90% of SMBs Say Embedded Finance Is Now Essential

Small businesses may not be known for switching software providers. Yet, a striking detail in a new study suggests that’s changing fast — and embedded finance is at the center of the shift.

The “Embedded Finance: The New Growth Engine for SMBs” report, part of the PYMNTS Intelligence Payments Optimization Tracker Series commissioned by Worldpay, finds that 9 in 10 small businesses now consider access to embedded financial services essential to daily operations.

While headlines will highlight that reliance, the more telling story may be that small and medium-sized businesses (SMBs) are prepared to walk away from providers that fail to deliver. In 2024, just over half were open to switching; this year, nearly two-thirds are.

The report indicates that embedded finance is no longer a nice-to-have offering. Once simply a way to cut costs and smooth back-office processes, integrated financial tools — payments, credit, even lending — are becoming the software equivalent of oxygen.

Businesses rank these tools second only to data analytics when evaluating platforms. Companies that adopt them are seeing meaningful commercial impact.

91% of SMBs say they feel ready for growth in 2025, with most planning to invest in software not merely for efficiency but as a springboard to new revenue streams.

90% of small firms report that embedded finance is critical to their operations, a figure that elevates payment and credit integrations from convenience to necessity.

Businesses using embedded finance tools report sales gains of 25% to 50%, underscoring the difference between software as a back-office utility and software as a growth engine.

The undercurrent of these findings is that embedded finance is resetting the competitive landscape for software providers. Frictionless credit access, one-click payments and lending options are no longer just customer perks — they are determinants of vendor loyalty.

The study notes that 65% of businesses are now open to changing platforms, and one in five are actively searching for better-suited providers. The willingness to switch nearly doubles when SMBs have tested embedded lending and found it lacking.

Other details in the report hint at the pressures behind this recalibration. Healthcare firms cite frequent innovation needs to keep pace with regulation. Retailers are chasing omnichannel consistency across online and in-store experiences. Logistics firms demand automation to untangle complex supply chains. Across sectors, nearly half of small businesses expect their software partners to continually deliver upgrades, and 90% want to be proactively contacted about new solutions.

For providers, the stakes have been raised: embedded finance has become more than a feature. It is the frontline of customer retention. Satisfied SMBs are less likely to switch, with almost half saying they would stay put if their payment tools meet expectations. But dissatisfaction carries sharper consequences than before, as the bar for “good enough” keeps rising.

The study ultimately frames embedded finance as both an opportunity and a warning. For SMBs, it is the route to expansion, customer engagement and long-term competitiveness. For tech providers, it is the make-or-break factor determining whether they remain central to clients’ operations or risk being replaced.