Regulatory and Policy Challenges of Embedded Finance Adoption in SME Digital Platforms across Emerging Economies

Abstract

This study investigated regulatory and policy challenges to the implementation of embedded finance on SME digital platforms in emerging economies. A Systematic Literature Review (SLR) approach was used to integrate academic literature available on the topic of embedded finance, fintech regulation, and SME digital platforms. Major academic databases such as Scopus, Web of Science, Google Scholar, Emerald Insight, and Taylor and Francis Online were used to identify the relevant studies published in the period of 2020-2026. The selection procedure adhered to pre-established inclusion and exclusion criteria that centred on peer-reviewed studies in English language dealing with regulatory and policy aspects of embedded finance adoption. The review indicates that regulatory uncertainty, fragmented governance structure, data protection requirements, and cross-border compliance problems are significant factors that affect the adoption of embedded finance. Furthermore, policy-specific obstacles to effective integration of financial services into SME platforms are the lack of digital infrastructure, low financial literacy, and poor fintech ecosystem coordination. The paper identifies the necessity of consistent regulation frameworks, dynamic and versatile policy options, and excellent institutional coordination to assist embedded finance innovation.