into a standalone payment terminal, and manually updating inventory and accounting software. This "swivel chair" experience is a major pain point that embedded finance solves, he said.
Continued expansion of virtual cards
Banks are starting to pursue partnerships with software providers for virtual cards more aggressively, but it's early on, Rebecca Meeker, senior vice president of B2B partnerships at Mastercard, told American Banker. Corporations are starting to put embedded finance into their RFPs for card programs, which is motivating banks, she added. In the next few years, she expects to see the results of early adopters' efforts. These early adopters include HSBC, PNC Bank,
Payments are just the beginning
Small businesses are increasingly looking for one-stop shops, a provider that will help them with all things from appointment setting, appointment confirmations, payments, inventory management to employee scheduling, said Peter Galvin, chief marketing officer of NMI, a white-label embedded payments platform. He expects this trend to accelerate over the next few years. In addition, many software providers are offering embedded finance tools, allowing businesses to get loans or funding through third parties. "The software becomes the distribution mode of what had been, traditionally, banking products."
The trend started with credit card payments and making invoicing easier for small and midsize businesses, but other areas of finance, such as lending and insurance, are next, he told American Banker. "The software provider can be a one-stop shop for just about anything the small business needs," he added. "The risk [for banks] is losing the important business relationship because they get disintermediated by a software company."
Agentic commerce will proliferate
Several payments professionals said it's hard to predict what agentic commerce could look like in several years since the landscape is changing so quickly. What's clear, however, is that the market is likely to look very different from today. Checkout.com
Merchants and consumers are not necessarily adopting agentic commerce at a fast clip today, but that's poised to change, certainly over three to five years, and probably sooner as they start to understand what the technology can do and how it benefits them, KeyBank's Girard told American Banker. "Back in the day, people were asking for faster horses, not cars."
