Introduction

India is witnessing a paradigm shift in financial services delivery, driven by the twin engines of digital public infrastructure (DPI) and fintech innovation. With the proliferation of smartphones, low-cost data, and government-backed digital frameworks such as Aadhaar, Unified Payments Interface (UPI), and account aggregators (AA), the conditions are ripe for embedded finance—or the integration of financial products and services, such as payments, credit, insurance, and investments, into the customer journeys of platforms not traditionally associated with finance.

This trend offers both promise and peril. On the one hand, it opens new pathways for financial inclusion and economic empowerment; on the other, it raises questions around regulatory arbitrage, data privacy, algorithmic bias, and consumer protection. This brief aims to provide a comprehensive account of embedded finance in India, reviewing its emergence, categorising its models, identifying opportunities, and outlining the attendant risks and regulatory challenges.

Embedded finance, while not a novel concept globally, has undergone a notable transformation in recent years, particularly with the advent of digital-first, Application Programming Interface (API)-enabled, and data-intensive architectures. In the Indian context, this contemporary iteration of embedded finance is intertwined with the growth of DPI, most notably, the India Stack.

The India Stack comprises a suite of interoperable digital building blocks, including Aadhaar for digital identification, UPI for real-time payments, DigiLocker for secure document storage, and the AA framework for consent-based data sharing. Collectively, these components have enabled the frictionless, secure, and scalable delivery of financial services, laying the foundation for innovative financial intermediation models. This ecosystem allows non-financial platforms,      such as e-commerce firms (e.g. Amazon and Flipkart), mobility services (e.g. Ola), agritech enterprises (e.g. DeHaat), and logistics providers (e.g. Delhivery),      to embed and deliver financial products and services within their core offerings. Crucially, India is attempting a more inclusive strategy by creating digital public infrastructure that stays open and interoperable at scale. The India Stack allows fintech and embedded finance players to integrate instantly without needing proprietary rails.

Platforms can offer financial services without being licensed financial institutions themselves, relying instead on strategic partnerships with regulated entities such as banks, non-banking financial companies (NBFCs), and insurers. Unlike Western open banking models, which are often fragmented and privately governed, India’s approach is government-backed, API-first, and accessible to even the smallest startups and merchants. The zero-Merchant Discount Rate UPI regime, for instance, has dramatically lowered transaction costs and accelerated digital payments adoption far beyond what similar policies have achieved elsewhere.^[1] India is also pioneering Data Empowerment and Protection Architecture, a consent-based data-sharing system built into public infrastructure rather than retrofitted into private systems.

This model of embedded finance, enabled by India’s robust DPI, has the potential to democratise access to financial services, improve customer engagement, and support the broader national goals of financial inclusion and economic formalisation.

The Landscape of Embedded Finance in India

Payments

India has witnessed a transformative shift in its payment infrastructure over the last decade, largely driven by the proliferation of digital public goods such as UPI. Launched in 2016 by the National Payments Corporation of India, UPI has become the cornerstone of India’s real-time payments ecosystem.^[2] As of August 2023, the platform had processed over 10.5 billion transactions valued at INR 15.76 trillion, underscoring its scale and widespread adoption.^[3]

One of the most compelling innovations in this space has been the integration of UPI into a wide range of consumer-facing applications. These integrations allow consumers to complete transactions within non-financial apps without being redirected to external banking platforms. For instance, Swiggy and Zomato embed UPI-based payment options within their food-delivery interfaces, while PhonePe and Paytm serve both as wallets and UPI-based payment platforms, increasingly blurring the line between banking and consumer services.

This frictionless integration of payments into everyday consumer experiences is a pillar of embedded finance. According to a report by Bain & Company, embedded payments are expected to account for US$3.5 trillion in global transaction volumes by 2026.^[4] India is poised to be one of the fastest-growing markets within this category, driven by its mobile-first user base and digital infrastructure stack.

Regulatory and policy interventions have further catalysed this embedded payment landscape. In June 2022, the Reserve Bank of India (RBI) permitted linking RuPay credit cards to UPI, enabling credit card holders to transact via UPI for the first time.^[5] This move was expected to democratise access to short-term credit and enhance the use-case of UPI beyond traditional savings and wallet-linked accounts.

The role of private-sector fintech cannot be overstated in this environment. Players like Razorpay, for instance, have developed payment gateway APIs that seamlessly integrate into e-commerce platforms, enabling merchants to embed UPI and other digital payment options into checkout systems. This has improved customer experience and conversion rates for online retailers.

For small- and medium-sized enterprises (SMEs), these integrations have been transformative, lowering the technical and financial barriers to accepting digital payments. Fintech platforms allow SMEs to go live with payment acceptance in a matter of hours rather than weeks. They also provide dashboards, reconciliation tools, and automated settlements that reduce the operational burdens for small teams.^[6] Access to embedded checkout solutions has enabled SMEs to participate more effectively in online marketplaces and direct-to-consumer channels.^[7] As a result, the digital payments ecosystem is helping level the playing field between small merchants and large online retailers.

Credit

The landscape of consumer and small business credit in India is undergoing a paradigm shift, catalysed by the rapid expansion of embedded credit solutions. These offerings integrate credit products such as Buy Now, Pay Later (BNPL),^[8] small-ticket loans, or working capital financing directly within non-financial digital platforms, streamlining access and enhancing user experience.

Major e-commerce platforms, for instance, such as Amazon and Flipkart have developed embedded credit products like Amazon Pay Later and Flipkart Pay Later through strategic partnerships with regulated NBFCs. These credit lines allow users to defer payments or pay in interest-free instalments, without needing to engage with traditional financial institutions separately. The onboarding process is typically powered by electronic Know Your Customer procedures (e-KYC) and alternative data-based underwriting, leveraging customer shopping behaviour, device metadata, and past payment performance. In providing such services, they address persistent challenges related to credit access, especially in underbanked and thin-file segments of the population.

Beyond consumer lending, embedded credit has also found critical applications in agriculture and supply chain finance. Agritech platforms such as Samunnati, DeHaat, and AgriBazaar provide embedded working capital loans to farmers and agri-entrepreneurs by integrating credit solutions into their broader service offerings, which include input sourcing, market linkages, and advisory services.

Such platforms leverage proprietary transaction-level data like produce volumes, input purchases, and sales to assess creditworthiness in the absence of traditional documentation. This data-driven approach to risk assessment, often referred to as ‘cash flow-based lending’,^[9] represents a departure from conventional balance sheet-based underwriting and is especially critical in India’s informal and underbanked sectors.

Insurance

Embedded insurance is emerging as a transformative force in India’s evolving digital financial landscape. By integrating insurance offerings directly within the purchase or service experience on digital platforms, insurtech firms are lowering distribution costs, simplifying user journeys, and expanding coverage to previously underserved demographic groups. This innovation is particularly impactful in the Indian context, where insurance penetration remains low—3.7 percent as of 2023,^[10] and large segments of the population are underinsured, if at all.

Insurtech startups, such as ACKO Insurance and Digit Insurance, are leading this embedded model wave by partnering with high-traffic platforms like Ola, Amazon, Zomato, and MakeMyTrip. These partnerships embed context-specific microinsurance products—such as ride insurance, trip-cancellation protection, or product warranty extensions—into the platform’s checkout or booking process.

For example, Ola offers ride insurance at a nominal cost, underwritten by ACKO,^[11] which covers accidental death, disability, and hospitalisation linked to a single trip. Ola claims to have sold over 20 million such policies, indicating traction for low-cost, high-frequency insurance embedded in daily use-cases.^[12]

Similarly, Amazon India, through partnerships with ACKO and others,^[13] enables product insurance and extended warranties for electronics and appliances, bundled directly at the point of sale. These offerings are seamlessly integrated, requiring minimal user input, and leverage the platform’s trust and interface to enhance uptake.

The embedded model thus leverages digital underwriting, automated claims processing, and user-friendly interfaces to streamline traditional friction points in insurance distribution. It also enables microinsurance policies with low premiums and limited but targeted coverage, which is especially relevant in price-sensitive and low-trust segments.

Investments and Wealth Management

Investing, while still in its formative stage in India, is gradually gaining momentum as fintech platforms integrate wealth-building products into broader financial and lifestyle ecosystems. This trend is particularly relevant in the context of India’s growing digital financial inclusion and the demographic shift toward younger, tech-savvy consumers seeking convenient, low-friction access to investment tools.^[14]

India’s digital investing revolution is largely spearheaded by platforms like Zerodha, Groww, Upstox, and Paytm Money, which have transformed access to equity markets and mutual funds. These platforms act not just as brokers, but increasingly as embedded investment service providers offering simplified interfaces and integrated dashboards that combine savings, insurance, and investing services under one roof. Zerodha’s Coin platform, for instance, offers direct mutual fund investments without commission, embedding investment opportunities within the larger Zerodha Kite trading interface. The company’s philosophy of ‘nudge-based investing’,^[15] supported by behavioural finance principles, helps users make more informed, long-term decisions.

Neobanks such as Fi Money, Jupiter, and Niyo are also entering the embedded investing space by integrating goal-based investment tools into their primary banking interfaces. These tools typically allow users to allocate small amounts towards mutual funds, digital gold, or recurring investments in Systematic Investment Plans directly from their savings accounts. Fi Money’s rules-based savings features, for example, automatically funnel small amounts into investment instruments based on user behaviour, rounding off transactions or setting aside spare change.^[16] This seamless embedding of micro-investing combines behavioural nudges with automated investing, a strategy that has shown promise in improving financial wellness by helping inculcate saving and investment habits.

Embedded investment models are also playing a crucial role in democratising access to capital markets, especially for first-time investors from Tier-2 and Tier-3 cities. According to the Association of Mutual Funds in India, as of FY24, the country recorded its highest-ever mutual fund penetration, with the ratio of mutual fund assets under management (AUM) to GDP reaching 18.2 percent. Additionally, women accounted for 33 percent of the total AUM held by individual investors.^[17]

Challenges and Risks

Regulatory Ambiguity

Among the challenges in India’s embedded finance landscape is the lack of regulatory clarity, particularly in the emerging area of embedded credit. While such credit models have enhanced financial access and convenience, their rapid innovation has often outpaced the development of corresponding regulatory frameworks, creating grey zones in terms of compliance, consumer protection, and risk oversight.

BNPL services, for instance, often operate outside the traditional lending frameworks established by the RBI. These services extend credit without conducting comprehensive creditworthiness assessments akin to those required for formal bank loans. As a result, there is concern over hidden indebtedness, particularly among young, digitally savvy consumers who may not fully understand the cumulative cost of these microloans. Further, the minimal regulatory supervision also results in a lack of standardised disclosures and inconsistent repayment structures, which raise red flags for financial stability and consumer rights.

Recognising these issues, the RBI introduced the Digital Lending Guidelines in August 2022,^[18] marking a pivotal move toward formalising oversight of new-age credit models. The guidelines include the following:

• Direct Loan Disbursal to Borrower Accounts: The RBI mandates that all loan disbursements be made directly into borrowers' bank accounts, rather than through intermediaries or platforms.
• Disclosure and Transparency Requirements: Lenders must provide clear disclosures of all fees, interest rates, and repayment schedules at the point of onboarding.
• Data Protection and Consent-Based Collection: Platforms must obtain explicit user consent before accessing personal data, and only necessary data may be collected.
• Responsibility of Regulated Entities: Regulated entities like NBFCs and banks are held fully responsible for the actions of their Lending Service Providers (LSPs), including fintech platforms offering BNPL.

While these guidelines are a welcome step forward, implementation remains inconsistent, with fintech platforms still navigating ambiguities around classification, credit-reporting obligations, and technological compliance. Other unresolved regulatory challenges stem from the blurred lines between credit, payment, and commerce in many embedded finance offerings, making it difficult to determine which regulatory body has jurisdiction. Furthermore, embedded investment options need careful regulatory oversight to avoid conflicts of interest, such as commission-driven fund placement or platform-specific bias in recommendations.

The convenience and gamification of investing also carry behavioural risks, such as impulsive trading, under-diversification, and short-termism, especially among users lacking financial literacy. Smaller fintech providers and aggregators often lack the resources to ensure full compliance, potentially creating uneven regulatory enforcement across the sector.

Data Privacy and Security

The embedded finance model is underpinned by the continuous collection, processing, and exchange of vast volumes of personal, financial, and behavioural data across diverse ecosystems with participants ranging from fintech and e-commerce platforms to NBFCs and banks. While this interoperability enhances user convenience and promotes financial inclusion, it also exposes consumers to the heightened risk of data breaches, surveillance, and unauthorised profiling.

India’s Digital Personal Data Protection Act, 2023,^[19] represents a landmark attempt to establish a comprehensive framework for safeguarding personal data. The Act introduces foundational principles such as purpose limitation, data minimisation, and explicit consent, each particularly salient in embedded finance ecosystems where consent is often bundled or obscured within terms of service. Yet, despite these legal protections, enforcement remains an ongoing challenge. Embedded finance platforms often operate through multiple APIs, data aggregators, and third-party service providers, each of which represents a potential point of vulnerability.

Similarly, while the RBI’s AA system aims to streamline and secure consent-based data flows, the ecosystem is still maturing and faces gaps in institutional capacity and user comprehension. Adoption remains uneven across financial institutions, and many smaller NBFCs lack the technical capacity to integrate AA efficiently. On the user side, limited awareness of data-sharing permissions and digital-security practices creates additional vulnerabilities.

Given the sensitive nature of financial data, the risk of misuse, whether for predatory lending, discriminatory pricing, or behavioural manipulation, cannot be overstated. The intersection of embedded finance with AI-based credit scoring further complicates this landscape, as opaque algorithms can embed systemic biases without adequate regulatory oversight or auditability.

Addressing these issues will require not only stronger institutional mechanisms and interoperability standards but also a concerted effort to promote data literacy, grievance redressal channels, and privacy-preserving architectures. The adoption of privacy-by-design principles, where data minimisation, encryption, and user control are baked into system architecture, will be essential for ensuring that the promise of embedded finance does not come at the expense of consumer autonomy and trust.

The Global Context

At present, India does not have a unified or sector-specific regulatory framework governing embedded finance. Instead, regulatory oversight is fragmented across different financial verticals, each governed by independent regulators, such as the RBI, the Insurance Regulatory and Development Authority of India (IRDAI), and the Securities and Exchanges Board of India (SEBI). In this context, studying how other jurisdictions are approaching embedded finance becomes critical. Comparative analysis can offer valuable insights for India to develop flexible, forward-looking frameworks that balance innovation with consumer protection and systemic stability.

Table 1. Global Regulatory Approaches in Embedded Finance

Country	Key Regulatory Approach	Notable Guidelines or Bodies	Focus Areas	Takeaways for India
United States	Principles-based regulation; emphasis on consumer protection, data rights, and market-driven innovation	Consumer Financial Protection Bureau,[20] Officer of the Comptroller of the Currency,[21] Federal Reserve; Dodd-Frank Act,[22] Gramm-Leach-Bliley Act[23]	BNPL, data consent, open banking	Adopt modular regulations with clear interoperability and robust disclosures without stifling innovation
United Kingdom	Strong open banking regime with clear licensing and third-party access rules	Financial Conduct Authority,[24] Payment Systems Regulator,[25] Open Banking Implementation Entity;[26] Consumer Duty standards, 2023[27]	Payments, credit scoring, consent architecture	Build India's account aggregator ecosystem in tandem with stronger embedded finance norms
Singapore	Proactive sandboxes and clear fintech licensing[28]	Monetary Authority of Singapore; FinTech Regulatory Sandbox guidelines[29]	Sandbox for BNPL offerings, digital banks, AI credit systems	Scale RBI's sandbox with targeted tracks for embedded credit and RegTech tools
Australia	Comprehensive BNPL and digital payments regulation	Australian Securities and Investment Commission;[30] Consumer Data Right[31]	BNPL, embedded credit, data rights	Leverage India’s DEPA infrastructure with explicit opt-in consent and transparency in embedded credit
China	Tightened rules post-Ant Group’s IPO crisis;[32] centralised regulation with AI and data governance controls	People’s Bank of China, Cyberspace Administration of China; focus on data localisation and algorithm audits[33]	Super-app governance, credit scoring, embedded lending	Balance innovation with risk by applying learnings from China’s rapid centralisation and real-time supervision
European Union	Adoption of the Payment Services Directive regulations, to empower open finance and strong consent layers[34]	European Banking Authority,[35] European Supervisory Authority (ESAs); Strong Customer Authentication directive	Embedded payments, insurance, and consent flow	Harmonise India’s embedded payments systems (like UPI) with structured consent and anti-fraud mechanisms
Brazil	Open finance framework that covers insurance, credit, and investments[36]	Banco Central do Brasil; phased implementation of the Open Finance environment since 2021	Cross-sector interoperability, insurance APIs	Use account aggregator and Open Network for Digital Commerce infrastructure to expand embedded insurance and lending through cross-sectoral interoperability

      Source: Author’s own, using various open sources, as cited.

Policy Recommendations

Clear Definitions and Licensing

Embedded finance intersects multiple financial domains, such as payments, credit, insurance, and investments, each governed by different regulatory bodies, including the RBI, the IRDAI, and SEBI. As a result, entities offering composite services often operate in legal grey zones.

To address this, regulators should adopt a taxonomy that clearly outlines what constitutes embedded finance, distinguishing between platforms that enable transactions and those that bear underwriting or risk. A framework akin to the RBI’s guidelines for payment aggregators^[37] could be introduced for embedded finance intermediaries too. This would reduce regulatory arbitrage and ensure oversight proportionate to risk exposure and service complexity.

Digital Literacy and Consent Frameworks

As financial products such as credit, insurance, and investment are bundled into everyday digital interfaces (e-commerce platforms, ride-hailing apps, and social media), they present a frictionless user experience that is a key enabler of adoption. Yet, this characteristic smoothness simultaneously poses challenges for ensuring meaningful informed consent, as it encourages a brevity of user attention. Digital financial service users often do not fully comprehend the terms and conditions of the products they engage with. This knowledge asymmetry exposes consumers to a range of vulnerabilities, including exposure to hidden fees, data misuse, unauthorised financial obligations, and misaligned risk appetites. The nature of embedded finance amplifies this risk, as financial decision-making becomes incidental rather than deliberate.

To address these systemic challenges, regulators must move beyond conventional disclosure norms and consider the architecture of consent. Public awareness campaigns, such as the RBI’s ‘RBI Kehta Hai’ initiative,^[38] attempt to promote basic financial literacy. These efforts must be complemented by enforceable design principles at the level of the user interface and user experience. In this context, regulatory frameworks should define design obligations not just for financial service providers, but also for platform intermediaries who facilitate the delivery of these products.

Mandating the use of simplified, standardised, and layered consent mechanisms akin to SEBI’s risk-o-meter^[39] disclosure requirements for mutual funds can enable users to better understand financial risks in real time. Incorporating behavioural nudges, mandatory pause points for high-risk products, and just-in-time explanations for data permissions can further empower users to make informed choices.

By embedding regulatory intent into interface design, policymakers can bridge the consent gap without compromising the seamlessness that makes embedded finance attractive. In the long term, such an approach is not only a matter of consumer protection but also critical for building trust in digital financial ecosystems.

Regulatory Technology (RegTech) Infrastructure

Traditional supervisory approaches, often reliant on ex-post audits and static compliance checks, are increasingly inadequate in managing risks within high-velocity, complex, and opaque digital financial ecosystems such as BNPL, microinsurance, and instant credit products. In this context, RegTech can emerge as a critical enabler for real-time oversight, precision regulation, and scalable enforcement.

RegTech refers to the application of emerging technologies, such as artificial intelligence, machine learning, distributed ledger technology, and APIs, to regulatory processes. For embedded finance, where financial transactions are deeply integrated into digital interfaces with minimal friction or user deliberation, RegTech tools can help regulators track market conduct, enforce compliance norms, and safeguard consumer interests without impeding innovation.

The RBI Digital Lending Guidelines (2022) represent a nascent but significant step toward formalising this transition.^[40] By introducing the concept of LSPs and mandating the direct disbursal of funds from regulated entities to borrowers, the RBI has acknowledged the layered architecture of digital lending. However, the enforcement of these guidelines still relies heavily on manual reporting and retrospective assessments, limiting their responsiveness to dynamic risk scenarios.

To operationalise a more agile and intelligent regulatory posture, India must invest in a robust RegTech backbone. This could take the form of:

• Regulatory Sandboxes: Iterative sandbox environments where RegTech solutions are tested not only by startups but by regulators themselves to simulate stress-testing, fraud detection, and consent auditing under live market conditions.
• Central Supervisory Dashboards: Integrated platforms aggregating real-time transactional data from licensed intermediaries such as payment aggregators, loan service providers, and insurance distributors, with automated flagging of anomalies (such as surge pricing of premiums, unauthorised auto-debits, or bundling without consent).
• Open API Frameworks: Interoperable, consent-based data sharing among financial service providers and regulators to facilitate continuous compliance and risk-based supervision.
• Automated Grievance Redressal Mechanisms: AI-powered chatbots and Natural Language Processing tools to triage consumer complaints, identify systemic issues, and alert regulators to potential patterns of misconduct.

From a policy standpoint, the deployment of RegTech infrastructure should be accompanied by a capacity-building initiative across India’s regulatory institutions. This includes training human resources in data analytics, legal–tech interfaces, and the ethical design of supervisory algorithms. Collaborative platforms between RegTech firms and regulators, such as a public–private RegTech lab, could serve as accelerators of innovation in supervisory technology.

The shift from manual to intelligent regulation is not just a technological imperative but a structural one. For embedded finance to fulfil its promise of financial inclusion and personalisation without compromising on trust, safety, and stability, India’s regulatory architecture must be proactively augmented by RegTech capabilities.

Conclusion

Embedded finance stands at the vanguard of India’s evolving digital financial ecosystem, and is transforming how individuals and businesses engage with financial systems. By leveraging the widespread penetration of smartphones, e-commerce, and platform-based services, embedded finance has the potential to democratise access to formal financial services, reduce transaction costs, and deliver personalised solutions at scale. This is particularly salient in a country like India, where vast segments of the population remain underserved or underbanked despite strides in digital inclusion.

As discussed earlier, embedded credit stands out as particularly powerful among emerging embedded financial products. By integrating credit into the tools SMEs already use, lenders can offer financing at the exact point of need. With more businesses digitising their workflows, platforms will have access to live financial data rather than outdated statements. This enables sharper underwriting and reduces risk. Ultimately, it creates a new path for low-friction, data-driven credit.

Yet, this promise is not without its dangers. The very features that make embedded finance attractive also pose risks to consumer autonomy, transparency, and financial stability. Without a coherent regulatory framework, the proliferation of embedded financial products may lead to unchecked credit expansion, mis-selling, erosion of informed consent, and widening asymmetries between consumers and platform intermediaries. These concerns are amplified in the context of limited digital literacy and uneven enforcement capacity.

From a macroeconomic perspective, as India aspires to achieve the status of a US$5-trillion economy,^[41] the strategic harnessing of embedded finance could play a pivotal role in deepening financial inclusion, enhancing productivity, and fostering entrepreneurial ecosystems. However, its integration into the architecture of everyday digital interactions must be premised on a policy paradigm that is agile, risk-based, and citizen-centric. This requires not only inter-regulatory coordination across the RBI, IRDAI, and SEBI, but also the deployment of advanced supervisory technologies, such as RegTech, to keep pace with rapid innovation.

Moreover, the regulatory approach must be calibrated to distinguish between high-risk and low-risk actors, adopt clear definitions and licensing categories, and embed user protection principles such as transparency, consent, grievance redressal, and financial education into the design of embedded products. Policies must also be inclusive, ensuring that small businesses and low-income users are not excluded from the benefits of digital finance due to overregulation or infrastructural gaps.

From a broader structural perspective, achieving a unified regulatory approach to embedded finance in India presents considerable challenges. This complexity arises primarily from the wide range of financial instruments involved, spanning payments, investments, insurance, and credit products, each governed by distinct operational and risk characteristics. Consequently, the development of a new and differentiated taxonomy for embedded financial services is both necessary and valuable, to offer a structured framework to categorise and regulate these emerging models appropriately.

India’s current regulatory architecture reflects this diversity, with separate sectoral regulators overseeing different domains: the RBI for payments and credit, SEBI for investments, and the IRDAI for insurance, among others. A forward-looking development would be for each regulatory body to establish dedicated digital finance or embedded finance sections. These units would be responsible for overseeing the integration of financial services into non-financial platforms, ensuring that sector-specific standards for consumer protection, transparency, data privacy, and systemic stability are maintained even in new distribution contexts. Such a coordinated but sector-specific approach could better accommodate the dynamic and hybrid nature of embedded finance while preserving regulatory clarity and accountability.

In sum, embedded finance has the potential to be a cornerstone of India’s next phase of financial sector innovation and inclusion. However, realising this potential will require a delicate balance between innovation and oversight, flexibility and accountability, growth and protection. Only through a forward-looking, harmonised, and adaptive regulatory framework can embedded finance contribute meaningfully to the broader goals of economic resilience, digital sovereignty, and inclusive development in India.

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Sauradeep Bag is Associate Fellow, Centre for Digital Societies, ORF.

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All views expressed in this publication are solely those of the author, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

Endnotes

^[1] PricewaterhouseCoopers (PwC) India, Analysis of Charges Levied on Digital Payments, PwC India, 2024, https://www.pwc.in/industries/financial-services/fintech/payments/analysis-of-charges-levied-on-digital-payments.html

^[2] Press Information Bureau, April 5, 2024, “Government of India identifies focus areas for making India a global semiconductor hub,” Ministry of Electronics & IT. https://pib.gov.in/PressReleasePage.aspx?PRID=2079544

^[3] Times of India, “UPI crosses 10 billion transactions: The four biggest numbers,” September 1, 2023,  https://timesofindia.indiatimes.com/gadgets-news/upi-crosses-10-billion-transactions-the-four-biggest-numbers/articleshow/103293470.cms

^[4] ​​Bain & Company, “Embedded finance transaction value to more than double to $7 trillion in US by 2026, but financial institutions must move quickly to keep up: Bain & Company and Bain Capital report,” November 1, 2022, https://www.bain.com/about/media-center/press-releases/2022/embedded-finance-transaction-value-to-more-than-double-to-$7-trillion-in-us-by-2026-but-financial-institutions-must-move-quickly-to-keep-upbain--company-and-bain-capital-report/

^[5] National Payments Corporation of India (NPCI), “Operating circular for RuPay credit cards linked to UPI,” October 4, 2022, https://www.npci.org.in/PDF/npci/upi/circular/2022/Operating-circular-for-RuPay-Credit-Cards-linked-to-UPI.pdf

^[6] Alakananda Chatterjee, “Empowering Women Through Digital Payments in India: Overcoming Barriers for Greater Economic Participation,” Razorpay Blog, March 20, 2025, https://razorpay.com/blog/empowering-women-with-digital-payments-in-india.

^[7] PricewaterhouseCoopers (PwC) India, Embedded Finance: A Strategic Outlook, PwC India, 2024, https://www.pwc.in/assets/pdfs/consulting/financial-services/fintech/publications/embedded-finance-a-strategic-outlook-final.pdf

^[8] B. Guttman-Kenney, C. Firth, and J. Gathergood, (2023), “Buy now, pay later (BNPL) ...on your credit card,” Journal of Behavioral and Experimental Finance, 37, 100788, https://doi.org/10.1016/j.jbef.2023.100788

^[9] K Naveen Kumar, V S Kaveri and Narul Shah (2024), “Digital Cash Flow Lending to MSMEs: Concepts and Models,” NIBM Working Paper Series WP 45/May, https://www.nibmindia.org/static/working_paper/NIBM_WP45_NKVSNS.pdf

^[10] Business Standard, “IRDAI Annual Report 2023-24: Insurance penetration declines,” December 25, 2023, https://www.business-standard.com/finance/insurance/irdai-annual-report-2023-24-insurance-penetration-decline-124122500470_1.html

^[11] Business Standard, “Ola, Acko partner to create in-trip insurance program,” https://www.business-standard.com/article/news-ani/ola-acko-partner-to-create-in-trip-insurance-program-118040501232_1.html

^[12] Ola Cabs, “With over 20 million in-trip insurance policies availed by customers each month, Ola is India’s largest private micro-insurance platform,” July 11, 2019, https://www.olacabs.com/media/in/press/with-over-20-million-in-trip-insurance-policies-availed-by-customers-each-month-ola-is-indias-largest-private-micro-insurance-platform

^[13] Livemint, “Amazon Pay ventures into insurance in India,’ July 24, 2020, https://www.livemint.com/companies/news/amazon-pay-ventures-into-insurance-in-india-11595427759424.html

^[14] “How India’s Digital Natives Are Redefining Financial Services,” Entrepreneur India, June 2025, https://www.entrepreneur.com/en-in/news-and-trends/how-indias-digital-natives-are-redefining-financial/493916

^[15] LiveMint, “Zerodha Introduces Nudges Feature for Mutual Fund Investors to Avoid Common Mistakes,” February 10, 2022, https://www.livemint.com/companies/news/zerodha-introduces-nudges-feature-for-mutual-funds-investors-to-avoid-common-mistakes-11644392218820.html

^[16] FI Money, “FIT Rules,” 2025, https://fi.money/features/fit-rules.

^[17] Association of Mutual Funds in India (AMFI), AMFI Factbook, 2024, https://www.amfiindia.com/Themes/Theme1/downloads/AMFIFactbook%202024.pdf

^[18] Reserve Bank of India. (2022, August 10). Recommendations of the Working Group on Digital Lending – Implementation. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54187

^[19] Ministry of Electronics and Information Technology. (2023, August 11). The Digital Personal Data Protection Act, 2023 (No. 22 of 2023). https://www.meity.gov.in/static/uploads/2024/06/2bf1f0e9f04e6fb4f8fef35e82c42aa5.pdf​

^[20] ​​Consumer Financial Protection Bureau​​,  https://www.consumerfinance.gov/complaint/

^[21] Office of the Comptroller of the Currency, https://www.occ.treas.gov/

^[22] Commodity Futures Trading Commission, Dodd-Frank Act. https://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm

^[23] Federal Trade Commission, Gramm-Leach-Bliley Act. https://www.ftc.gov/legal-library/browse/statutes/gramm-leach-bliley-act

^[24] Financial Conduct Authority, https://www.fca.org.uk/

^[25] Payment Systems Regulator, https://www.psr.org.uk/

^[26] Open Banking Limited, https://www.openbanking.org.uk/about-us/

^[27] Financial Conduct Authority, Consumer Duty,  https://www.fca.org.uk/firms/consumer-duty

^[28] Monetary Authority of Singapore (MAS). “FinTech Regulatory Sandbox.” MAS Development. https://www.mas.gov.sg/development/fintech/regulatory-sandbox#:~:text=The%20FinTech%20Regulatory%20Sandbox%20framework,be%20applicable%20for%20such%20applicants.

^[29] Monetary Authority of Singapore. (n.d.). FinTech Regulatory Sandbox, https://www.mas.gov.sg/development/fintech/regulatory-sandbox

^[30] Australian Securities and Investments Commission, Australian Securities and Investments Commission. https://asic.gov.au/

^[31] Australian Government. (n.d.). Consumer Data Right. https://www.cdr.gov.au/

^[32] The Diplomat. “The Long-Term Implications of Ant Group’s Delayed IPO.”, November 2020. https://thediplomat.com/2020/11/the-long-term-implications-of-ant-groups-delayed-ipo/

^[33] ​​“Impact Analysis: China Strengthens Data Localisation Requirements with New Privacy Laws,” Thomson Reuters Insight, https://insight.thomsonreuters.com/sea/business/posts/impact-analysis-china-strengthens-data-localisation-requirements-with-new-privacy-laws

^[34] “Revised Payment Services Directive (PSD2): ECB Publishes Opinion,” European Central Bank News, March 2018. https://www.ecb.europa.eu/press/intro/mip-online/2018/html/1803_revisedpsd.en.html; Ernst & Young (EY), “PSD3 Impacts on Payment and Electronic Money Institutions: Get Ready!” EY, May 5, 2025, https://www.ey.com/en_be/technical/financial-services/financial-services-alerts/psd3-impacts-on-payment-and-electronic-money-institutions-get-ready

^[35] European Banking Authority, Homepage, https://www.eba.europa.eu/homepage

^[36] Brazilian Central Bank (Banco Central do Brasil), “Open Finance,” Financial Stability https://www.bcb.gov.br/en/financialstability/open_finance

^[37] Reserve Bank of India, “Guidelines on Regulation of Payment Aggregators and Payment Gateways,” Notification, March 17, 2020, https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11822&Mode=0.

^[38] Reserve Bank of India, “RBI Kehta Hai,” https://rbikehtahai.rbi.org.in/.

^[39] Securities and Exchange Board of India (SEBI), “Investor Riskometer,” https://investor.sebi.gov.in/riskometer.html.

^[40] Reserve Bank of India, Recommendations of the Working Group on Digital Lending – Implementation, August 10, 2022, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54187

^[41] Press Information Bureau, Government of India, “PM Launches National Data Governance Plan and Digital Public Infrastructure Initiatives,” https://www.pib.gov.in/PressReleasePage.aspx?PRID=1944734

• Economics and Finance
• Developing and Emerging Economies
• India
• embedded finance
• embedded finance in india
• embedded finance landscape
• embedded finance models
• embedded finance platforms
• embedded investment
• financial services delivery
• non banking financial companies
• real time payments
• unified payments interface

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