According to McKinsey, digital platforms will mediate 30% of all global economic activity as early as next year. One force behind this trend is the increasing ability of these platforms to embed payments directly into their app or website. By eliminating the middleman (external payment gateways), digital platforms can now offer a more seamless customer experience.

Want to learn a bit more about embedded payments? Here’s how they work, what they can do for your business, and how to go about implementing them.

What Are Embedded Payments?

As mentioned, embedded payments are any payment capabilities directly integrated into software solutions. Any time you’re purchasing dinner via an app or buying something from a friend directly via social media, you’re using embedded payments. The goal behind this feature is to integrate software with payments so seamlessly that the transaction is barely noticeable.

In many ways, embedded payments are similar to integrated payments. The key difference is that integrated payments still require the use of a third-party portal. Embedded payments offer merchants a one-stop solution, removing a lot of friction from their operations.

Benefits of Embedded Payments

Beyond fast implementation and consolidated payment management, embedded payments offer a variety of other benefits to merchants. For instance, they can offer a new source of revenue via transaction fees or new lines of business like lending, instant payouts, and more.

Embedded payments also give you greater control over the customer experience. Without having to consult third-party providers when problems occur, you can fix issues faster and more reliably. Another benefit of greater control is the ability to use pre-built UIs or custom-built onboarding flows, making the onboarding process much smoother.

Finally, the consistency that embedded payments provide can help drive revenue and increase your conversion rates. Thanks to their excellent customer experience, embedded payments are a major competitive differentiator for marketplaces and platforms.

Implementing Embedded Payments

When it comes to implementing embedded payments, the biggest decision you’ll need to make is choosing your payment provider. This usually boils down to looking into their features and capabilities to ensure they’re a good fit for your business. Do your research on factors like hardware, data and analytics, accounting add-ons, and so on.

Once you’ve narrowed your decision to a few providers, trial their products. Focus on how easy their services are to use and whether their app is fast and reliable. Ask for input from your employees to get a full picture of the product.

Once you choose a provider, all that’s left is to implement embedded payments and adjust workflows as necessary. Create an intuitive checkout process and look into add-ons and other features that may further improve the customer experience.