As consumer tech companies continue to make great strides over the last decade, infrastructural factors like access to technology, cheaper data, smartphone penetration and non-infrastructural factors like pandemic have further accelerated the digital adoption among general masses across industries. Digital payments continue to witness high growth across regions and instant payments have become a norm or a general expectation in the business cycle. After years of successful implementation of instant, digital payments, it is time to move to the next phase of change in the payments and financial services domain. Phase that focuses on wider reach, better customer experience, larger applicability, and an integrated payments ecosystem.
Experience Via Integration
With growing technology innovations across multiple industries, customer experience has become the backbone for growth and success for tech companies across domains. Seamless integrations that allow a cohesive customer journey ensures that a customer is able to complete a job with the least amount of friction and minimum touchpoints. In the world of commerce, it’s getting realised via smarter integrations, APIs, in-built services, or in-short, embedded finance. According to reports, embedded finance as an industry itself will cross the milestone of 7 trillion dollars in value in the next decade. This gives a good insight into the need and potential of the value embedded finance as a technology-service provides to the consumer and businesses.
Simply speaking, embedded finance is the ability to integrate and process financial services, by a non-financial business entity, in a digital business environment without involving additional third party into the process. Embedded finance can further be branched out into multiple sub-domains within the financial services industry like micro-lending, insurance, payments, etc.
- Embedded Payments : Ability to make payments for a service within an app without involving additional payment applications, performing steps, etc.
- Embedded Lending : Ability to access instant finance for purchase within the shopping app without any additional formalities.
- Embedded Insurance : Securing a product at the point of purchase via integrated insurance services.
Similarly, there are multiple financial products and services that are now getting integrated and brought closer to the end consumer at the point of sale itself, enhancing the overall customer journey.
Embedded Payments
Within the sub-domains of embedded finance, embedded payments have witnessed a rising demand across multiple businesses, primarily for the convenience it provides to the end consumer. In some ways, the synergies between business and payment technology via APIs have revolutionized the way consumers shop and business offer services. Consumers are continuously getting used to the single click payment and checkout experience with minimum third-party interference. These experiences can be achieved by a systematic partnership between businesses and technology providers who understand both the customer and the business needs.
Technology companies and financial service providers are at the forefront of catering to these needs. Technology companies today must enable businesses that are not in the financial services in providing the same customer experiences by building solutions that are easily integrated to the current business environment, are scalable and cost efficient and can be deployed for multiple businesses.
More than just payments
As one talks about embedded payments, there are multiple aspects that the technology provider needs to keep in mind from the point of view of customer. Right from the type of payment a customer would make, to the type of app the customer would use to make the purchase, to the type of device the customer would use to make the payment, technology providers need to provide for these variables to help businesses curate a seamless purchase journey for its customers.
Be it buying at a takeaway store and paying via a smartwatch or using a shopping app to get a credit and make payment via in-built BNPL option, a company has to ensure that it is able to cater to all the payment journeys for its customer and the technology provider needs to ensure that maximum journeys are getting catered to with the least amount of interferences.
It’s also because embedded payments today can provide more than just a payment solution to the business and the customer. Properly executed embedded payments solution has the ability to open additional gates of value creation for businesses with the amount of customer insight one gets from the data that the business now has access to.
By embedding innovative payments technology solutions, businesses can be much closer to the customer’s shopping wallet, enabling them to retain customers for a longer time, provide additional services and improve the business metrics per customer. In a competitive business environment, by facilitating embedded payment solutions and other financial services, companies are able to create a closed-loop ecosystem, like Apple, that helps them improve both the customer experience as well as customer stickiness.
Future of payments
The future of payments is embedded, Payments across businesses will be seamlessly integrated in the digital shopping journey. Businesses that can ensure a frictionless, single point, “invisible payment” experience to its experience will be the businesses that will see growth in future.
But to achieve that, developments at an infrastructure level also need to be facilitated. To enable a well woven digital payments journey, banks, businesses, and technology providers need to collaborate and build solutions that are catering to the needs of the last shopper, through a transparent regulatory mechanism that not only provides payment efficiency but also payment and data security, while removing the barriers to finance and access to technology to even the small and new players.
The challenge would always be to get multiple stakeholders across the shopping cycle come together and work in a synchronized manner to ensure that the cycle is complete without any leakages.
At FSS, we are building solutions that cater to this exact need. By providing a payments ecosystem that is backed by a strong, agile, and cloud native infrastructure, we are building technology solutions that will help bridge the gaps in payment cycle for businesses, while providing a single click, frictionless journey for the customer. From payments, to lending, to insurance and banking, we believe that every aspect of the financial services business in future will be embedded and will be offered micro-packages, customized to every buyer’s need. At FSS we are building solutions that can facilitate such micro-level offerings and can be easily integrated within the customer’s payments journey.
