Embedded Payments: The Future of Seamless and Intuitive Commerce

The promise of embedded payments and the march toward embedded everything is transforming the way we think about commerce and money movement. In the continuing conversations within the "What's Next in Payments" series, exploring the rise of embedded finance, Doug Brown, chief product officer of digital banking at Candescent (formerly NCR Voyix), sheds light on how this evolution is solving pain points for both merchants and financial institutions.

Unlocking the Potential of Embedded Payments

Solving the Cart Abandonment Dilemma

Embedded finance solutions are designed to address a critical challenge faced by merchants and financial institutions alike – cart abandonment. By embedding payment capabilities directly into the customer's journey, these solutions make the checkout process more convenient and intuitive, incentivizing customers to complete their purchases. As Brown explains, "That's a merchant problem, but it's also a banker's problem. It's a lost transaction." Embedded finance helps guide end-users towards affordable and personalized payment options, creating a win-win scenario for all stakeholders.

Balancing Convenience and Responsibility

While the focus is often on the seamless customer experience, banks and credit unions have a unique set of considerations when it comes to enabling embedded payment options like buy now, pay later (BNPL). "There's the responsibility to guarantee the funds and the transaction itself," says Brown, underwriting the risk to ensure all parties are repaid. Banks must also leverage data and real-time insights to evaluate decisions, recommend alternatives, and ultimately prioritize the consumer's financial wellness.

Extending the Relationship Beyond the Transaction

Beyond the immediate transaction, banks have a distinct advantage in their ability to inform and educate consumers about the longer-term implications of their payment choices. "That level of education goes beyond mere disclosure (which the merchants might do) and should ideally prod the consumer to consider whether they can afford the equal installments over time," Brown explains. By understanding how a financing option may impact a consumer's credit score or financial standing, banks can help them make more informed decisions and maintain their overall financial health.

Cementing Competitive Advantage through Trust and Transparency

The combination of financial wellness, a broad range of payment options, and a focus on transparency can be a significant competitive advantage for banks and credit unions. "Trust, in turn, is further enhanced when banks can repeat successful outcomes over the long term," says Brown. This trust is further reinforced when banks can provide post-purchase financing options, allowing consumers to adjust their decisions and find the most suitable solution.

Navigating Natural Disasters and Emergencies

The importance of banks' role in supporting their communities becomes especially evident during times of crisis, such as natural disasters. "We've been helping a number of banks just keep their infrastructure up and running — and to help restore infrastructure too," Brown shares. In these situations, banks can leverage their data and contextual understanding to provide emergency funds or payday advances to customers in need, ensuring they do not become over-extended.

The Future of Embedded Everything

Looking ahead, the full potential of embedded everything will require advancements in technology, particularly in the areas of tokenization and secure data exchange. "Those commerce journeys are going to extend and become even more intuitive as the tokens move with consumers through everyday life," Brown predicts. The goal is to create a seamless, secure, and guided experience that prioritizes the consumer's financial wellness, not just the immediate transaction.As the financial landscape continues to evolve, the promise of embedded payments and the march toward embedded everything will redefine the way we think about commerce and money movement. By balancing convenience, responsibility, and a focus on long-term financial wellness, banks and credit unions can cement their competitive advantage and deliver a truly transformative experience for their customers.