Embedded Payments Will Help Brands Compete Globally Over The Next Decade

Commerce is global and customers not only have large domestic footprints but also increasingly global operations and pay supply chains. As business footprints increase, industries are becoming crowded, more competitive, and brands are fighting for space in their own sector. In the fight for space, the integration of financial services into non-financial websites, mobile applications, and business processes is emerging to reshape the financial services industry. According to private-equity firm Lightyear, there are estimates that embedded finance will grow to nearly $230 billion (in revenue) by 2025, up from $22.5 billion in 2020. The embedded finance market is still budding and embedded payments offers a growth opportunity that can help support businesses in further monetizing their business models.

During the pandemic, leading brands are facing stiff competition and pressure to continue to be the best. With customers wanting the best to compete, they have engaged with competitors to shop around. As this pressure for brands to maintain their core increases, there is also increased pressure to maintain payment operations in a time of crisis.

Suppliers may no longer be willing to wait for long invoice terms while buyers may need to buy from supply chains they have not interacted with before. This critical lifeline of balancing credit and cash flow against payment assurance and risk has never been so important.

There is complexity to this and brands who outsource their payments can protect their core business while moving quickly to match the buyer/supplier money movement that supports their operations.

SUCCESFFUL BRANDS USE A POWERED BY MODEL

Great brands know and serve their customers better than anyone else in their core space, they innovate against customer needs quickly and use data to understand customer trends. The winners are those brands that move quickly and can react to change in their markets.

While these brands are running their core business, they also manage millions and in some cases billions worth of payments all across the world every day. These payments come in different forms such as customers paying for goods and services, the company paying payroll or paying their supply chain the movement of money is critical to these brands’ operations.

Lately there has been an emerging trend among brands looking to maintain their core market leader positions in their respective fields. These brands are working to bring in top payments providers to create a “powered by model” that enhances efficiency, seamless movement of funds and often saves and can even create revenue.

PARTNERSHIPS MATTER

When partnering with a payments provider it is important to understand if they offer flexible and scalable solutions, global licensing, automation, industry expertise, and what type of back-end processing they provide.

Payments are more than just a card and a processor, so making sure a partner has more than payments is the trick. Do they have a full suite of products—card and non-card, can they help map the global and local buyer and supplier relationships and do they have the compliance and licensing to manage it, can they help with credit and cash flow with multiple funding options, and is there intelligence in their system to help digitize and automate processes?

Creating value through payments is important for successful partnerships and payments can help cut costs by optimizing payment terms and timing, deliver new business efficiencies and provide sources of revenue. Ultimately, partners should be able to take away the worry of payments and provide a full-service engine room enabling brands to focus on the core customer experience and become best in class to win in their market.

Knowledge of the industry and a provider’s reputation also matters when it comes to selecting a payments provider. Since 2019 there has been an increased focus on ensuring the compliance and licensing part of payments is done well. Payments partners are able to help navigate issuing and accepting payments more effectively and help balance the buyer and supplier economics as well as the internal risk to revenue path.

The right payments partners are able to move quickly with a cloud-based infrastructure, expand globally while providing local expertise, and has ability to make things right when something like the pandemic hits.

HOW PAYMENT PLATFORMS CAN CAPITALIZE

Demand is growing for finance that meets the customer at their convenience and point of need. As such, this has turned the payments function into a competitive advantage. Couple this with the rise of embedded finance, which will reach a market cap of $7.2 trillion globally by 2030, payments innovation is effectively changing operation models across industries.

For many companies, outside of big tech, the main barriers right now are both technical and financial. The typical embedded finance solution requires a company to spend months doing complex coding to implement APIs, which allows their software to connect with banks and card companies electronically. However, the right payments partner can ease the friction.

By providing a full set of payment APIs and capabilities that integrate to single or multiple platforms, along with complementary payments expertise, payment partners can actually reduce costs and optimize brand experiences. As nonfinancial brands integrate more financial services to their business, they must keep in mind that great payments partners take away the worry of payments and enable brands to focus on the core customer experience, become best in class and win in their market.