Embedded Payments: A Guide

Whether shopping or just surfing, everyone is in a hurry online.

An ‘online second‘ is even shorter than a ‘New York minute‘.

For example, one study found that websites with 1-second loading times have 3x higher conversion rates than those with 5-second ones (and 10x higher than those with 10-second ones).

Payments are a significant part of this picture. Seconds and even fractions of a second matter when it comes to payment acceptance.

This is why embedded payments are essential if you want your business to thrive online.

What are embedded payments?

Embedded payments are online-based payment methods that – most of the time* – don’t require more than one-step verification by the buyer. They should be efficient and unobtrusive.

The most common example is one-click payment capability on eCommerce stores, i.e., ‘Buy Now’ buttons that complete a payment.

The opposite of embedded payment methods are methods requiring detailed forms to be filled out and/or redirections to separate pages.

*Exceptions to one-step verification occasionally occur. For example, 3D Secure (3DS) and 3DS 2.0 sometimes ask for additional verification, such as one-time passwords or biometric authentication, etc.

Contactless vs embedded payments

The difference between embedded and contactless payments is that the former refers to a physical, in-store process, whereas the latter refers to an online experience.

Embedded payments can be viewed as the online equivalent of contactless payments in terms of speed and customer convenience.

What are frictionless payments?

Frictionless payments refers to contactless or embedded payments that provide a simple and easy-to-complete payment experience.

All embedded payments should aim to be frictionless. However, not all will achieve this.

For example, if changing shipping addresses at the online checkout isn’t easy, then payment services are embedded – but they are not frictionless for all users.

Benefits of embedded payments

There are many benefits of embedded payments. In addition to improved customer experience, there are clear and tangible benefits of embedded payments for merchants.

1. Increased conversion rates

Embedded payment solutions make buying from you less time consuming. This reduces the chances your customers will become frustrated, distracted or lose interest in a purchase.

Unlike in-store shopping, online shoppers are only ever seconds away from your competitors. Like good user experience more broadly, embedded payments reduce this risk of sudden defection.

2. Increased customer loyalty

Embedded payments can increase brand loyalty in a similar way to how they increase conversion rates – by contributing to improved customer experience.

Some clients have more than one preferred payment method. Providing all of these embedded payment solutions will significantly contribute towards retaining their custom.

3. Better analytics

Embedded payments can provide transaction data and payment information that is useful for improving your understanding of customer behavior.

This in turn can help your marketing strategy. You can prioritize particular products, create personalized offers or marketing campaigns and carry out other activities that further increase sales.

4. Brand perception & trust

The presence of embedded payments can contribute towards building a positive perception of your brand. It sends a signal about your businesses’ capabilities and forward-thinking attitude .

It also reassures customers and potential customers. Many may trust and associate embedded financial services with payment security. All of these embedded payments considerations go towards promoting brand loyalty.

Choosing the right embedded payments provider

There are a range of potential third-party providers such as fintech companies for embedded payments solutions.

Finding the right one for your business can make a big difference to what kind of embedded payments you provide and how well they are implemented and maintained.

Embedded payments work not just as business tools but as a strategic asset, too. So, it’s important to consider the value-added services your payments provider brings.

This can include everything from helping you gain deeper insights on your industry and payment trends to simply being available for customer support when needed.

Security for embedded payments

Financial institutions need to adhere to industry standards on transaction security and the management of sensitive data. The embedded payments industry and fintech companies are no exception to this.

Bad actors are consistently looking to figure out flaws in the movement of money through payment channels. You need to be mindful of issues around this, including how you contact your customers, validate their transactions, etc.

The importance of point of sale (POS) integration

Integrated POS solutions help keep your business in-sync and efficient. And website integration with your POS systemcan be a game-changing part of this. 

But getting it right is not always a certainty…

Multiple different types of software might need to be integrated. Done well, it eliminates manual data entry, reduces human error and speeds up transaction processing.

It also allows for real-time financial data visibility, improved inventory management and reconciliation. This can help free up your employees’ time and energy.

Other embedded solutions

Embedded payments can be seen as part of a wider suite of embedded solutions. There are many variations and additional features available. The embedded finance market is evolving at a rapid pace.

Collectively, these integrated and synchronised embedded offerings can create a seamless customer experience and improve user satisfaction. 

Internally, it should also keep your finance manager happy with the additional revenues expected.

1. Embedded finance

Offering embedded finance solutions has similar benefits to embedded payments. It involves integrating lending services directly into non-financial businesses via APIs. This is also known as embedded lending.

This enhances user experience by simplifying transactions within apps or online channels. In turn, this can: 

• Increase customer’s spend
• Improve sign-up and loyalty 
• Boost brand reputation and competitiveness

It also allows improved data collection and analytics, offering real-time updates, detailed reports and simplified consumer feedback. These inform future strategies by enabling businesses to better understand customer pain points.

How do you offer embedded financing options?

To offer financing to your customers you can find a payments and software provider.

Most payment providers will offer white-label services with payment processing capabilities. This will enable your business to accept payments through multiple channels.

2. Embedded insurance

Embedded insurance is the integration of insurance products into non-insurance platforms or services.

This strategy, which is often developed in collaboration with insurance companies, allows companies to offer contextually relevant policies at the point of sale. It enhances convenience and experience for platform users.

3. Embedded banking services

Embedded banking is a business model where core banking services are integrated seamlessly into non-financial platforms.

These include services such as account creation, digital wallets to hold funds, fund transfers and card issuing.

B2B embedded payments and embedded finance

The business-to-business (B2B) field is different to the business-to-consumer (B2C) one in some important ways.

As a result, embedding most B2B payment methods and solutions for B2B finance is considerably more complex than for B2C equivalents.

For B2B buyers, the process is likely to involve multiple stakeholders, including the purchaser, budget owner, procurement group and accounts payable team.

Complexity is further increased by procedural and technological integrations. These are needed for dealing with 30-, 60- or even 90- day net terms and accounts receivable processes.

Despite the added specialized processes and expertise required, B2B embedded payments offer substantial benefits. These are similar to B2C solutions, albeit often at a larger scale. These include:

• Increased buying ease and convenience
• Meeting stakeholders’ expectations
• Fostering stickier customer relationships
• Higher share of wallet
• Improved lifetime customer values
• Optimized cashflow management and reduced day sales outstanding (DSO)

TreviPay’s B2B embedded payments solutions

Today, embedded payments is about more than just enabling purchases with a few clicks. The entire B2B buyers’ journey needs to be considered.

At TeviPay we offer specialist B2B payment solutions, including embedded payments. This enables you – whether you are an SMB or enterprise – to offer invoicing options at checkout with real-time authorization across all sales channels. 

By using trade credit, your buyers are able to purchase more without using their own valuable cashflow.

Our solution ensures brand consistency throughout the user journey and facilitates omnichannel purchases via eCommerce, marketplace, offline and in-store options.

Conclusion

Embedded payments are efficient, unobtrusive online payment methods that typically require only one-step verification from the buyer. They are the online equivalent of contactless payments.

Embedded payments aim to be ‘frictionless’. This means they offer buyers a simple and easy-to-complete payment experience.

For sellers, there are many benefits of embedding payments into your web site including:

• Increased conversion rates
• Customer loyalty
• Improved analytics
• Enhanced brand perception and trust

Embedded payments should be seen as a strategic initiative that’s integrated with the wider customer experience. Other embedded solutions, including embedded finance, insurance and banking services, are all similarly aimed at improving user experience and satisfaction.

Choosing the right third-party payments provider will not only help ensure you achieve optimal security and most efficient POS integration. It will also help you make embedded payments work in a way that best suits your industry and customers.

Read our whitepaper on embedded payments here.