74% of Embedded Finance Platforms Report Less Fraud

A finding from a new PYMNTS security report suggests that the technology expanding fraud risk in business payments may also hold its most promising solution.

The report, “Embedding Security: Designing Fraud Risk Out of Business Transactions,” by PYMNTS Intelligence and WEX, examines how embedded payments, financial services woven directly into business software platforms, are reshaping both transaction efficiency and fraud exposure.

The report’s central argument is that the traditional approach of detecting fraud after a transaction is already moving is no longer adequate.

The better path, it concludes, is designing security into the payment architecture from the start.

Three data points from the report illustrate the scale of the opportunity:

• 74% of embedded finance users say the technology has significantly reduced their fraud risk, suggesting that well-designed embedded payment systems can outperform traditional standalone fraud monitoring tools.
• 70% of banking chief executives plan to allocate between 10% and 20% of their budgets to artificial intelligence in the coming year, with fraud detection and cybersecurity ranked as the most immediate areas of value. Enhanced cybersecurity tops the list of reported AI benefits, cited by 24% of those executives.
• 35% of organizations have delayed embedded finance initiatives because of fraud concerns, pointing to a significant confidence gap that better payment design could help close.

The report’s most actionable section lays out a practical framework for what proactive fraud prevention actually looks like in practice. It calls for anchoring fraud controls at the identity and access stage, before payment initiation, through strong verification and role-based permissions.

Virtual cards with configurable spend limits and merchant restrictions are highlighted as a concrete example of design-led control, aligning payment capability with business intent from the moment a transaction is enabled. The partnership between WEX and Nuvei is cited as a model for embedding these instruments directly into merchant systems.

The report also recommends centralizing visibility across platforms to eliminate the blind spots that form at the handoff points between systems. Deploying AI-driven monitoring at key workflow stages and building automated enforcement rules that can block or reroute transactions when risk thresholds are met are among the additional recommendations.

The underlying logic is straightforward: controls that are part of how payments are initiated are more reliable than controls that depend on catching problems after the fact.

The broader backdrop matters. Embedded finance transaction value is projected to exceed $7 trillion in 2026, nearly triple the $2.6 trillion recorded in 2021. Fraud attempts targeting these platforms are growing two to three times faster than in traditional banking.

The window for stopping fraudulent transactions, once measured in hours, has collapsed to seconds as faster payment systems have proliferated. Static, rules-based detection systems were not built for that environment.

The report’s conclusion is an optimistic one.

Companies that treat payment infrastructure as a place to embed security, not merely process transactions, have a genuine opportunity to stay ahead. The tools exist. The data supports it.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.

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