This revolution has a name: embedded payments. In total, embedded payments services are expected to generate 277.46 billion Euro of revenue across Europe over the next five years.
Last year, locked down and managing our entire lives over the internet, our patience for poor consumer experiences finally cracked. No industry was left unscathed. Thanks to the digital shift during the pandemic, we now have little patience for tedious, outdated payment journeys. The less time we have to spend on actual payment – with fewer clicks required and fewer data fields to complete – the better.
Consumers are not going back. Any business offering an experience that puts up even the slightest friction is throwing an (avoidable) spanner into their client relationships. So, more organisations recognise that they need to own and improve their payments experience if they want to enhance the overall customer experience.
This revolution has a name: embedded payments. Embedded payments is a subset of embedded finance, and it enables any business to seamlessly integrate payment services into their customer journeys and to tailor the payments experience to their exact needs. The result is a more compelling, convenient, and personalised financial experience for customers.
In total, embedded payments services are expected to generate 277.46 billion Euro of revenue across Europe over the next five years. If you want to see this in practice, just look at Open Banking Payment Initiation. Between February and August 2021, there were 11 million Open Banking payments, compared to 700,000 in the whole of 2020, according to the UK’s Open Banking Implementation Entity (OBIE). That’s a sea-change in the way we pay.
And new payment methods like Open Banking are just getting started. 96% of European brands say they are planning to offer embedded payments to customers in the next five years or are seriously thinking about doing so. Clearly expectations are high for embedded payments and its ability to reshape the consumer-brand relationship.
Paying for goods and services is one of the most important financial interactions customers have with businesses, so it’s no surprise that almost all brands are focused on payments. But as more consumers use embedded payments, offering other embedded finance options will make more sense too. Payments is just the first step in creating an ecosystem of financial products that will unlock new revenue streams and allow for far deeper and better customer experiences.
So how do you start? The fastest way to start building an embedded payments offering is by partnering with an infrastructure provider. An embedded finance provider brings a wealth of knowledge and experience to the table, making the process of embedding a solution easier, faster, and more scalable.
At every stage, the right partner can help businesses access the entire ecosystem of embedded financial services and easily integrate them into their customer’s journeys. And while businesses focus on optimising experiences for their customers, their partners handle the heavy lifting of complying with regulatory changes, Know Your Customer (KYC) requirements, and licensing obligations. No matter what your strategy is for embedded finance, whether it is to build a broader product offering, expand internationally, or capture a greater share of the market, partnership can greatly improve your chances of success.
We’re now past the point of no return. Our long-term confinement over the last two years has fundamentally changed the way we use digital services, and the functionality we expect from those services. Embedded payments is the next step in building these deeper, more compelling experiences.
We’ve only just scratched the surface of the huge, unmet demand for embedded payments across Europe. 2022 and beyond is going to be transformative. More than half (54%) of the businesses we’ve spoken to will be spending the next year exploring embedded finance options, with embedded payments leading the pack.
What will drive this change will be the collaboration between those firms that want to provide embedded payment solutions and the technology companies that can help build them. The market is quickly being established and we’re already seeing the appetite from businesses and consumers. The time is now for brands to leverage embedded payments.
"As more businesses incorporate financial technology into their offerings, such as cryptocurrencies and other embedded finance solutions, regulation will form around what’s already built and working well."
Bitfinex, a digital token trading platform, is working with fiat on-ramp provider OpenPayd to enable real-time SEPA payments for Euro deposits and withdrawals.
Leading UK fintech payments provider Caxton has partnered with OpenPayd. OpenPayd IBANs will overhaul Caxton's operations, saving time and enhancing customer experience.