A New Era of Value Creation for E-Commerce and Fintech

Francesc AltisentVice President of Product, Payments and Banking at Mangopaycovers topics related to embedded finance, digital wallets, orchestration, and interconnectivity.

The continued growth of e-commerce underscores its apparent resilience in the face of economic headwinds and geopolitical instability. This growth creates countless opportunities for fintech and e-commerce companies as they create more integrated payment experiences for end users.

E-commerce platforms leverage partnerships with fintech companies to offer embedded financial solutions to end users, such as BNPL (Buy Now, Pay Later), one-click payments, co-branded credit cards, embedded wallets, and more. Through these partnerships, fintech companies can reach a huge user base, and e-commerce platforms offer their customers an optimized payment experience while unlocking new revenue streams from additional monetization and revenue sharing opportunities. For end users, this means a more convenient and unified shopping experience. Fintech companies can lower their customer acquisition cost (CPA), and e-commerce increases revenue, while end users enjoy a safer and smoother experience. All of this paves the way for more sustainable growth.

Rapid growth of embedded finance

The Embedded Finance market is expected to grow to $7.2 trillion by 2030, with insurance, financing, and payments sectors expected to lead the way. B2B BNPL and trade finance solutions are driving this growth by providing merchants with faster access to working capital and accelerating adoption by businesses and consumers.

Meanwhile, fintech-enabled marketplaces and platforms are commanding higher valuations than their peers, demonstrating the power of Embedded Finance to enhance customer experiences and drive business growth. We expect to see continued convergence of financial services and non-financial experiences through 2024. This trend will drive a significant portion of fintech revenues to be generated through embedded channels, further reinforcing the transformative impact of this emerging technology.

The power of the wallet

The wallet infrastructure enables businesses to create digital wallets for their customers, allowing them to seamlessly store, send, and receive funds. This same infrastructure also provides a solid foundation for marketplaces and platforms to capture additional revenue streams via wallet-enabled transactions within their apps and websites. Payment flows operating outside of the wallet infrastructure can limit customization and hinder revenue potential. Additionally, the ability for e-wallets to store funds through an electronic money institution (EMI) license gives platforms greater flexibility to retain funds within their ecosystem when necessary.

Operationally, the wallet infrastructure streamlines money flows within the platform by allowing marketplaces to create multiple wallet accounts for any type of trade, including commissions, platform fees, seller wallets, and even buyer wallets.

This segmentation increases financial transparency, giving sellers and buyers more control over their funds. Additionally, the same wallet infrastructure can be the foundation for building an integrated seller earnings management experience directly on the platform. This allows sellers to track earnings, manage payouts, and access comprehensive financial information, streamlining their operations and supporting customer satisfaction.

Orchestration is the key to unification

While it provides a number of benefits, wallet infrastructure alone is not enough to create a scalable payment flow. A payment orchestration layer connects different payment systems into a single, interoperable ecosystem, providing greater control and flexibility in scaling payment operations. In a provider-locked payment setup, payment data is often captured and secured in a non-interoperable token vault within the payment provider.

For payment technology networks in an Embedded Finance setup, building automation without an interoperable token vault can be difficult. Additionally, managing refunds and chargebacks from multiple payment providers and payment methods can require platforms to build their own unified PaymentOps ledger – or juggle multiple dashboards across different payment providers. Both approaches are very time- and resource-intensive.

The payment orchestration layer not only unifies the entire operation, but also exposes a network of third-party providers such as payment methods, fraud prevention solutions, CMS, and more, enabling faster integration.

Shifting towards interconnectivity

As unified experiences become the new norm, we will see a shift in the e-commerce payments system towards a more acquirer-agnostic and interconnected ecosystem.

By leveraging a wallet-based payments infrastructure and payment orchestration, the modern marketplace can achieve agile and scalable operations, unifying its operations into a single ecosystem and unlocking efficiency and revenue growth. This ensures the entire infrastructure is future-proofed as digital commerce continues to evolve.

This editorial was originally published in The Paypers magazine Fintech for Marketplaces and Platforms Report 2024 which relates to the rapidly growing e-commerce industry and is the best resource for businesses looking to expand their customer base.

About Francesc Altisent

Francesc Altisent is Vice President of Product, Payments and Banking at Mangopay. Based in Munich, Francesc joined Mangopay in 2023, having previously worked at Airwallex, Amazon and Adyen.

About Mangopay

Created in 2013, Mangopay empowers the platform economy with a modular payments infrastructure. Built around a programmable e-wallet solution, Mangopay’s end-to-end infrastructure covers the platform’s payment needs, from deposits and withdrawals to comprehensive fraud prevention and currency exchange, for multiple business models and workflows. The company has 235 million end users of its services and has processed over €100 billion in transactions since inception.