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Insights and Expertise

StreetSmarts SM

Embedded finance: Getting from glitter to gold

By Allen Kopelman cessing
Nationwide Payment Systems Inc. • Data security vulnerabilities
• Regulatory uncertainties, including evolving laws
n most industries, new tech is exciting until it's not. regarding AI
The old saying, "All that glitters is not gold," could
apply to payments. People were excited to see the • Inflation and interest rate increases and potential
I first Bluetooth card reader and personalized busi- impact on consumer spend
ness dashboard. But shiny tech doesn't stay new for long; • Securing favorable terms for financing
it needs to keep producing recurring revenue streams to
keep us and our merchants in the game. In a separate article, "Block shares fall on profit, revenue
miss," published Feb. 20, 2025, CNBC reporter MacKen-
Embedded finance can be a gold mine for ISOs and mer- zie Sigalos described the company's pivot to embedded
chant level salespeople (MLSs) that partner with the right finance:
technology providers. ISOs can build or buy by designing
and developing products in house or aligning with ready- "Block's payments business has expanded beyond tradi-
made solution providers. tional point-of-sale transactions to include lending and
financial services. In 2021, the company acquired Aus-
Big fintech companies like Stripe, Square, QuickBooks, tralian buy now, pay later firm Afterpay for $29 billion,
Toast and PayPal have embedded financial products into integrating the service into Cash App and Square's eco-
their platforms with varying degrees of success. The system. This week, Afterpay on the Cash App card begins
lucky ones added income to their bottom line. Others, like rolling out."
Block, the parent company of Square and the Cash App,
lost a lot of money and had to retool. The company told Sigalos they want to provide more

Early-market glitter credit, financing and banking options to customers. And
on a recent earnings call, Dorsey mentioned plans to inte-
When Square Inc. launched its mobile payment app in grate the Cash App and Square POS into a single platform
2009, it gained millions of small and midsize merchant to reduce reliance on multiple applications.
customers. Over time, other fintechs began to chip away
at Square's market share, and co-founders Jack Dorsey and Recurring-revenue gold
Jim McKelvey eventually rebranded as Block Inc. in 2021. Managing a business is easier in the digital age. Yester-
day's filing cabinets have been replaced by dashboards
Block has faced a slew of economic and financial chal- that offer a suite of financial tools. Payroll, insurance,
lenges recently, according to the company's 10-K report, BNPL and banking-as-a-service are just a few examples.
published Feb. 24, 2025, in the following areas: When businesses need access to working capital, software
• Cryptocurrency volatility programs can help them determine eligibility and other
• Reliance on third-party providers for payment pro- requirements.

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