Embedded payments: 5 reasons to add them to your platform business

Epos Now, Lightspeed, SKIDATA, and Zenoti explain how embedded payments can help you manage your own funding flows, deliver speedy payouts, and earn revenue on each transaction.

When the COVID-19 pandemic hit, many SaaS platforms catering to in-person businesses (like spas and restaurants) drew a deep breath and prepared for difficult times. Yet, while the past couple of years haven’t been easy, SaaS platform businesses have been busier than ever.

That’s because many small businesses used the lull induced by lockdowns to digitise. This was partly driven by the short-term need for survival; many having to pivot to online services to stay afloat. But it was also driven by a long-term strategy of improving business efficiencies and agility by moving to the cloud.

As a result, SaaS platforms are enjoying rapid growth. But they’re also facing the challenge of remaining competitive as well as scaling and future-proofing their own businesses. One way to achieve this is through embedded payments and we’ll explain how in this article.

But first…

What is embedded payments?

Consumer-facing embedded payments are increasingly the norm in our daily lives (think Uber). In the business world, payments can now be embedded into SaaS platforms so customers’ transactions can be processed natively. No redirects, no third-parties; everything happens in one place.

This is a huge growth area. Our recent Embedded Finance Report found that 35% of our SMB survey respondents are using an embedded payments service provided by their platform (up from 30% in 2021). On top of that, 69% of these users would move to a platform that offered a more integrated payments experience. Equally compelling is the fact that front-running platform businesses are already seeing up to 80% of their revenue coming from embedded payments.

This paints an attractive picture. To illustrate the benefits further, here are five ways embedded payments can boost your platform business:

Person reviewing payment data

1. More revenue, less churn

It’s hard to think of a more compelling benefit than generating more revenue while improving the stickiness of your platform. You don’t need us to tell you that competition can be fierce and so the more indispensable your service, the better.

By embedding payments into your platform, you’ll be able to provide seamless cashflow that’s hard to replicate by a third-party. Plus, once payments are integrated, it becomes a much bigger job for a user to switch to a competitor. This benefit is amplified if you can offer a payments service that spans geographies. One payment integration covering all the markets in which a user operates is a huge value-add. On top of that, becoming part of the funding flow means you can charge processing fees, which adds an additional source of revenue to your business.

Commerce platform Lightspeed understands the importance of providing a service its users just can’t do without:

“We’ve learned that providing a one-stop solution makes our core SaaS products stickier, and enables merchants to simplify their operations, scale for growth, and provide exceptional customer experiences. Adyen supports our vision of supporting this space globally, with localisation and payment regulatory framework in each region.”

Jona Georgiou General Manager of Payments, Lightspeed

2. Stop payments being a pain-point for users

For small businesses, payments is often a necessary evil. It has to be integrated (you can’t do business without it) but it’s time consuming and expensive. Different payment methods needed different integrations and contracts and often required third-party acquirers to boot. That’s different portals to log into and different support numbers to call.

All of this goes away if you can offer your users an embedded payment processing solution. They can enjoy a plug-and-play service without the hassle of additional onboarding flows or integrations. And, if your embedded payments technology allows it, you’ll be able to provide users with a choice of payment methods that can be added with a click of a button. In that way, they can be sure their checkouts are as welcoming and frictionless as possible.

“With Epos Now Payments (powered by Adyen), our customers have faster and better onboarding experiences and more integrated products with one portal to log into and one number to call for support.”

Nathan Gill, Chief Product Officer Epos Now

3. Control the funding flow

Funding flows are a crucial part of any platform business. Customers need to pay, users need to get paid, and commissions and admin fees need to be deducted. It quickly becomes complicated, which can slow things down but here’s what you can achieve if you’re in the driving seat:

Greater flexibility

Funding flows are different for every platform business and so flexibility is key. For example: Spa, medspa, and salon management platform, Zenoti, supports a range of different funding flows like letting customers buy a gift card in one store and redeem it in another. The ability to design specific flows is vital to being able to meet both user and customer expectations.

Faster payouts

Another key differentiator you’ll achieve with embedded payments is the ability to offer faster payouts. Cash flow can be a knife-edge for small businesses and the ability to receive funds fast can make all the difference. So imagine if you could offer same-day payouts.

“Like us, Adyen is a technology-first company that puts a focus on innovation. We are looking forward to continuing our leadership with the most integrated offering in the industry.”

Dheeraj Koneru Senior Vice President of Sales, Zenoti

4. Deliver unified commerce

The world may be digitising, but physical commerce still counts for a lot. It’s important therefore, that you’re able to cater to your users’ point of sale requirements as well. In doing so, you’ll not only make life much easier for them, you’ll increase your customer loyalty in the long-run. To achieve this, you’ll need a payments functionality that supports online and in-person payments in one system. If your backend systems are connected, it’s easy for your users to support seamless cross-channel journeys, reconcile cross-channel payments, and enjoy valuable cross-channel insights.

SKIDATA is a global market leader in access and revenue management helping businesses such as ski slopes, stadiums, airports, and amusement parks. Senior Product manager Martin Treiblmayr explains how the business has benefited from consolidating payments across channels and regions into one system:

“Before working with Adyen we were dealing with heterogeneous providers, numerous local integrations, and contracts. With Adyen things are so much easier. We're able to manage all of our terminals in one place, we're less dependent on third parties, and we can add local payment methods like WeChat Pay and Apple Pay with the click of a button. Most importantly, we can reduce PCI scope for our users thanks to Adyen's end-to-end encryption."

Martin Treiblmayr Senior Product manager, SKIDATA

5. Pave the way to embedded finance

Embedded payments is a necessary first step before progressing to embedded finance, which also has huge potential gains. Our recent Embedded Finance Report found that there’s a universal demand for embedded finance products, especially amongst small/medium businesses (SMBs) that tend to be overlooked by traditional banking providers. 74% of SMBs surveyed said they’d be interested in using embedded finance products. And 65% say they’d be willing to switch to a platform that offered them. Currently, just 30% of platforms offer embedded payments, but that number is growing fast so the time is now.

So what does embedded finance look like in practice? Below are some examples of the products and services you can offer:

Issuing

Issue your own virtual or physical cards to users and they’ll enjoy same-day settlement at no extra cost. This could even be scaled to business employees, giving them debit or prepaid cards they can use to make purchases.

Capital

There’s lots of reasons small businesses could use a little injection of capital. It could be slow periods, cash-flow issues, recruitment ,or supplies. And platforms can help. No need for them to fill out lengthy funding application forms. You’ve already done your KYC and you know their trading history. Capital can be offered on the spot.

Bank account

Embedding a bank account and treasury services into your platform will mean users can manage their funds and pay bills from within the platform. Again, that’s just one login for all their day-to-day business needs.

“Embedded finance goes beyond just providing a payment solution. It provides a full banking solution as well. Our software is the operating system that these merchants use to run their business. We already know a lot about them and we can make much more informed credit decisions than a traditional financial institution can.”

Nathan Gill Chief Product Officer, Epos Now

Getting payments right is just the beginning

There’s a lot to be gained by streamlining the payments process for your users. Not only can you remove pain points around integration and onboarding, you’ll give them a single place to manage payments across channels and geographies. But of course it goes beyond that. As platforms look to scale up and differentiate themselves, putting the infrastructure in place that lets you diversify into financial services, is a huge win.

The key is setting yourself up with a strong payments provider that can do most of the leg-work on your behalf. This means you can deliver global, cross-channel payments to your users while remaining free to focus on what you do best: Provide great service to your users. If you choose to partner with Adyen, you’ll have a powerful engine behind you that’s always evolving ensuring your business is always ready for the latest opportunities.

“We spoke to lots of providers in our search for a true partner, open to helping solve merchant issues with fair commercials. So far, we’re really happy with the speed and service offered by Adyen. The team has been very supportive and we’re very excited about our next projects.”

Nathan Gill Chief Product Officer, Epos Now

Embedded Finance Report

Insights into the products with strongest SMB demand, quickest path to market, and revenue uplift potential of up to 70%.

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