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Embedded payments are a way to buy things without leaving the app or website you're using. It's like having a special payment feature built right into the app or website. So when you want to buy something, you don't have to go to another place to make the payment. You can do it right there with just a few clicks. It's convenient because you don't have to switch between different websites or apps to complete your purchase. It makes buying things easier and faster!
Ever seen a ‘One-Click Buy’ button on an online store? That’s an embedded payment system.
With cash being used less frequently across the globe and digital payments booming, embedded payments are an important part of a new wave of financial technology that is changing the way people buy. Customers now expect a seamless, intuitive, and fast customer experience whenever they use software.
By creating a frictionless payment process, embedded payments offer consumers a more convenient, faster way to purchase. On the side of businesses, they can boost customer satisfaction and significantly improve conversion rates. Additionally, with the right provider, embedded payments are highly secure for both businesses and their customers.
Below, we’ll take a deeper look at embedded payments, what they are, how they work, and why they can be so beneficial for businesses and customers alike. We'll also explore how businesses are leveraging the technology to enhance user experience, streamline operations, and even increase revenue.
A brief history of embedded payments
The journey to the common use of embedded finance has been truly transformative for businesses. We may all take this kind of tech for granted now—largely because it’s so intuitive— but just a few short years ago, this kind of convenience and secure integration was almost unimaginable.
It wasn’t so long ago that we relied solely on cash and checks to pay for everything. The next big step was the credit card and debit card, starting with physical payments, then technology started creeping in telephone payments, which carriers us right through to the 90s and early 2,000s. Eventually, with the advent of the digital age, more and more businesses embraced the use of credit cards for online payments, largely eliminating the need for manual monitoring and middlemen, improving security in many ways, and massively boosting convenience for the consumer.
Embedded payments represent another great leap in payment technology, taking digital payments to another level of convenience. Now, customers can simply click one button, and the system, which is linked to their card, bank account, or digital wallet, will process the purchase near-instantaneously, expanding the range of payment options for consumers.
How do embedded payments work?
Embedded payments are a way to make buying things easier when using a computer or a phone. Instead of having to go to a different website or store to make a purchase, you can do it right where you are. For example, imagine you are using an app on your phone to order groceries. Instead of leaving the app and going to a different website to pay for your groceries, you can pay for them right there in the app. It's like having a special payment machine built into the app. You just enter your payment information, like your credit card details, and the app takes care of the rest. It keeps everything secure and makes the process simpler, so you don't have to worry about going to different places to make your payments.
Examples of embedded payment systems in action
Many of the world’s biggest brands have fully embraced embedded payments, and the technology has even been a fundamental part of their success in many cases.
For example, ride-sharing apps—a development that revolutionised transport for millions of people globally—feature embedded payment technology at their core, and it is an integral part of their business model.
Online retail is another great example of an industry that has not only embraced but has been significantly shaped by the use of embedded payment technology. It has never been easier for shoppers to search, browse, and make purchases, and embedded payments make it all possible.
Thinking beyond these examples, embedded payments can benefit businesses in any industry, as they make the purchase—a fundamental part of any business—simpler and more convenient.
Benefits of using embedded payments
The benefits of embedded payments are not just theoretical, they’re proven in practice by countless organisations and millions of customers worldwide, every day. The technology is not only a cost-saving or revenue-boosting measure for businesses but actually tangibly improves the customer experience as well, making it a win-win for both sides of the purchase.
Let’s break down some of the key benefits for both businesses and consumers.
Benefits for businesses
1. Streamlining operations
As a business, using embedded payments in your digital platforms can go a long way to streamlining internal operations by reducing the amount of work needed for payment processing. Everything is integrated into a single platform, improving efficiency and removing layers of complexity. This can help to free up internal resources that can be deployed elsewhere in the business. Additionally, the streamlined, less complex process can reduce opportunities for human error.
2. Enhanced customer experience
Embedded payments can contribute to creating an overall more seamless, intuitive, and satisfying customer experience. When the payment process is integrated with a business platform, customers don’t need to leave the app or be redirected. This reduces barriers, can improve customer satisfaction, and strengthen the relationship between the customer and the brand. It also allows businesses to customise the checkout experience based on customers' preferences or purchasing behaviour, further enhancing the user experience and encouraging customer loyalty and brand loyalty.
3. Increase conversion opportunities
By incorporating embedded payments, businesses and marketplaces can create additional opportunities to convert customers and build new revenue streams. Firstly, embedded payments remove barriers to purchase, meaning customers are less likely to abandon their carts as a result of complex or lengthy checkout processes. Abandoned carts are common for any retailer, and any way to improve the situation can directly translate to increased revenues.
Secondly, as the customer never leaves the platform, businesses can upsell or cross-sell products during the checkout process, providing personalised recommendations based on customer data.
Benefits for customers
1. Quick and convenient
A major benefit for customers using embedded payments is the convenience and speed they offer. Payments can be completed almost instantaneously, within the app, website, or platform they are using. This eliminates any need to manually and repeatedly enter lengthy payment details, wait for transactions to process, or switch between different platforms. The speed and convenience offered can improve the customer experience and can be integrated across all customer touchpoints.
Two of the most important considerations for customers making any kind of purchase are speed and convenience, so businesses that offer these things can become more attractive to consumers.
2. Seamless transactions
They reduce the number of steps between browsing and purchasing, making purchasing more frictionless. Beyond just making the process faster, it is simpler and more conducive to casual browsing. Customers don’t need to expend any mental energy on a time-consuming checkout process, which can contribute to an improved overall customer experience and a higher chance of repeat business.
3. Improved security
Modern, trustworthy embedded payment providers prioritise security by building in a range of robust security features. These may include various levels of encryption and other important safeguards to protect user data and prevent fraudulent activity.
Additionally, embedding payment systems keeps the entire payment process contained within a single platform. This can improve security by reducing the need for third-party platforms and redirected data, thereby lowering the chance of data being compromised.
Digital fraud is an ongoing and growing concern for many consumers, so these security benefits can give customers peace of mind,
Should your business use embedded payments?
Short answer: yes.
Long answer: yes.
For many modern businesses operating in a digital age, embedded payment functionality can enhance the customer experience and improve conversion rates.
Look at some of the biggest retailers on the planet, such as Amazon, and innovators like Uber and other ride-sharing services. They were early adopters of these systems, and they’ve had a significant positive impact on their growth, usability, and success.
Payments made simple
Embedded payments are an important part of many businesses’ digital transformations and evolutions, across a wide variety of industries, including retail & e-commerce, service sectors, financial services, healthcare, telecommunications, and transportation. By streamlining operations, enhancing the customer experience, and increasing conversion opportunities, embedded payments offer a range of benefits. These benefits can give businesses an edge and help them provide a more convenient, secure, and successful service.
With any technological advancement, businesses that choose to invest in transformative tech can reap the greatest benefits. In the case of embedded payment solutions, this is illustrated by the staggering success of many of the businesses that integrated these payment systems into their operations.
Looking ahead, embedded payments are likely to become even more common as customers increasingly prioritise convenience, speed, and intuitiveness from the products and services they buy—all of which can be achieved with the use of embedded payment systems.
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