By doing away with the necessity of conventional middlemen, embedded finance has long been contributing to the evolution of the financial services industry. It deals with a variety of goods and services, including as payments, deposits, loans, and issuance, but integration is now beginning to give it greater power.

According to Alan Irwin of Global Payments, users may now move more money from within non-bank apps or software and engage with digital interfaces on a regular basis.

Irwin talks about some of the advantages of integrated finance and how it may enhance a customer's digital experience in an exclusive conversation with FinTech Magazine.

Extending the meaning of integrated payments

According to Irwin, a growing number of companies are assuming control of the payment process since it may significantly improve the consumer experience. This might include businesses that provide buy-now-pay-later (BNPL) choices or ride-sharing applications that accept payments instantly.

According to prior study by FinTech Magazine, integrated finance supports a unique client experience and is a major driver of financial inclusion.

When it comes to income and potential for merchant expansion, payments make up the majority of embedded finance. EY study indicates that the amount of money paid through embedded channels hit US$2.5 trillion in 2021 and is projected to hit US$6.5 trillion by 2025, according to Irwin.

In addition, he points to the COVID-19 epidemic as a major growth driver, having forced millions of customers to depend on embedded payments.

"They don't need to leave a website, social media platform, or mobile app to make a purchase. He points out that several consumer touchpoints, such as shopping cart systems, digital wallets, accounting software, and customer loyalty programs, are excellent possibilities for integrated payments for businesses as well.

The payment process is made simpler by integrating integrated payments across different channels, which also provide chances for advanced data analytics and income generating. Consequently, embedded payments are taking off in unexpected industries and in all areas of trade.

Leveraging transformational capacity

A change in customer behavior is one factor contributing to the growth of integrated payments. Irwin claims that since they have grown so acclimated to digital platforms, modern customers need a smooth, integrated approach to financial services.

According to Irwin, "Embedded payments fulfill these expectations by providing financial services within the organic flow of consumers' daily activities." "Embedded payments eliminate the need for customers to switch between platforms, ensuring that financial transactions are no longer a separate, cumbersome step but an essential component of an easy user journey, whether they are made online, through subscription services, or in the gig economy."

To increase client loyalty, financial organizations are currently putting all of their attention into the customer experience. They are reducing cart abandonment rates as a consequence.

69.57% of online shopping carts are abandoned, according to Irwin. Businesses can reduce this rate by using embedded payments, for example.

"Retrieving a credit card and manually inputting the information is a hassle that may lead to customers giving up on an online transaction. This procedure is streamlined by embedded payments, which link and save a payment method for quick access at a later time.

"To further lower cart abandonment rates, merchants are now utilizing tokenization and card data storage more frequently. This is because these features enable customers to save their card details for later use, expediting their subsequent e-commerce purchase."

Transitioning from security to inclusivity: Achieving digital transformation

In an era of heightened financial cybercrime, embedded finance may provide a way to provide customers a sense of security when they make payments.

Frequently, clients are sent to an other website or application in order to complete their payment. In addition to adding time to the payment process, this may result in more mistakes or security problems. Therefore, the consumer may decide not to proceed with the payment at all if they believe their data is not safe.

"The key to instilling a sense of security is to reduce site changes as much as possible and use clear branding and user experience (UX) to ensure customers are aware that they're still on the same site," says Irwin.

"In a similar vein, real-time data validation integrated into the payment form can stop malicious actors from mass-spamming card data and stop bad data—like an invalid security code or expiration date—from being entered in the first place."

Irwin discusses how the pandemic's unintended consequence was to make people, companies, and financial organizations envision a world without currency.

"Many merchants permanently stopped accepting notes and coins because they were unable to handle cash or even touch PIN pads," he claims. After the epidemic was over, this pattern persisted, denying the unbanked access to the goods they required or desired to purchase. The decreasing acceptability of cash has given companies and financial institutions a chance to position themselves as the unbanked people's go-to source for solutions.

Through BNPL or peer-to-peer payment systems, embedded payment solutions may provide consumers and merchants with an alternative to cash for the purchase of products and services. Banks are beginning to take this into account as well; they now provide guidance and services like online bill payment, transfers, and loan applications.

Irwin continues, "To provide a complete picture of a person's creditworthiness, embedded finance providers can also analyze other data sources, such as cross-border sources, open banking data, and non-traditional sources like utility bills.

"Basic shifts in merchant and customer behavior have fueled the development of embedded banking technologies. Customers need financial services and products integrated into the devices they use on a daily basis. Because it enables banks and non-financial services companies to create a seamless and integrated client experience, embedded finance has emerged as the answer.