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Online Retailers Using Embedded Finance With Provenir, J.D. Power, TreviPay, Valuedynamx and Galileo

EY estimates that the market size of global embedded finance will grow from $264billion in 2021 to $606billion as early as 2025. With the space set to dramatically disrupt the financial sector worldwide, The Fintech Times seeks to understand how.

The rise of embedded finance is centred around giving consumers more choice and flexibility when it comes to making payments. While the benefits for them are clear, we sought to understand the benefits of embedded finance for online retailers. In order to do this, we got in touch with some experts in the space.

Benefits “centre on increased revenue”
John Cabell
John Cabell, managing director of payments intelligence at J.D. Power

John Cabell is the managing director of payments intelligence at J.D. Power, the consumer research and data analytics firm. Cabell introduces one of the key benefits of introducing embedded finance products: increased revenue.

“Benefits to retailers of these finance solutions typically centre on increased revenue. The financial services products themselves may offer per-transaction or usage-based revenue to the retailer depending on the nature of the product.

“In other cases, there may be the prospect of increased retail sales, such as in the case of a retailer offering payment plans that ease the moment of purchase financial burden on the consumer.”

“Embedded finance opportunity can be very lucrative to retailers”

Kathy Stares, executive vice president of North America at AI-powered credit risk decisioning platform Provenir, explains the key benefits that embedded finance offers retailers:

Kathy Stares, executive vice president of North America at Provenir
Kathy Stares, executive vice president of North America at Provenir

“The embedded finance opportunity can be very lucrative to retailers. Embedded finance gives retailers the means to offer a seamless customer journey all the way to the last – but crucial – mile of payment and financing.

“Today’s consumers want personalised and seamless digital experiences, and embedded finance can give retailers a significant advantage in the customer experience arena, through simplified checkout that also provides streamlined operations and efficiencies and less cart abandonment.

“Offering flexible payment options allows retailers to capture more market share and greater revenue opportunities while serving more customers (improved customer acquisition).

“Moreover, it enables retailers to gain improved access to customer data and insights into their behaviour, providing actionable insights for targeted marketing. This enables retailers to offer more personalised and relevant offers, key to customer retention and repeat purchases, maximising revenue opportunities throughout the customer lifetime.”

Benefits in the form of reward programs

Mark Jackson, joint managing director of rewards platform Valuedynamx, discusses potential benefits that embedded finance can offer retailers that they may not have previously considered:

Mark Jackson
Mark Jackson, joint managing director of Valuedynamx

“Retailers may not realise that embedded finance benefits them in the form of credit and debit card reward programs that include card-linked offers (CLOs). These are card and potentially even cardholder-specific offers that give people the ability to earn rewards when shopping with select retailers in-store or online using a preferred credit or debit card.

“CLOs can provide huge boosts for online retailers that participate in these programs because they reach people where they are, open up opportunities for customer touchpoints and acquisition, and drive cross- and up-sell opportunities. For example, customers that register their card with a bank or travel rewards program can earn points, miles or cashback with doing their everyday shopping.

“And the opportunities don’t end there. There are also gamification reward possibilities that can be incorporated into reward programs where cardholders can sign up for different programs to earn rewards. With increased engagement with that program, additional rewards are offered. For example, ‘welcome’ points when a consumer signs up and makes their first purchase, (for instance, through their bank) or at seasonal times throughout the year (e.g. birthdays and ‘Black Friday’).

“As consumers battle inflation and other economic challenges, an array of offers and money-saving card benefits are much-appreciated – particularly by Gen Z and millennials. Shoppers may not realise they can look for CLOs before they shop as part of a more strategic spending plan, so retailers (online and in-store) that work with their financial services and travel reward programs have an edge on building brand awareness and enjoying the perks of technological advancements in payments.”

Connecting “with customers through specific micro-moments”

David Feuer, chief product officer at fintech platform Galileo Financial Technologies, comments on the power of personalisation and customisation in boosting customer loyalty:

David Feuer
David Feuer, chief product officer at Galileo Financial Technologies

“Embedded finance enables non-financial brands, such as online retailers, to offer seamless payment options, personalised financial products and convenient, direct access to financial services within their platforms. By providing a streamlined, integrated experience, online retailers can tap into embedded finance tools to boost customer loyalty, increase engagement and drive higher spending.

“Over the past decade, advancements in embedded finance have exploded. Seamless financial interactions have become second nature to the e-commerce experience as shoppers don’t want to think about the payment mechanism. They want fast, easy and secure ways to pay online with their favourite brands.

“Embedded finance tools help retailers streamline those online interactions by creating ‘invisible’ checkout experiences that reduce customer attrition and cart abandonment.

“Thanks to the power of fintech and banking partnerships across the financial services and e-commerce ecosystems, online retailers can quickly integrate embedded finance solutions into their own branded platforms.

“For instance, online retailers can leverage embedded finance to tap into contextual financial services that offer customised, real-time insights about how each customer interacts with their brand. By creating more personalised touchpoints, online retailers can connect with customers through specific micro-moments during different points of their payment journey.”

“Simplicity continues to be a motivator”

Brandon Spear, CEO at B2B payment service provider TreviPay, concludes the discussion by highlighting the power of simplicity:

Brandon Spear
Brandon Spear, CEO at TreviPay

“Merchants continue to face immense competition to win digital buyers, amplifying the need to offer payment solutions that will drive revenue and support customer loyalty. Embedded payments make an online retailer easier to do business with by letting the buyer interact, and transact, on their preferred terms. If a business can offer a more enhanced and seamless customer experience through payments, the likelihood of securing repeat customers increases.

“From a B2B perspective, business buyers prefer to purchase on terms and will spend more, more frequently when they have a dedicated financial relationship and credit line with a business. The fundamental advantage of offering embedded payments is expanding a customer’s share of wallet with your business.

“As the payments world advances from cash to check to cards to mobile device to now – not even presenting a payment type – simplicity continues to be a motivator for this progression. When something is easier for a buyer to use, they will choose to use it more.”

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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