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What are Embedded Payments, and Why Do They

Topics: Finance

The massive shift to digital business in recent times is accelerating the implementation of fintech payments solutions in B2C and B2B companies. As businesses transition their sales to websites and apps, the use of embedded payments has become the means of creating customer experiences that build brand loyalty and drive repeat business. In this article you’ll learn what embedded payments are, and why it is must-have technology for all merchants in the modern business environment.

What are Embedded Payments?

Embedded payments enable your customers to skip the usual checkout process and pay with a single click directly on your site or app. Depending on who you speak with, embedded payments may be described as an e-commerce operation or a CX strategy. Either way, it highlights the shift in e-commerce toward faster, effortless purchasing experiences for customers.

Embedded payment example

Amazon paved the way in embedded payments with its “Buy Now” express purchase option. Amazon stores customers’ credit card or bank account details as well as a shipping address. When customers select “Buy Now” right on an Amazon product page, the global retailer automatically uses the payment method and shipping address – all customers need to do is confirm they are correct. The entire transaction takes just a few seconds. Uber, GrubHub and other companies have followed Amazon’s lead by integrating “place order” and “pay” in a single embedded payments function.

What is Embedded Banking?

Retailers, marketplaces and other non-financial services companies have started to offer traditional banking services within their customer loyalty apps or websites in a strategy known as embedded banking. For example, Walgreens now offers a credit card linked to the myWalgreens reward app. Customers use it just like any credit card, but they also gain access to members-only Walgreens sales and cash rewards and more streamlined checkouts. Together, extra rewards and the ease of the embedding banking experience can increase customer loyalty and buying to levels you couldn’t achieve with rewards programs alone.

Apruve Embedded Payments Hero ImageWhat is Embedded Finance?

Embedded payments and embedded banking fall within the umbrella category of embedded finance. Embedded finance includes a wider range of financial services such as lending and insurance that are embedded in a non-financial services company’s website or app. Use of embedded finance allows you to become a trusted, all-inclusive solution for your customers.in you.

Why are Embedded Payments Important?

Embedded payments represents a vital customer retention solution in a time when companies are trying to make up for large losses in customer loyalty and revenue during the pandemic. According to Omnicom Media Group, consumer brand loyalty dropped sixteen percentage points to 49%  in the U.S. within the first nine months of the economic shutdowns in 2021. 

In B2B markets, companies are working to avoid a similar decrease in customer loyalty by responding to changes in buyer needs and preferences. Embedded payments can help them strengthen buyer loyalty and increase order frequency and volume.   

Embedded Payments Benefits Supplier-Buyer Relationships

Embedded payments changes the nature of supplier-buyer relationships. With transaction details handled via embedded payments, your conversations can center on better solutions for your buyers’ unique needs. In addition, the ease of the established relationship makes it likely that buyers will turn to you, their trusted business partner, first for new products or to expand supply volume. 

For small-medium sized businesses (SMB), embedded payments delivers alternative access to loans, and greater flexibility in securing financial services which larger, more traditional financial institutions are sometimes unwilling to provide. Embedded payments can also help SMBs automate processes to increase cash flow and decrease costs. 

Embedded Payments and eCommerce Success

As more B2C companies integrate embedded payments, consumer expectations for a satisfying purchase experience have escalated. Conventional digital checkouts that require customers to enter large amounts of information and complete multiple steps to make a purchase can’t compete with the simplicity, ease and convenience of embedded payment models.

B2B buyers’ expectations have also evolved. Integrating embedded payments through a platform like Apruve enables you to streamline payment options and offer extended terms right from checkout. Your customers can pre-qualify for credit and onboard almost instantaneously. They can also access the entire relationship online, including setting up autopay and track invoices from the buyer portal. B2B embedded payments platforms also have B2B-specific features, such as large credit limits, global trade capabilities, and purchasing team access that make purchasing easier and less time-consuming for your customers.

Embedded Payments, BNPL and POS Lending

Klarna fintech payments platform image

With fintech payments platforms such as Klarna, B2C companies give customers wider choice in embedded payments options such as buy-now-pay-later (BNPL) and point-of-service (POS). Customers can take advantage of interest-free loans integrated with their purchase to stretch their payments out over time. The same is true in B2B markets, where embedded finance platforms offer buyers similar options such as BNPL or net terms.

How Embedded Payments Build Brand Loyalty

Brand loyalty equates to gold in digital business because it drives customer retention and higher profitability. Embedded payments fuel brand loyalty through an enhanced CX, which leads to:  

 

  • Cost Effectiveness and Time Savings
    Embedded payments reduce A/R team workloads through intelligent automation. With this digital technology, B2C and B2B companies reduce fixed costs by up to 50%, and earn higher profit margins on business from customers using an embedded payments option. In addition, solutions like Apruve’s payment platform reduce Days Sales Outstanding (DSO) to one, and eliminate all collections work related to customers using embedded payments.
  • Increased Conversion Rate
    The ease of embedded payments purchases and the fact that transactions are essentially invisible to the customer reduce barriers to buying. Customers are more likely to make on-the-spot decisions, which means fewer abandoned carts and higher conversion rates. 

Generating Repeat Business 

The ease and convenience of all-in-one ordering and payment through embedded payments has been shown to increase B2B average order volume and purchase frequency. Customers are more likely to trust in the embedded payments experience when they know service issues will be handled to their satisfaction. That trust is essential for generating repeat business and the brand loyalty companies need to hold onto market share.

The Future of Embedded Finance

Every day, advances in digital business narrow the gap between consumers, merchants and financial institutions, whether the model is B2B or B2C. Embedded finance accelerates this alignment by blurring the lines between ordering and payment. Merchants using embedded payments can deliver a one-click, no-pay experience that transforms customer relationships and builds priceless brand loyalty.

If you’d like to discuss how you can implement embedded payments for your B2B organization with Apruve’s intelligent credit and A/R automation, get in touch with us.  


ABOUT APRUVE

Apruve enables large enterprises to automate long-tail credit and A/R so you can stop spending 80% of your time and resources on 20% of your revenue. We partner with each of our customers to solve their unique credit, payment, and accounts receivable challenges and build the right credit solutions for your markets, customers, and goals. 

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