US Regulators Turn Their Attention to Embedded Finance as Transaction Volumes Soar
With embedded finance transactions projected to exceed $7 trillion in 2026, regulators are scrutinising the sector — but most firms say tighter rules will actually help.
The embedded finance sector — companies that weave financial services like payments, lending, and insurance into non-financial apps and platforms — is bracing for increased regulatory oversight in the United States. And somewhat counterintuitively, most players in the space say they welcome it.
The scale demands attention
Transaction volumes flowing through embedded finance platforms are projected to exceed $7 trillion in 2026, according to industry estimates. That's roughly the GDP of Japan passing through technology layers that sit between consumers and regulated financial institutions. For regulators accustomed to direct oversight of banks and licensed money transmitters, the intermediary layer presents novel challenges around consumer protection, data privacy, and operational resilience.
Why the industry isn't fighting it
A survey of embedded finance firms published by PYMNTS found that a majority view additional regulation positively. The reasoning is pragmatic: clearer rules reduce uncertainty, make it easier to form partnerships with banks, and create barriers to entry that benefit established players. "We'd rather have rules we can plan around than ambiguity that makes banks nervous about working with us," one fintech executive noted.
Connections to cross-border payments
Embedded finance intersects directly with international money transfers. Services like Wise Platform and PayPal's Braintree allow non-financial companies to embed cross-border payment capabilities into their own products — think freelance marketplaces paying contractors abroad, or e-commerce platforms handling cross-border seller payouts. Regulatory clarity in this space could accelerate adoption of embedded remittance solutions, bringing competition and lower costs to corridors that traditional providers have long dominated. Our guide to international business payments explains the practical options available to companies today, while our money transfer safety guide covers what regulatory protections to look for when choosing a provider.