Embedded payments global market size is expected to surge from USD $65 billion to $183 billion by 2027.
This shouldn't be surprising, as both business-to-consumer (B2C) and business-to-business (B2B) consumers now demand smoother payment experiences.
Instant payments make life easier for consumers and businesses alike.
In this blog, we will explore embedded payments technology, embedded finance, and the differences between B2B and B2C embedded payments.
What are embedded payments?
Embedded payments refers to the integration of payment processing capabilities within physical and digital platforms. This allows users to quickly and securely make payments - in store at point of sale (POS) or online payments without leaving the merchant's website.
It enhances customer experience and support for existing systems and eCommerce platforms while being customizable, secure, and compliant with financial regulation.
Embedded payments also provide companies with valuable analytics and facilitate cross-border and mobile payments.
What is embedded finance?
Whilst embedded payments specifically focus on the integration of payment options, embedded finance covers a broader spectrum of embedded financial services.
It seamlessly integrates these financial services into the e-commerce platforms of non-financial organizations. This includes services such as:
- Banking
- Insurance
- Investing
- Lending
This provides users with direct access to financial products and services within the same platform or application they are using for non-financial purposes.
Embedded payments vs embedded finance
Embedded payments are technically a category within embedded finance, the most widely used category. However, the two are often spoken about separately because whilst there are some differences in types of embedded payments, there are many more for embedded finance.
What are B2B embedded payments?
Embedded payments in B2B involves B2B-specific features, such as integration with invoicing processes and recurring payments setup.
They streamline payment processes and offer the benefits of greater convenience, efficiency, and control for businesses engaged in transactions with other businesses.
B2B embedded finance
B2B embedded finance options are different from B2C ones. They offer B2B-specific financing options like automated invoicing and trade credit. They typically deal with large order volumes and complex logistics.
The goal is to have solutions that make financial processes more efficient and user-friendly for businesses. This means streamlining and simplifying workflows whilst enhancing digital experiences by providing data and insights.
Differences between B2B and B2C embedded payments
Overall, B2B embedded payments emphasize customization, lower costs, complexity, and catering to the needs of professional buyers.
Whereas B2C embedded payments focus on delivering a user-friendly, standardized payment experience for individual customers with higher transaction volumes but lower values.
Let's look closer at these points of difference.
1. Target audience
- B2B: Tailored for businesses that primarily provide other businesses with goods or services. The audience is typically professional buyers, including procurement departments in organisations.
- B2C: These are designed for an individual customer to make purchases or payments for personal use.
2. Transaction volume and value
- B2B: Transactions often involve large volumes and high values due to business-to-business transactions. This may include bulk purchases, contracts, and recurring payments.
- B2C: Transactions usually involve smaller values and are more frequent.
3. Complexity and Customization
- B2B: Payments can be complex due to factors such as negotiated terms, bulk pricing, and specific invoicing requirements. Consideration for tailoring to individual business needs is needed.
- B2C: Payments are typically straightforward and standardized, with no need for customization.
4. Payment Methods
- B2B: Involve various methods, such as electronic funds transfers (EFTs), checks, ACH transfers, wire transfers, corporate credit cards, etc.
- B2C: Typically rely on standard customer payment technologies, including credit/debit cards, digital wallets (e.g., Apple Pay), and other consumer-focused payment providers.
5. Regulatory and Compliance Considerations
- B2B: May be subject to specific regulatory requirements, especially when international transactions are involved. Compliance with business-specific regulations is critical.
- B2C: Have regulatory considerations focused on consumer protection and data privacy.
6. User Experience
- B2B: Integration into platforms often caters to businesses' specific needs and workflows, ensuring a seamless experience for corporate users.
- B2C: User experience is crucial, allowing buyers to make payments easily and without friction.
Conclusion
Embedded payments integrate payment capabilities into digital platforms, apps, or services, enabling users to make online payments without leaving the merchant's website.
It brings customer loyalty as transactions are smooth and efficient for B2B and B2C consumers.
Whereas, embedded finance seamlessly expands the range of financial services into various platforms. The differences between B2B and B2C payments come down to the audience, transaction details, complexity, and customization.
The primary difference between B2B embedded payments and B2C embedded payments lies in the nature of the transaction and the specific needs and characteristics of the business customers in each market.
Understanding these factors is key to navigate in the evolving world of embedded payments. With the growing demand for them in digital channels, they are becoming essential for B2B transactions.
.svg)
