Future Of Embedded Payments And Its Importance

The concept of Uber and Ola is so familiar today that maybe we somehow forget how brilliant the idea of booking and paying for a cab from your mobile was at the beginning. This monumental shift to a seamless cab-driving experience paved the way for an amazing experience for the always-on-the-go people, transforming the entire industry, much like innovative credit card payment solutions did to help businesses easily accept credit card payments. Today, there are countless examples of embedded payments. No wonder, the embedded finance market is expected to generate US$440 billion in annual revenue by 2030.

What is Embedded Finance?

Embedded finance involves the merging of a non-financial service provider such as a utility or service company with a financial service such as lending, insurance, or payment processing. It helps organizations to make payments to people remotely, get paid remotely, and avoid handling actual paper checks or visiting a physical location to cash a check.

This may come as a surprise to some but the concept of embedded financial services has been around for a while, such as payment plans for high-priced items, car rental insurance, and airline credit cards. The best thing about effective embedded finance solutions is that they meet the customer where they are with their preferred financial option, whether it be a payment program, loan, insurance plan, or more.

For instance, a credit card processing powered by embedded finances can help in seamless and instant connecting and saving a payment method for later use with just a click of one button. This solves the common pain point of taking out a credit card and entering the card details on the checkout page.

Embedded payment options can also provide consumers the choice to pay directly via their bank accounts instead of a credit card, saving merchants on fees. On the other hand, embedded lending can open additional revenue streams for businesses while enhancing the overall buyer experience. For instance, customers can choose the “Buy now, pay later” (BNPL) option during the online checkout process to split the payment up over time.

Today, banks and credit unions of varying sizes are noticing the potential of extending embedded services via third parties. Embedded finance helps banks develop new revenue sources, broaden their customer base, and stay relevant as big tech and fintech provide high-concept apps to consumers. Furthermore, embedded finance helps banks explore new markets and growth opportunities while minimizing serving and acquisition costs. It also helps them monetize exponentially without raising costs to their customers which, in turn, further helps them assist more and better with their core offerings.

Some of the biggest reasons behind the unprecedented growth of the embedded finance market are SME (small and medium-sized enterprises) lending, insurance, and Unified Payments Interface (UPI). On the other hand, some of the key factors that drive the growth of the embedded finance market are increased consumer and SME lending, growing digitization in multiple spaces, and the acceptance of UPI payments. The COVID-19 pandemic that significantly pushed the cashless economy was also a big reason behind the increased consumption of embedded finance.

Today, more and more businesses are integrating embedded finance solutions with out-of-the-box technologies such as the Internet of Things (IoT), machine learning, and artificial intelligence. This includes machine learning getting leveraged for embedded investment programs, the integration of AI into lending platforms, and the integration of IoT with embedded payment options.

All these features continuously transform the market trend while enhancing the end-user experience. Moreover, the exponential surge in the use of cloud-based platforms to smoothen up multiple complex operations is also encouraging different market sectors to adopt the concept of embedded financial practices to fuel the sales and popularity of embedded financial services.

One of the biggest reasons why the concept of embedded payments has emerged as an integral aspect or cornerstone of the FinTech revolution is because it astoundingly redefines the way how financial transactions are conducted. Their significance lies in their unique potential and ability to integrate payment processing seamlessly into different software apps and platforms, streamlining transactions and enhancing user experience. This out-of-the-box integration has not only made financial transactions more user-friendly and efficient, but it has also opened up new growth and success opportunities for innovations in the segment of the financial sector.

Embedded payments can also help your business gain invaluable insights into the purchasing habits and preferences of your existing and potential customers. This can help you create more personalized, customer-centric, and user-friendly marketing content that highlights the unique selling proposition of your products and services and how they solve the specific pain points and challenges of your customers.

Conclusion

The demand for embedded finance is likely to grow exponentially over time because it offers a unique opportunity to enhance financial access and customer experiences while offering risk-reduction and cost-reduction advantages to businesses throughout the value chain. While some businesses might hesitate and possibly miss out on some opportunities, others will be bold enough to take the lead and grow by leaps and bounds.

If you want to reap the innumerable benefits of embedded finance, you can reach out to us at WebPays. Our team can help your customers benefit tremendously from seamless and contextual experiences while unlocking new use cases. It also helps them leverage proprietary data to enhance financial access while minimizing costs. WebPays can also help you deliver consistently exceptional customer experiences throughout the buyer or customer journey while helping your business with payment processing in a secure environment. You can explore our innovative credit card payment solution to accept credit card payments securely, delivering frictionless customer experiences and enhancing brand loyalty.

Partnering with a reputed provider of credit card payment such as WebPays can help you seamlessly and easily integrate embedded finance into your pre-existing solution to accept credit card payments. Whether you want to incorporate a BNPL, Build Your Own Card (BYOC), or choose something else to deliver consistently exceptional and memorable customer experiences, WebPays can help you do just that.