Embedded finance – also known as "integrated finance" – involves the integration of financial services directly into non-bank digital products and platforms. The most common features include integrated payments, card issuance, financing, and other services that users can access without leaving the platform.

In recent years, the model has changed. Software-as-a-service (SaaS) businesses and marketplaces can now incorporate an increasing number of financial features into their products. These include virtual cards for expense management to more advanced tools for managing their customers' financial flows.

This article explains embedded finance, including its evolution and card-issuing infrastructure and the role of application programming interfaces (APIs). We also explore some of the most relevant use cases for SaaS platforms and marketplaces, integration of new financial features without obtaining a banking licence, and aspects to consider when creating and managing a card programme.

Key takeaways

• For a software-as-a-service (SaaS) platform, embedded finance can transform separate financial functions into an integral part of the product. Payments, cards, and other services become accessible within the same environment where the customer already manages their business. This reduces the need to switch between different systems and can increase the platform's value.
  
• Application programming interfaces (APIs) that issue cards connect business software to the infrastructure needed to create and manage physical or virtual cards, implement spending controls, and manage authorisations. This way, the rules defined in the product can be applied directly to card usage.
  
• Virtual cards are particularly suitable for managing B2B expenses because they can be created with limits and controls consistent with business policies for employees, suppliers, or specific purposes. Therefore, they can replace processes that involve card sharing or manual reimbursements.
  
• A platform can integrate certain financial services without holding its own banking licence when it relies on regulated financial providers and institutions. This does not eliminate compliance obligations. Liability, authorisations, and controls depend on the service offered and the actual role of the platform.
  

Embedded finance: Meaning and evolution for Italian businesses

The term "embedded finance" refers to the integration of financial services into the products and platforms of nonfinancial businesses. These features are accessible directly within the platform already offered to the customer. For example, business management software can incorporate payment processing; a platform for professionals can offer cards for business expenses; and a marketplace can handle payment collection and fund transfers all within the same environment.

Embedded finance is already present in many customers' everyday purchasing experiences. Here are some examples:

• For a purchase on an e-commerce site, a customer pays using a buy now pay later (BNPL) instalment payment service.
  
• A customer makes a payment on a rideshare app.
  
• While purchasing a flight on the airline's website, a customer adds a cancellation insurance policy.
  

These are just a few examples, but the model has developed alongside the widespread use of digital platforms. While integration initially focused on payments, embedded finance currently encompasses a much broader range of financial services. These include virtual cards for expense management, integration of financial services directly into customers' workflows, and more automated management of money movement.

The expansion of embedded finance has also affected the Italian market. According to a report about the Italian embedded finance market compiled by PayNXT360 and published by Research and Markets, the sector recorded a compound annual growth rate (CAGR) of 10.3% from 2021–2025. It is expected to continue growing at a CAGR of 4.9% from 2026–2030. The market value is projected to expand from its 2024 value of about US$11.2 billion and reach approximately US$14.5 billion by 2030.

This growth reflects a broader shift in the way providers deliver financial services. Instead of offering financial services exclusively through banks or dedicated apps, digital platforms can offer them as part of the experience already provided. Therefore, embedded finance can expand the features available within the platform and create new service and revenue models.

How does card-issuing infrastructure work, and how are APIs involved?

Issuing a payment card means more than just generating a card number. Behind every physical or virtual card lies an infrastructure that connects the platform providing the service to various entities, including the customer, the provider that manages card issuing and processing, financial institutions, and payment networks (e.g., Visa or Mastercard).

Traditionally, creating and coordinating this infrastructure required specialised systems and direct relationships with various operators. On the other hand, card-issuing APIs offer businesses ways to link their software to existing infrastructure while maintaining control over the experience they provide to customers.

The role of APIs in card issuing

An API is a system where two software applications communicate and exchange information. In the case of card issuing, it serves as the link between the business's software and the card-issuing service provider's infrastructure.

For example, if an SaaS platform wants to create a card for a customer, the following steps take place:

• The SaaS platform sends a request via API specifying the required characteristics.
  
• The provider processes the request, performs the checks required by the programme, and interacts with the other parties involved in the financial infrastructure (e.g., financial institutions, specialised fintech platforms, and card networks).
  
• The card is set up.
  
• Once the process is complete, the platform can directly manage the card.
  

APIs are involved at the time of issuing and can accompany the card's entire lifecycle. This gives a platform the flexibility to do the following:

• Create physical or virtual cards and link them to specific cardholders
  
• Activate, suspend, or block cards
  
• Set and modify spending limits
  
• Determine where or for what types of purchases cards can be used
  
• Manage transaction authorisations and receive information about card activity
  

These features can be integrated directly into the product logic. For example, an expense management platform can create a virtual card when a budget is approved and automatically apply the corresponding spending limit. This allows the business to integrate card issuing and management into its software without building the necessary financial infrastructure in house.

Virtual cards for expense management: New use cases

Virtual cards exist in digital form, and they can be created and used without a physical card. With card-issuing programmes, cards can be generated quickly – often instantly – and linked to a specific cardholder or spending need.

These features make virtual cards well-suited for managing business expenses. SaaS platforms can integrate features that allow customers to create cards specifically for their employees or contractors or associate cards with specific suppliers or types of purchases. Compared to using a single shared corporate card, this allows customers to define more precisely who can make purchases and under what circumstances.

What controls can be set on virtual cards?

One of the most useful aspects of virtual cards for expense management is the ability to apply specific rules to each card. The available features depend on the card-issuing solution used. For example, Stripe Issuing supports controls that businesses can set for individual cards or cardholders and modify later.

The main controls include the following:

• Spending limits: These can be per authorisation or for a specific period.
  
• Seller category restrictions: This control can prevent the card from being used for payments to certain types of businesses.
  
• Geographical restrictions: This can be used to exclude specific countries.
  
• Seller restrictions: This is based on the seller's merchant ID number.
  
• Type of card use: This can include monitoring whether the card is physically present during the transaction.
  
• Duration or frequency of use: With this option, in some configurations, businesses can create cards that are automatically cancelled after a certain number of transactions.
  

These controls make it possible to customise each card for specific purposes, such as setting predetermined limits or specific restrictions on purchases.

Why are virtual cards useful for managing business expenses?

Virtual cards offer several benefits that can help manage business expenses. The following features have made virtual cards increasingly popular:

• Greater preventive control over expenses: A business can establish certain terms of use for the card in advance to monitor employee expenses, for example.
  
• Swift activation: Because businesses don't need to handle card production or physical delivery, virtual cards can be used quickly – often instantly.
  
• Easier assignment of cards to specific purposes: Creating separate cards for individuals, suppliers, or specific expense categories makes it easier to distinguish between different flows. This is also more efficient than using a single corporate card for many activities.
  

Embedded finance strategies for SaaS platforms and marketplaces

An effective embedded finance strategy needs to start with the services customers already use and the financial challenges they face while using the software. A useful question for platforms to ask is: What financial activities currently force customers to leave the platform?

The answer to this question can help platforms understand the features that need to be integrated first. Adding as many financial services as possible is not the goal. Instead, platforms need to incorporate services that naturally complement the workflow that the product already manages.

Embedded finance strategies for SaaS platforms

For SaaS platforms, the starting point is to observe how often customers have to stop working in the software to perform a financial task elsewhere.

For example, if a platform handles reservations, orders, and sales but payments are processed through a separate system, embedded payments might be the first step. On the other hand, if the software is designed for managing budgets or expenses, it might be more useful to directly integrate payment tools intended for employees or contractors.

The services that SaaS platforms can consider include the following:

• Embedded payments: This allows users to collect payments from their customers.
  
• Physical or virtual cards: These are useful for software that manages expenses, purchases, or budgets.
  
• Financing: This can be helpful when users have recurring cash flow needs related to their businesses.
  
• Fund management tools: These can be used when products also involve receiving or using funds related to the customer's business.
  

Embedded finance strategies for marketplaces

For marketplaces, the starting point is often the movement of money among multiple parties. The platform connects customers, vendors, professionals, and suppliers. Therefore, it must consider the collection of payments and how funds are distributed and used.

An embedded finance strategy for a marketplace can focus on the following questions:

• How does the customer pay?
  
• How and when does the vendor or supplier receive the money?
  
• Do vendors need quick access to funds?
  
• Do vendors incur expenses related to business activities on the platform?
  

The answers to these questions can make various embedded finance services necessary, including the following:

• Embedded payments: This helps manage payment collection directly within the marketplace.
  
• Splitting, transfers, and automatic bank transfers: When a payment needs to be split among multiple parties or regularly transferred to vendors, professionals, or suppliers, the marketplace can automate outgoing payments according to the rules and timelines set by the platform.
  
• Physical or virtual cards: Can be issued if users need to use the funds to cover business-related expenses.
  
• Financing or other financial services: These are based on recurring needs that the marketplace can integrate into the existing experience.
  

SaaS models and marketplaces: A comparison of embedded finance strategies

Regulatory aspects: How to introduce embedded finance without a banking licence

To integrate embedded finance features and offer related financial services, it is not necessary to become a bank or obtain required authorisations. Many platforms rely on specialised embedded finance providers that supply the necessary infrastructure and partner with banks or other authorised financial institutions. However, this model does not eliminate compliance obligations. Responsibilities depend on the service provided and the roles of the various parties.

Embedded finance providers

An embedded finance provider offers technology and access to the regulated financial infrastructure needed to integrate financial services into a digital product. For example, with card issuing, an embedded finance provider can manage or coordinate infrastructure and dealings with financial institutions and payment circuits.

Responsibilities vary depending on the service and the model used. Relying on a provider does not mean that all regulatory obligations are automatically transferred to the provider.

Revised Payment Services Directive (PSD2) and Payment Services Directive 3 (PSD3): The European framework for payment services

When integrated features are part of payment services, one of the key regulatory frameworks in the EU is the second Payment Services Directive (PSD2). It governs the provision of payment services and transaction security. This framework is currently being updated. PSD3 and the new Payment Services Regulation (PSR) are intended to update and, in part, replace PSD2. As of August 2026, the legislative process has not yet been completed.

Know Your Customer (KYC), Know Your Business (KYB), Payment Card Industry Data Security Standard (PCI DSS), and data protection

In addition to the authorisations required to offer financial services, an embedded finance project must also take into account various compliance and security requirements:

• KYC and KYB: KYC is the identification and verification of individuals, while KYB applies to businesses and can include checks on the business and its beneficial owners. Both are part of the due diligence processes required by anti-money laundering regulations.
  
• PCI DSS: When card data is stored, processed, or transmitted, PCI DSS compliance must be considered. It is an international standard that defines security requirements to protect cardholder data.
  
• Personal data protection: Platforms that process personal data in the EU must comply with the General Data Protection Regulation (GDPR), including the principles of lawfulness, transparency, purpose limitation, data minimisation, and data security.
  

How Stripe Issuing can help

Stripe Issuing allows you to easily create, distribute and manage custom cards – generating new revenue streams and enhancing your customer experience.

Issuing can help you:

• Launch new card products: Quickly create physical, virtual or tokenised cards customised to your specific business needs – whether that's expense cards, rewards or something else.

• Improve operational efficiency: Automate card issuance and management through Stripe's APIs, reducing the complexity of working with multiple card issuers.

• Enhance customer experience: Offer your customers a branded card experience that integrates seamlessly with your existing products and services.

• Gain visibility and control: Access detailed transaction data and controls to monitor card usage, set spending limits and suspend cards when needed.

• Expand revenue opportunities: Monetise your card programs by collecting shared interchange revenue or by offering value-added services.

• Access Stripe's expertise: Benefit from robust infrastructure and compliance support, influenced by Stripe's experience powering card programs for leading companies.

Learn more about how Stripe Issuing can help you drive growth with custom card programs or get started today.

FAQs on embedded finance for SaaS models and marketplaces