The integration of embedded payments presents software providers with great opportunities for growth. By capitalizing on convenience, customization, and streamlined processes involved in embedded finance, organizations can improve customer retention rates, increase revenue streams, and enhance overall customer value. With the embedded finance market projected to reach $800 billion by 2030, embracing this technology is not just an option but also a necessity for business platform companies looking to thrive digitally. In a recent webinar hosted by PaymentsJournal, industry experts Ralph Dangelmaier, CEO of BlueSnap, and Brian Riley, Co-Head of Payments at Javelin Strategy & Research, explored the transformative impact of embedded payments integration.

This article delves into the advantages of embedded payments for software providers, the considerations involved in integrating payments, and how organizations can optimize the customer experience to unlock the full potential of embedded payments. The integration of embedded payments presents software providers with great opportunities for growth. By capitalizing on convenience, customization, and streamlined processes involved in embedded finance, organizations can improve customer retention rates, increase revenue streams, and enhance overall customer value. With the embedded finance market projected to reach $800 billion by 2030, embracing this technology is not just an option but also a necessity for business platform companies looking to thrive digitally. In a recent webinar hosted by PaymentsJournal, industry experts Ralph Dangelmaier, CEO of BlueSnap, and Brian Riley, Co-Head of Payments at Javelin Strategy & Research, explored the transformative impact of embedded payments integration. This article delves into the advantages of embedded payments for software providers, the considerations involved in integrating payments, and how organizations can optimize the customer experience to unlock the full potential of embedded payments. What to Keep in Mind as Payments Integration Is Considered Software platforms looking to integrate payments should consider a few key factors: onboarding, the opportunity to scale their business, compliance and regulation, whether there’s underwriting and risk staging, and overall, how the solution can improve the customer experience.

Let’s delve into each of these and how they can help organizations get the most out of embedded payments. Onboarding The onboarding process for software providers is straightforward: A merchant wanting to join a platform fills out an application form. As part of that process, the applicant provides additional data for things like identity verification and anti-money-laundering checks. This data is then sent to the platform’s onboarding system through special APIs. “With this system, we can quickly onboard merchants in about 15 minutes, and they can start selling their products in 47 different countries almost instantly,” Dangelmaier said. Some platforms make it mandatory for new merchants to sign up for payments as well.

When merchants join the platform, they automatically get the payment services included in the price. “This is becoming really popular, and lots of merchants from different industries are joining these platforms in large numbers,” Dangelmaier added. Opportunity to Scale Software and technology platforms are increasingly incorporating embedded financial services as a requirement for new merchants. These platforms are not only signing up merchants for payment processing but also integrating it into their pricing. This trend is attracting many merchants from different industries, and there is tremendous potential for growth in this area. “This scalability is crucial for business expansion,” Dangelmaier said.

“It’s not just about having a streamlined process that satisfies existing customers; it’s about having the capability to expand and accommodate the needs of new customers. This adaptability is what ultimately strengthens a business.” Compliance and Regulation Embedded finance also has built-in tax compliance and regulation offerings. When it comes to moving money and dealing with payments, a lot of rules and regulations must be followed. It’s not just about setting up a technical system.

Legal requirements can vary depending on the country. “Just because you can make it work in the U.S. doesn’t mean it works in Mexico or the UK,” Dangelmaier said. “There are different underwriting risk rules in every country.

We’re connected to dozens of tools around the world to make sure we comply with the underwriting and KYC (know your customer) and AML (anti-money-laundering) standards around the world.” BlueSnap helps platforms manage these compliance issues by taking care of the regulatory requirements so the organization doesn’t have to spend a lot of money or hire a team to handle that task. Because the rules and regulations are different for each country, BlueSnap connects with various tools worldwide to ensure they comply with the specific rules of each country. Sometimes, the company has to physically check someone’s identity in certain countries before approving them for payments. “You need to either decide, ‘Am I going to do that on my own, spending millions of dollars higher to comply with the regulations?’ or ‘Am I going to partner with somebody who already has the infrastructure set up?’” Dangelmaier said.

“We take the compliance concerns away from the platform and take care of it behind the scenes.” Visibility Into Underwriting and Risk Staging Embedded financial services for software and technology platforms involve complex processes related to underwriting and risk staging. Compliance with underwriting risk rules and KYC and AML standards in different countries is crucial, and there are tools to assist with automatic verification. However, exceptions may occur during the process, requiring additional attention and collaboration with the platform. Certain countries provide particular challenges of physical verification, which necessitate staged underwriting with conditional approval. “In some countries, you actually have to do a physical check before you board them, so we conditionally approve them,” Dangelmaier said.

“Then, we actually got to send (someone) maybe somewhere on a scooter to go verify that they actually are who they are and check their IDs.” BlueSnap allows businesses to quickly onboard customers and give conditional approval for payments. After the conditional approval is granted, a final verification step can ensure that all necessary information is provided and verified. Alternatively, the conditional approval can be given and the loan processing can begin immediately, similar to how Uber starts processing a ride request as soon as it is confirmed. Improving Customer Service When platforms integrate payments, they provide a more convenient and seamless experience for their customers.

Merchants no longer have to go to different places or hire experts to handle technical implementation. Instead, everything is handled within the platform. This is especially useful for small and medium-sized businesses. “I can’t tell you how many people have to hire system integrators to get everything working and get it going,” Dangelmaier said.

“If the platform provides a system integration as part of a turnkey solution, the customer experience is just significantly improved.” Making this integration work smoothly requires three API connection points. The first one is the payment API, which allows customers to make payments. The second is the onboarding risk API, which ensures that customer applications are securely set up with the appropriate banks.

The third is the consumption or webhook API, which provides data and reporting back to the platform. These APIs are like the different sections of an orchestra playing together harmoniously. It can take some time and fine-tuning to optimize the platform for different countries, currencies, and payment types. Platforms like BlueSnap provide support and guidance to help businesses navigate this process and make the necessary adjustments. Access the On-demand Webinar - Mastering Embedded Payments: The 5 Things Software Platforms Must Know First Name (required) Last Name (required) Your Email (required) Company (required) Title (required) Δ

By PaymentsJournal
Aug 15, 2023 00:00
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