embedded payment

What are embedded payments?

Embedded Payments: What you need to know

Embedded Payments come from new integrated services like Embedded Finances (including Embedded Insurance, Embedded Lending, & Embedded Payments). It involves understanding user behavior and experience, seamlessly integrating payment methods into relevant processes. From the user’s perspective, payment is invisible because they don’t have to think about it; it’s just a part of their interaction. With the use of data analytics, adjustments can be made dynamically based on each user’s behavior and relevant financial parameters.

Embedded Payments represent a Customer Experience (CX) strategy, seamlessly integrating digital payments or financing processes into shopping behaviors, rather than relying on third-party payment providers or banking services.

This concept is based on the Payments 4.X generational shift in payments proposed by the World Payment Report (WPR), which was published by Capgemini in the post-pandemic era. In simple terms, Embedded Payments encompass several features: big data applications, user experience, and immersive and deep integration.

financial services analysis by Capgemini

Image source: Capgemini Financial Services Analysis, 2021

 

Nowadays, we are familiar with global companies such as Fiserv, FIS, Global Payments, and local ones like ECPay, ACHTaiwan, TapPay, etc. These companies revolve around Payments 2.0 or Payment 3.0, aiming to make consumer payments fast and convenient.

In practice, however, when a consumer makes a payment or a merchant begins receiving payments, a payment point (Pay page, Link, QR, or even a physical card machine) needs to be generated to facilitate the final stage of the payment process. This approach only facilitates “payment acceleration”  but lacks experience optimization related to the generation of big data.

Currently, global promotion and application of Embedded Payments can be seen in companies like Stripe, Paypal, Square, and Zelle. For brand stores, Starbucks and Uber serve as good benchmarks.

Furthermore, there is an even larger market – B2B Payments. Buyers and suppliers can actually get more electronic payment options than ever, including Automated Clearing House (ACH), Real-Time Payments (RTP), cards, wire transfers, and cross-border payments. However, the integration and experience issues in B2B Payments have always been significant challenges. In terms of architecture, it can only be referred to as Payment 1.0 or Payment 2.0.

Embedded Payments are just one of the innovative ways of paying. In many more scenarios, providing consumers with a more immersive process and optimized experience will be the direction for future Solution Providers, somehow in the realm of Fintech companies.

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