?EF Espresso issue #3: "apple bobbing", embedding everything and checkout abandonment

??Fiona?and I caught up over an espresso on all things embedded finance, although a little delayed as I’ve been on my hols (hiking in Colorado - think bears, mountains and +150km of hiking) with no t’internet in sight (yes, I was shocked too… these places really do exist!). I'll save you my holiday photo album, but thought the pretty epic pic above was too good not to share...

So, as you can imagine, Fiona had a lot to catch me up on – the Spanish F1, royal births… and most importantly, all things EF

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1.??????Mastercard “bobbing for apples” - power in EF partnerships

2.??????the evolution of financing – how all financing is becoming embedded (and a fun recap of trash going digital)

3.??????how we think EF can stop customer abandonment during the checkout experience

?? As always, stay up-to-date by subscribing to our LinkedIn newsletter and like / comment on our posts - exciting, new?#EFespresso?content landing soon in issue #4

#EFespresso?#fintech?#embeddedfinance?#platformlending

??Weekly headline: Mastercard is partnering (…again, as it partners with open finance platform Fabrick)

??Espresso thoughts: Mastercard has partnered on yet another embedded finance venture – its press release signals the intention to “develop Embedded Finance solutions that will improve the digitalization of businesses, financial institutions and fintechs across Europe”. Mastercard’s EF partnerships are interesting. This is because it’s been anticipated that EF partnerships are with traditional financial institutions, and in order to provide a EF firm a larger channel for distribution, and/or gain product funding. But look at the Mastercard / Apple partnership – Mastercard provides the integration tool for Apple’s new US Pay Later offering, a B2C EF product seamlessly integrated into an Apple user’s Apple Wallet. Apple has its own (v large) customer base. Apple has its own funds – its parent entity’s 2023 Q1 consolidated unaudited accounts boast profits in the millions). So what does this prove? Well, that there definitely is power in partnership. If Apple, arguably a brain child of fintech evolution, is turning to partnership for its EF offering, then there must be something to it. We’ve all heard of cherry picking, but Mastercard have put a spin on the phrase and seem to be apple picking EF partnerships. We’re looking forward to seeing if, and who, Mastercard pick next…?

??Quote of the week:?“All finance is becoming embedded” (Simon Taylor of Fintech Brain Food)

??Espresso thoughts: The EF-old question is where does EF begin, and where does it end. EF has been argued by some as a form of credit, but as noted by Simon in his most recent Brain Food ‘rant’ (?? Simon calls them this – they’re fab and well worth a read!), EF products are “going wider and deeper”. Why? To name a few – firstly, customer types are changing. There are individual consumers (all the way from millennials to those struggling with the cost of living crisis), SMEs and larger corporations. Products need to follow suit. This means the evolution of more EF offerings. Secondly, more and more products are going digital. Going back to our w/c 24 April #EFespresso, the EF in numbers feature was the $4m seed raise by CurbWaste, a SaaS software and payments company providing services to the waste management industry – yes, EF and trash. If waste management is going digital, who isn’t?! This means more sectors for EF offerings to operate in. Thirdly, B2B checkouts seek to buy business. Many B2C EF providers have seen success by virtue of chopping up a customer’s payments. Why wouldn’t I want to buy that new sparkly dress in 4 instalments, split over 3 months? EF is becoming more mainstream – consumers are used to the products and expect them to be an option when they hit the checkout page

??EF in numbers: 42%, 42% and 39% abandonment?

??Espresso thoughts: The 2023 State of Payments report published by Marqeta this week sets out some interesting statistics. Included in this, Marqeta picked up on the idea of frictionless payments. Their survey found that 42% of US respondents, 42% of Australian respondents and 39% of UK respondents were willing to abandon their purchase at the checkout phase due to a fragmented payment experience. Does this demonstrates the importance of integrating payment technology into a consumer’s experience? If around 40% of consumers walk away from the checkout process due to a gap in the checkout’s technological capabilities, then merchants are losing out on nearly half of all potential transactions. The survey results demonstrates that consumers do expect a seamless checkout process. Increasingly the expectation is that the purchase system can be navigated within a limited number of clicks. EF (and particularly B2C BNPL) can help bridge this gap. With the rise of more EF products, the continuous development in EF technology, and increasing number of partnerships between merchants and EF firms, it will be interesting to see if the % of abandonment decreases in the next few years