What are embedded payments and how do they benefit platform businesses?

Consumers have a big demand for digital services that enable them to access various things without going to a physical location. Business-to-business (B2B) is an application that aims to streamline business operations, simplify complex business processes, and meet specific embedded payment service industry needs. Fortis is a Payment Facilitator and ISO/MSP processing transactions for all major payment and banking networks. EpicPay International LLC, DBA Fortis Payment Systems LLC is a registered Independent Sales Organization of Wells Fargo Bank, N.A., Concord, CA.

As an increasingly accepted industry standard, embedded payment systems offer new companies a myriad of benefits. As a technology, it is fast and convenient for customers, it builds customer loyalty, and it can provide another stream of revenue. Below we take a deeper look into embedded payments and how companies can take advantage of this up-and-coming payment system. With the rise of embedded investing, consumers can now buy cryptocurrency from other platforms they already use, including Venmo and Paypal. While this is a newer use case for embedded financial services, it’s ripe for growth as consumers come to expect the sites they use to offer additional services. In the future, this might include being able to discuss stocks in a chat room and then easily buy shares or allowing users to buy stocks in their checking account app.

Embedded bank accounts

That could result in lost sales and lost customers for businesses that haven’t modernized the payment experience. In fact, there are multiple commercial and technical models that have emerged to support various business scenarios. Jumping into the deep end of the pool too soon could backfire, causing you to lose focus on your core software, alienate customers and waste time and money. It’s important to understand the differences so that you can choose the model best aligned with your maturity, resources, and customer profiles. For most banks with proprietary distribution, embedded finance represents a significant cannibalization risk. However, banks with limited footprints or localized relationships, such as community banks and regional banks, may see it as an attractive way to expand their revenue base.

• For every $100 million processed, businesses can realize an additional $3 million in revenue, according to current payment processor rates.
• Before the embedded finance technologies came on the scene, layaway was an option where a consumer could go into a store to buy a product and place a deposit to reserve the item.
• Think of it like a closed ecosystem, with every application connected to streamline workflows in one place, with no need for outside services.
• It’s as if Plaid turns on the stream of user-permissioned financial data to these companies, then they transform it into embedded finance products and services.
• By offering tailored financial services, you’re uniquely positioned to help your users run their business and their finance directly from your platform.
• Payment acceptance is different from functions of core software such as sales, inventory or staff scheduling.

According to Baymard Institute, 18% of consumers cite ‘a long and complicated checkout process’ as the main reason for cart abandonment. In an era where digital experiences are increasingly omnichannel and interconnected, consumers don’t differentiate between what is controlled by one entity versus another. Make the right decisions with the latest insights and advice on business growth and payments innovation. Viasat chose Adyen for Platforms to simplify its payments infrastructure in a way that boosts their global expansion. Viasat has seen a lift in authorization rates by approximately three percent since switching to the new payment platform.

What Is Embedded Finance?

Furthermore, anyone looking forward to building a custom payment solution can partner with the bank. Exposing APIs may raise compliance red flags, but this is where those strategic fintech alliances may help. Find a partner who can reduce your onboarding efforts and related risk concerns and act as an aggregator or gateway to your services. Embedded payments provide platforms with diverse avenues to generate revenue while improving the payment experience for their users. The rapid evolution of the digital ecosystem allows platforms to maximize the potential of embedded payments through strategically implemented monetization strategies.

These fintech companies build insurance options into the checkout flow, enabling consumers to choose insurance as an ‘add-on’ to their purchase. One possibility is that banking as a service and API banking become as ubiquitous as online or mobile banking, a channel that every bank must build and maintain. In that world, achieving long-term differentiation with BaaS will be difficult, so banks will continue to distinguish themselves based on products, rates, reach, and other dimensions.

Payment Features

However, fintech has expanded companies’ ability to offer branded credit cards and increased the use cases where it makes sense. In this article, we’ll explore what embedded finance is, the different types of embedded finance, and outlooks for growth and future trends in the embedded finance industry. In sum, the merchants who see themselves as enablers of a wide spectrum of digital services are going to be the winners of this new era of embedded experiences. First off, you need to consider whether your business has the bandwidth to manage the embedded payment process. With this in mind, it’s not surprising that a growing number of businesses are interested in becoming facilitators of the payment process. In the same way that customers will blame the brand and not the parcel carrier if their order is delivered late, merchants cannot simply pass off a failed transaction on a third-party payment platform as ‘not their fault’.

Embedded banking refers to tools that allow you to access your bank account information or interact with your bank account from a non-bank website or app. For example, some accounting platforms like Treasury Prime client Bench allow business owners to view their business account balances within the accounting app. This option is ideal for platforms that are looking to get up and running as quickly as possible. Out-of-the-box embedded payments require minimal integration efforts and developer resources. Because payments are provided by multiple vendors, there needs to be an integration for each. This often results in disjointed user experiences, lack of data insight, and the platform having less control of the user experience.

Best Travel Insurance Companies

Almost 55% of businesses use APIs to build B2B products, 36% for mobile products, and 26% for employee productivity. This information proves that more companies integrate embedded payment mechanisms into their infrastructures. Researchers estimate that the embedded payment industry will grow by 40.4% annually. Moreover, it should reach $124,755.7 million by 2022 and $380,573.2 million by 2029. The embedded finance industry is growing, so business leaders should keep an eye on some of the most promising trends.

You head to the checkout – only to be confronted with a bunch of fields to fill out for your chosen payment method. It wasn’t until eBay started working with PayPal that the site started enabling online payments. If you’re a veterinary practice owner or manager, there are a number of good reasons why you should prioritize ease of use when selecting practice management and financial software. For one, receptionist and admin roles often experience high turnover, so a short training period is crucial to helping your business operations run smoothly. Learn more about how Stripe can help differentiate your platform and accelerate revenue growth, or get in touch with our team to get started.

Hyundai launches in-car payment service

Traditional payment methods that redirect users to external payment pages often lead to high cart abandonment rates. Embedded payments are important in creating a User Experience (UX) that is both frictionless and valuable. We have already discussed how embedded payments can enhance the payment experience, but we can go into more detail about their use of payment data. It offers massive potential for fintech companies to work with non-financial businesses to develop and expand the market. The embedded payment industry’s rapid evolution will occur over the next 4 to 8 years as investors continue to pour money into the sector.

They’ve developed customized offerings that cater to the unique needs of merchants in growing industries such as health and wellness, travel and hospitality, or transportation. No matter their marketplace, verticalized software companies recognize a need for specificity. The opportunity for financial services to expand into previously non-financial areas is unprecedented—and still in the very early stages. This financial transformation will continue to gain strength across nearly every sector as more companies adopt embedded finance and as consumers become more comfortable with these services. Financial providers and brands will forge lasting (and highly beneficial) partnerships. These partnerships will provide the experience and skill sets that brands need to offer embedded finance without hiring whole teams of financial experts and software developers.

The Future Of Embedded Payments: What The Consumer-Centric Approach Means For Banks And Businesses

Taking out a credit card and entering the number is a friction point that can cause consumers to abandon a digital purchase. Embedded payments make this process easier by connecting and saving a payment method for later use at the click of a button. The Starbucks app, for example, saves credit or debit card information for 1-click payments while customers earn points for using the app. By opening up new markets and improving customer experiences, embedded finance presents a significant opportunity to both financial service providers and non-financial companies in multiple industries. By embracing embedded payment solutions, brands can retain much more control over the user experience and eliminate key points of friction. This is where the fusion of embedded payments and deferred payment plans such as Buy Now, Pay Later is a powerful value proposition for customers.