You might be wondering — how do Payment Aggregators and Payment Orchestrators (which we studied earlier) connect with Embedded Finance and BNPL?
In this lesson, we’ll understand how these payment infrastructure players enable Embedded Finance services like BNPL.
Why is This Connection Important?
BNPL and other Embedded Finance products don’t work in isolation. They need a strong payment system in the background to function smoothly. This is where Payment Aggregators and Orchestrators play a key role.
Role of Payment Aggregators in Embedded Finance
Many leading Payment Aggregators in India (like Razorpay, Cashfree, Paytm, etc.) have started offering Embedded Finance services along with regular payments. Here’s how they help:
Seamless Integration
They allow merchants to add BNPL and EMI options directly into their checkout page with minimal technical effort.
Partnership with NBFCs
Payment Aggregators partner with NBFCs (Non-Banking Financial Companies) who provide the actual credit. The aggregator handles the technology and customer experience.
Instant Settlement to Merchants
When a customer buys using BNPL, the aggregator ensures the merchant gets paid the full amount quickly, while the customer repays in installments.
Role of Payment Orchestrators in Embedded Finance
Payment Orchestrators take this one step further by managing multiple providers and optimizing the experience:
- They can intelligently route BNPL transactions to the best available provider based on success rate or cost.
- They help platforms offer multiple BNPL options (e.g., both LazyPay and Simpl) through one integration.
- They provide unified reporting and reconciliation for both regular payments and BNPL transactions.
Simple Architecture: How It All Works Together
Customer → Merchant Platform (E-commerce / App) → Payment Aggregator / Orchestrator → NBFC / BNPL Provider → Credit Approval & Payment
In this flow, the Payment Aggregator or Orchestrator acts as the bridge between the merchant and the financial service provider (NBFC). They handle the technology, while the NBFC handles the credit risk and lending.
Real-World Example
Let’s say you’re shopping on an online fashion store:
- At checkout, you see options like “Pay in 3 EMIs” powered by different BNPL providers.
- Behind the scenes, the store uses a Payment Aggregator (like Razorpay) or an Orchestrator.
- When you choose BNPL, the aggregator connects with its NBFC partner, gets quick approval, and processes the transaction.
- You get the product immediately, the store gets paid, and you repay in installments.
Key Takeaway
Payment Aggregators and Orchestrators act as the technology layer that makes Embedded Finance (like BNPL) possible. They connect merchants with financial partners (NBFCs), handle the payment flow, and ensure a smooth experience for both customers and businesses.
Note: This is why many large Payment Aggregators are now also becoming important players in the Embedded Finance space.
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