Embedded Payments: A Prerequisite for Success


In an era of increasing ecommerce, embedded payment solutions have the potential to place businesses back in control and allow them to collect online payments directly without relying on third parties. Mehmet Pasa, GM of banking & payments at UST, shares why there is no one-size-fits-all roadmap to adoption and anyone looking to implement needs to examine best practices to form their approach.

The disruption of the past two years has ushered in several systemic changes that will fundamentally alter how businesses operate. These challenges spurred innovation, encouraging the adoption of radically new solutions and ways of thinking about how goods and services are allocated and delivered. The need to adhere to social distancing guidelines and health regulations increased reliance on technology during the pandemic, leading to the rapid rise of ecommerce and a growing expectation among consumers that increasingly complex and capable digital ecosystems would grow to encompass every aspect of the transaction process. 

Though the public expects digital commerce to be streamlined, until recently, all digital payments were handled by third parties – in the form of either large financial institutions or payment processors. This means that financial transactions were, in fact, separate processes that were never as direct as they may have initially appeared. Because software and technology companies have been forced to use these third-party integrations to allow customers to accept and make payments, there has always been a slight disconnect between vendors and customers, creating a disjointed user experience. But there is a growing appetite for the advanced solutions required to cut out these middlemen and give businesses the direct control they need for real financial independence.

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Creating Value

Even though getting paid is perhaps the most critical part of any successful business, not everyone can exercise complete control over this vital aspect of their enterprise. However, embedded payments offer a solution that will prove ideal for businesses of all sizes. By integrating payments tailored to the needs of specific users within platforms where they already are, embedded payments make it possible to offer tailored suites of products, at the point of need, with zero friction to adopt. 

Embedded payments create incredible value for businesses of all sizes, no matter the sector in which they operate. Offering enterprises the ability to improve customer retention and LTV while also boosting attach rates without increasing customer acquisition costs makes them a no-brainier in an age of growing ecommerce. Furthermore, embedded payments offer greater pricing flexibility. Adopting embedded payments is also easier than ever since the entire user experience resides within the business platform itself and does not kick out to a different provider at the point of application. This is possible because a separate company does not own the base platform — an embedded payment sits within a platform that did not start as a payment, nor does it look like one at the surface. With these remarkable upsides, it’s easy to see why so many of the leaders in the financial sector and the world of IT are excited about embedded payments. 

Primary Challenges

Though embedded payments have enormous potential to reshape how businesses operate, there are still a few hurdles ahead of full integration for embedded payments, especially in B2B. According to a survey conducted by AFP, significant hurdles to using embedded payments include lagging customer and vendor adoption, the lack of a standard format for remittance information and minimal integration between electronic payment and accounting systems. In addition, buyers already have a range of solutions for purchasing goods and services, processing invoices, executing payments and reconciling transactions. Overcoming these barriers will require taking a comprehensive approach guided by a pragmatic assessment of the actual state of the market.

Keys to Success

These challenges may appear formidable at first glance, but there is a viable roadmap that 

can be followed to establish embedded payments and accelerate growth successfully. Because each business is different and will have varying needs, this approach will be dependent on several pre-existing platform capabilities, which can be viewed as prerequisites for the success of any push towards embedded payments.

    • Establishing a viable multi-rail network: Multi-Rail payment options are essential for both buyers and suppliers aiming to optimize the movement of funds and data in efficient payment flows around the globe. 
    • API store & guided onboarding: Application Programming Interface (API) stores are where collaboration and interaction between potential API consumers and API providers happen. A-la-carte API selection complete with sandboxes, test harnesses and self- certification tool kits allow for frictionless onboarding and greater user convenience. 
    • Coordinated payment orchestration and optimization: Sophisticated systems must be in place to enable the routing of payments based on payment rails or payer as well as payee requirements and preferences. 
    • Rich data exchanges: Businesses need to leverage the power of data existing in the business platform to offer a seamless, convenient and satisfying payment experience that better serves customers and meets their emerging needs. 
    • Real-time payment tracking: When businesses begin embedding solutions that allow them to accept/make payments seamlessly within their processes, it will be increasingly important to implement solutions that enable them to access the status of all active orders and payments instantly. This increases transparency and allows for better decision-making.  
    • End-to-end support and processing: The integration of embedded payments will increase the need for accurate portraits of cash flow. Businesses that begin implementing embedded payments will require clear visibility into all payment types for simple reconciliation and settlement.  

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The use of embedded payment solutions has the potential to revolutionize how businesses handle payments and will empower them to take a larger role in defining their operations on their own terms. But like any seismic shift, this transition will require adopting more than just new technologies – outlooks themselves must change. 

The advice shared above can serve as a great starting point, but it is essential to remember that every business is different, and there are no one-size-fits-all solutions. In addition to fine-tuning the above points to suit your organization, you may find that entirely new addition are required. However, the important thing to remember is that throughout this trial-and-error process, you are working towards a goal that will reshape how your firm operates in an increasingly dynamic market.

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