The term “embedded payments” may sound complex, but it’s actually a really simple concept. It refers to the integration of payment products and processes into digital applications or websites to facilitate transactions.
Embedded payments are becoming increasingly popular in today’s digital world and understanding them can help businesses and consumers alike secure better payment experiences. In this article, we’ll look at the basics of embedded payments, including how they work and the advantages they offer.
The Role of Embedded Payments in the Embedded Finance Movement
Embedded payments are part of the foundation of the embedded finance movement. The main focus is non-financial companies offering financial products and services. A non-financial company could be an e-commerce merchant offering goods and services, a restaurant app with 1-click payment capabilities, or a branded credit card, among other things.
The goal of embedded finance is to make your customer’s life easier by offering them payment options that can be easily integrated into their shopping or sign-up experience. Embedded payments are being used for everything from small coffee shop purchases to larger transactions that make loans, payment plans, or insurance payments necessary at the time of purchase.
In other words, embedded payments offer consumers the ability to pay for their purchases in a variety of ways, without ever having to go to the bank and deal with payment systems that don’t easily mesh with existing merchants’ platforms.
Though embedded payments may seem like a new term, the concept is known by several different names: embedded banking, banking as a service, and embedded finance are some of the most popular terms used.
Why Embedded Payments Are Gaining Popularity: Convenience
One-click transactions, like on Amazon and other consumer sites and apps, are no longer considered a luxury – they are the standard. Customers want to pay for their items or services securely, but they don’t want to have to jump through a bunch of hoops to do it. Shoppers want quick, easy-to-add payment options that don’t have to be filled in every time they make a purchase.
Using embedded payments to offer one-click options that save your customers’ credit and debit information, or even their bank account details is becoming more and more popular. And, because many of these options utilize ACH processing technology rather than credit or debit cards, merchants and customers alike are preferring them because ACH doesn’t have added fees.
Embedded Lending Is Quicker and Easier
We mentioned earlier in this article that many merchants are now offering payment plans and subscription packages within their payment strategies. This helps consumers because, previously, they would have had to put those large purchases on a credit card (that has high interest rates) or go through the lengthy process of securing a traditional loan.
With embedded lending and payments, you can offer your customers more financing options within your own payment platforms, rather than waiting for them to (hopefully) be approved for a loan, or choosing not to purchase with you simply because they don’t want to spend all that time creating new accounts, getting approved for the loans, and setting everything up before they can even come back to you with the funds for their transactions.
Because of the ease and convenience of embedded payments, the market for it is expected to grow 10 times in value from 2020 to 2025.
Embedded Payments Offer Fewer Hidden Fees and Complicated Account Openings
The other thing that makes embedded payments so nice for you and your customers is transparency. Consumers today are looking for convenient, trustworthy transactions and shopping solutions.
This creates a great CX strategy opportunity because you can offer digital payment processing and financing options all in one place without taking your customers out of their journey through a transaction.
The easiest ways to do this are to keep your customers’ information in a loyalty app or online profile to which they can log in. This allows them to bypass the lengthy traditional checkout process.
Embedding your payment processing tools into your website, app, and/or shopping cart experience is the new standard for consumers.
Fewer Abandoned Carts and More Impulse Purchases
The easier you make your transaction process for your customers, the more they will buy and the less time they’ll think about it.
Often, your business will see higher abandoned cart rates when your payment and transaction processes are clunky or drawn out. But there are fewer abandoned cart issues if you can streamline your payment processing in such a way that it doesn’t breed frustration or waste time for those customers who are trying to check out.
And because the process is so easy, you’ll not only see a decrease in abandoned carts, but you’ll also see a rise in impulse purchases.
Big platforms and social media sites are thriving on these impulse purchases. A customer can go from a helpful review or video of your product or service and click through to your site, add the item to their cart, and check out all in less than 5 minutes with the correct payments service. This type of streamlined impulse buying is the same thing that drives big-name stores like Kroger and other retailers to make you walk through a maze of small product shelves before you get to the checkout kiosk.
When your prospects can see your product or service working and then immediately navigate to that item on your website and quickly checkout, you have created a near-frictionless transaction with embedded payments.
ReliaFund’s Integrated Payment Solutions Help Your Business Make Payments Easy
Convenience is one of the biggest drivers for your customer base, regardless of what industry you operate within. And when you can keep your payments organized and versatile, you can meet more of your customers where they want to be when it comes to payment types.
ReliaFund’s integrated payment processing platform has many flexible and customizable options, including ACH processing.
You can send and receive payments automatically, and our ACH software allows you to process checks using just a bank routing and checking account number.