As the payments ecosystem continues to evolve at a blistering pace, “embedded payments” have quickly become a norm and a necessity in the world of cutting-edge tech. But what is embedded payments functionality and how does it benefit a business? Here’s a closer look.
What Is Embedded Payments?
Instead of being a separate tool, embedded payments is a payment processing functionality included within a software product. Incorporating embedded payments into existing offerings allows enterprises to wield fine-tuned control over their payment process. This can help businesses that are trying to take advantage of economies of scale or operating on razor-thin margins.
An embedded payment model is especially popular among enterprise companies fielding large-scale products. Such businesses benefit from having payments “built-in” natively rather than “ bolted-on” or requiring third-party services. Embedded payments help businesses reduce the cost and bloat associated with these third-party services. They also streamline the buying process for customers, enhancing their overall experience.
By becoming a payment facilitator and incorporate payments directly into their offerings, software and SaaS companies can enjoy all the benefits of a native payment system without confusing paper trails. Such benefits can be extremely appealing to businesses hoping to optimize their payment processes.
5 Benefits of Embedded Payments
Here are five specific benefits that embedded payments bring.
1. Create New Revenue Streams By Monetizing Payments
Software companies seeking to diversify their revenue streams can monetize their payment process. By tapping into the payment fee that is charged to their merchants, they can add a small but significant share of stable revenue to their books.
Embedded payments by services are ideal for such a scenario. They allow you to add processing fees or enter into revenue-sharing agreements.
Using such payment facilitation model to monetize payments can make a non-trivial difference to a business’s success over the long term. With the incredible ease of use of modern embedded payment solutions, such services are increasingly popular.
2. Offer Additional Value-Added Services
Payment processing has been the most popular implementation of the embedded-services model, but it’s not the only use case. Most payment facilitators today provide a range of additional value-added services that allow a business to diversify its offerings and expand into new markets at the click of a button.
Credit, insurance, and structured payments are all value-added services enabled by these platforms. Leading embedded payment platforms are now also incorporating investments and personalized account services into their offerings. Taking advantage of such services can help businesses raise their profile and expand their customer base.
Adding various value-added services represents a golden opportunity for businesses to expand their platform and maintain market relevance. Embedded payments thus fill a much-needed gap in the market by making this process completely painless.
3. Quickly Onboard New Merchants
Using an embedded payments approach allows software companies to onboard merchants extremely quickly, further improving their metrics. Payment facilitation technology enables flexible infrastructure and greater reach. This allows you to quickly underwrite and onboard new merchants to your platform without going through the grueling process.
Payment facilitators have the underwriting and onboarding process down to a science. This allows them to improve the speed of processes — such as onboarding — far better than traditional payment processors could.
4. Increase Your Business Valuation
Embedded payments in your platform can also raise your business valuation. It allows your company to take advantage of market inefficiencies to gain an advantage, which naturally will likely raise your valuation.
For enterprise-grade companies, embedded payments can be the difference between a happy customer and one leaving in favor of a more integrated product. Because embedded payments contribute to a good user experience, this valuable feature can convert visitors to your website, leading to repeat business.
5. Improve the Buyer Experience
By shifting to an embedded payment model, you can reduce the number of “bolted-on” payment systems that your business relies on, improving their overall experience.
In the internet age, products compete based on small, crucial differences. Providing the buyer with a good experience is more important than ever. Letting the user pay on your platform itself provides a simple, streamlined experience. Doing away with the jarring experience of moving to a different page with a different UI can go a long way.
With the wide variety of benefits afforded by embedded payment services, don’t hesitate to consider partnering with a payment facilitation provider for your business. In an increasingly integrated internet, embedded is the way to go.