Payments provide a perfect entry point for software platforms into financial services. A relationship with payments creates data, trust and in most cases, further banking requirements. This provides the opportunity for software platforms to create a range of embedded finance options to increase their revenue, and improve the user experience and customer retention. Any software service offering payments should incorporate a focus on the long-term opportunities in finance.

Software platforms have a clear understanding of the performance and sales of customer businesses. This enables software platforms to make better decisions and allows them to design other opportunities and enhance customer growth. For example, software platforms could design integrated expense reporting services within their package, providing an additional opportunity to generate revenue.

As software platforms progress toward embedded finance, creating a money management product can convert the service into a complete financial operating system. This involves enabling customers to receive sales deposits, add funds and make payments. Combined with a card product, the account acts in a similar way to a conventional bank account, enabling customers to make transactions and withdraw money from their accounts. Furthermore, software platforms can generate interest revenue and interchange revenue, as well as receive regular reports on their finances. For example, Shopify Balance, in partnership with Stripe is considered one of the best options available. Launched earlier this year Shopify claims that thousands of merchants are now using the service.

As software platforms progress further into embedded finance, it’s clear that there are opportunities to expand into other areas. Insurance, purchase financing and payroll are all examples which could be explored. The main factor software companies must consider with the move toward embedded finance is improving the financial lives of their customers.