In life, and in commerce, it is often the little things that matter most. And as digitization changes the world, those little things are getting both smaller and more important — particularly when it comes to payments.
This, as leveraging embedded finance is emerging as a key pillar of payments innovation strategies for merchants looking to turn the benefits of a differentiated, end-to-end customer experience into a revenue driver.
By embedding financial services directly into their offerings, businesses and merchants can seamlessly integrate payment capabilities, lending solutions and other financial products into key touchpoints from first contact to final purchase.
The benefit comes from the fact that the merchant journey is full of micro moments that influence and sway the ultimate purchase decision of their customers but are inherently unique to each individual transaction pathway. Embedded finance solutions are the furthest thing from one size fits all, and that is what enables them to be so powerful and effective.
By adapting offerings to end-user payment preferences, including personalizations around payment currency, payment method and other factors, merchants can turn payments — which may have previously been viewed as a cost center, or something to be managed for — into an opportunity to generate more revenue and establish repeat business.
After all, convenience and personalization have been instrumental in driving payments innovation, and their impact when driving sustainable business results can’t be overstated.
Read more: Retailers’ Embedded Finance Bets Pay Off
Owning the Payment Process Can Be a Differentiator for Merchants
Providing a diverse range of payment methods via embedded solutions can help businesses stand out in an increasingly crowded and competitive landscape.
As Tom Randklev, global head of product at CellPoint Digital, told PYMNTS, “There is a lot of success in the SMB market using [embedded finance] to satisfy their customers and present this as an innovation … the whole ecosystem is inherently managed, which creates efficiencies and a delightful customer experience.”
Capabilities like digital wallets, account-to-account (A2A) bank payments and post-and-pre-purchase financing solutions like buy now, pay later (BNPL) are all ways to provide future-fit benefits that drive conversion and inspire repeat purchases.
“Integrated payments have helped increase operational efficiencies, have reduced costs — and have changed the narrative for merchants,” Gigi Beyene, senior vice president of integrated payments at Nuvei, told PYMNTS
Additionally, by eliminating the need for traditional intermediaries, embedded finance solutions enable merchants and businesses to empower their customers make purchases without leaving a website or other digital channel, or even a mobile app.
This attractively positions the merchant relative to peer businesses whose payment solutions may entail a fork in the road, where the end user needs to leave the commerce experience to perform a separate task, such as entering in their payment details. Against the backdrop of contemporary behavioral expectations, these little frictions can add up to lost sales.
“Any financial product or service that has traditionally involved a departure from the user experience, or an additional set of activities, is there for the taking,” Luke Latham, general manager of Australia and New Zealand at Airwallex, told PYMNTS.
See also: How PayFacs Use Payments to Reshape the Digital Economy
The Business Impact of Payments Innovation
Every business runs on payments, and embedded finance empowers merchants to optimize their operations and streamline financial processes.
Research in “The Embedded Finance Ecosystem: Logistics and Wholesale Trade Edition,” a PYMNTS Intelligence and Carat from Fiserv collaboration, finds that a majority of marketplaces (57%) are “highly interested” in further innovating their existing digital wallet offerings.
And by consolidating payment processing, reconciliation, and reporting within a single platform, merchants can simplify back-office operations and reduce administrative overhead. This not only improves efficiency but also enhances visibility into financial performance, enabling merchants to make data-driven decisions that drive business growth.
Whether it’s enabling one-click checkout options, offering flexible financing solutions, or providing personalized recommendations based on transaction history, embedded finance allows merchants to deliver a tailored experience that resonates with their target audience.
“We are seeing an erosion of physical accounts into virtual ones that not only reduce the total cost of ownership … but also allow the unleashing of data and analytics that help personalize pricing, credit decision and marketing offers, and all kinds of recommendations,” Michael Haney, head of product strategy at Galileo Financial Technologies, told PYMNTS.
