Embedded Finance: Pioneering Pathways to Revenue, Relevance

Fueled by a booming e-commerce market and a drive for greater financial inclusion, embedded finance is experiencing significant growth in Latin America. Mexico is a key player in this market, as numerous platforms are integrating services like digital wallets and buy-now-pay-later (BNPL) options to enhance customer experience and expand market reach, though data protection and limited consumer trust continue to be critical challenges in growing this market.

Embedded finance in Latin America is projected to reach US$20 billion by 2027, according to Juniper Research. Adoption among businesses has surged, with over 65% of fintechs and e-commerce platforms in Mexico integrating embedded financial services to enhance customer retention and streamline operations. Embedded finance can help companies, especially smaller ones, expand their market reach, says Paulina Aguilar, Co-Founder and CRO, Mundi. "Mundi was created to provide quality financial products and access to a wider range of services, enabling businesses to expand into new markets and reach more customers. Finance is not just about stability; it is also a powerful tool for growth," she adds.

In Mexico’s financial ecosystem, digital wallets, BNPL services, and integrated payment solutions have gained significant traction. The country’s e-commerce market, valued at over US$50 billion, has been a major driver, encouraging retailers, marketplaces, and even traditional companies to embed financial solutions into their offerings.

Embedded finance integrates financial services into common apps such as e-commerce, food delivery, and wellness platforms, says Mariana Allende, Journalist & Industry Analyst, Mexico Business. This technology is expected to significantly reshape global payments and collections, growing rapidly in Latin America as regulatory frameworks mature. This growth is expected to coincide with advances in blockchain and tokenization. 

Experts also call for including financial education in the sector’s vision, as it will support financial inclusion, which embedded finance is pushing forward.  "We must continue investing, especially in people who are new to the financial system, providing them with education in this area. Governments are also increasingly focusing on and deepening their efforts in this, and we are all involved in the sector,” says Andrés Albán, CEO and Co-Founder, Puntored.

The most common applications of embedded finance include embedded payments, lending, insurance, and investment solutions. Digital platforms are adopting seamless payment systems to reduce transaction friction and improve checkout experiences, with over 70% of online transactions now processed through embedded payment systems. 

Lending and BNPL solutions have been particularly transformative, as over 40% of Mexicans lack access to traditional banking services. With embedded lending, businesses can expand financial accessibility, and BNPL transactions in Mexico are expected to grow by 50% annually.

With 54% of Mexico’s adult population still unbanked, embedded finance aims to bridge the gap by offering accessible and flexible financial products. For example, BNPL services have allowed millions of Mexicans to make purchases without needing a credit card, contributing to increased consumer spending and higher conversion rates for businesses. "We aim to offer a solution to the more than 80% of Mexicans without credit cards, allowing them to make purchases and defer payments in installments, even without a bank account,” says Lisset May Cervantes, SVP of Sales, Kueski.

However, the implementation of embedded finance still faces challenges. CrowdStrike reports that Mexico ranks among the top five countries in Latin America for cyberthreats, making data protection a top priority. Experts say that companies featuring strong internal and certified processes will have an advantage and offer more security to their clients. “Similar to ISO-9001 for quality, ISO-27001 is the international standard for information security. We are proud to say we hold this certification, which involves a very complex process to guarantee we meet all client needs,” says Duarte Libano-Monteiro, Chief Business Officer, Ebury.

Companies must also navigate regulatory requirements related to anti-money laundering (AML) measures and consumer data protection under the country’s Fintech Law. Experts say that handling data securely is essential for consumer trust and further adoption. "Beyond just technology, tools, and regulations, building a reputation on transparency is key. For us, transparency means no hidden costs, no fine print, and a genuine commitment to privacy. This reputation must be built, as one instance of non-compliance can lose client trust,” says Aguilar.