Embedded finance is a pivotal component of payments ’ ongoing transformation , and its revenue is forecasted to surge to nearly US $ 230 billion by 2025 . Embedded finance integrates financial services seamlessly into non-financial customer journeys , leveraging banking and payments as a service and open banking .

The true potential of embedded finance and open banking combined has yet to be fully harnessed . An example of this untapped potential can be seen in the inconvenience homeowners face when making payments to tradespeople for services like boiler repair , as these professionals often do not carry portable Point of Sale ( POS ) devices . Imagine how much easier this would be if an open banking payment was embedded here at the point of need , so the tradesperson could send a payment request link via SMS or email so the customer could make an instant and secure payment . This is the kind of customer experiencefocused disruption that FinTechs are enabling today .

Another area where FinTechs are delivering significant disruption is within the recurring payments space . Recently , the Joint Regulatory Oversight Committee ( JROC ) launched two working groups to delve into variable recurring payments ( VRPs ). This initiative , a component of a larger programme , aims to drive the next phase of open banking in the UK . The establishment of working groups for VRP development is promising , but the urgent need for clear timelines and industry standards remains .

Our research indicates that more than three-quarters of payment service providers ( PSPs ) and independent software vendors ( ISVs ) plan to integrate VRPs or Request to Pay ( RtP ) into their offerings in the future and that 57 % are frustrated by the lack of progress on this front . To ensure the benefits of VRPs and RtPs are accessible to all UK consumers and businesses , the development of standardised frameworks is crucial .

However , FinTechs are innovating around these challenges . This year , Nuapay launched its open banking-powered direct debit solution , Authenticated Mandates , which enables merchants to reap the rewards of more efficient and user-friendly recurring payments while VRP standards are being developed .

Unlike traditional recurring payment signup processes , Authenticated Mandates eliminate the need for manual data entry of the customer ’ s bank details , enabling merchants to reduce administrative costs and provide a fast , frictionless and error-free sign-up process . Although this has been instrumental in helping businesses like Their Perfect Gift implement Authenticated Mandates and see tangible benefits , there ’ s still work to be done to make non-sweeping VRPs more accessible .

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