Embedded Payments: a New Era of Payments

  • Andrew Griffin, Chief Financial Officer at Modulr

  • 23.05.2023 06:00 am
  • #payments

Embedded Payments for corporate spending represent a huge untapped opportunity for organisations to maximise revenue, create operational efficiencies and provide a better experience for the end customer. Legacy banking systems which underpin the world of business payments are not compatible with tech-first businesses. Business hours only, batch/non-real-time processes and manual workflows that are separate from core systems often result in inefficiencies or even errors, which in turn creates further work for teams, increases costs and can damage brand reputation – all because of payments processes businesses have very little control over. 

Challenges with today’s business payments

B2B payments can range from business receivables and payables to loan disbursals, payroll, supplier payments and reconciliation. 

Relying on a bank to execute payments has always introduced roadblocks for business processes, especially if the business has more complex payment flows, which many B2B businesses have. This friction increases significantly with the volume of payments being made. Traditional bank payments run only in business hours and outgoing payments are batched and uploaded to banks via file upload, rather than happening in real-time. This delays payments and adds to the operations and finance teams’ burden.  

While enterprise technology has become increasingly impressive at providing user-driven solutions to common pain points for organisations, B2B payments have been letting the side down with disconnected crazy paving of processes.

The rise of Embedded Payments

But businesses are showing a clear shift in the technology they are using to manage their payments. Research has shown that four in ten small and medium-sized businesses (38%) in the UK plan to use embedded financial services more in the next 12 months.  

We call the insertion of payments functionality into businesses’ own software platforms Embedded Payments. 

We think of Embedded Payments today in the same way many thought about cloud computing in the 1990’s. Back then, you ran your software on servers you owned. It was unthinkable to outsource processing and storage to someone else. Today, running your software in the cloud is the norm, a complete change of approach. Similarly, today, using your corporate bank to do payments may be the norm but Embedded Payments now enable businesses to do this in-house, which presents them with the opportunity to tackle longstanding challenges that many may not even have realised could be solved. 

Let’s look at some specific steps in the payment processing, starting with the account used to make or receive the payment.  The traditional process for setting up a new business account is manual, time-consuming and painfully drawn out. With Embedded Payments, creating a new account is as simple as making an API call and you can create as many as you wish, one for each customer if required.  Outgoing payments can also be made much more efficiently, in real-time 24/7, while incoming payments can trigger webhook actions, instead of businesses needing to continuously monitor payment movements. This means large amounts of payments can be processed and reconciled automatically, saving time, and freeing up teams to work on more pressing issues. And all this can be done within a business’s own tech stack.

It’s a world of real-time account provision, real-time payments, and instant action. And what’s more, Embedded Payments can be used by any business running on a software platform.   

Banks are not the only option for processing payments

B2B payment processes no longer need to be clunky and slow, businesses in every sector can now move the process in-house. Embedded Payments are leading the way in simplifying payment processes for businesses, creating new ways of making and receiving payments, controlling and using payments data, while reducing error and maximising security.

It’s a new era of payments, where instead of being a hinderance, payments are a catalyst for innovation, new revenue opportunities and smoother customer experiences. 

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