Embedded Payments on Your Platform — Show Me the Money

Payment tools can be embedded in text messages and emails in addition to websites and voice interfaces.
Headshot of Mark Vermeersch
Mark Vermeersch
Chief Platform Officer
December 13, 2021
Payment rails passing through customer-facing mobile app

Want to hear something hard to imagine in the age of online payments? When eBay started in the 90s, buyers sent sellers checks in the mail. It wasn’t until eBay started working with PayPal that the site started enabling online payments. 

Today, consumers expect tech and finance to mingle. Embedded payments are a fundamental part of e-commerce and payments in general. Payment tools can be embedded in text messages and emails in addition to websites, and voice interfaces such as Alexa can also facilitate transactions. 

Embedded payments are not only ubiquitous, but they are also increasingly complex, allowing for a growing list of integrations. As payment-centered apps add on new features such as microloans (installment payments) and digital wallets, they are starting to look more and more like embedded banking apps. 

To learn more about how to offer embedded banking products on your app, download our white paper.

What are embedded payments, finance, and services?

Embedded payments, embedded banking, and embedded finance are overlapping categories of fintech services that all involve the embedding of financial tools in non-financial apps. A banking as a service provider (BaaS) can help non-financial businesses embed payment functionality into their platforms.

What is embedded finance?

Embedded finance broadly refers to the embedding of financial tools in non-financial services. When a website or app other than that of your bank allows you to see your bank account balance, that’s an example of embedded banking. When you pay at the online checkout of an e-commerce site, you use an embedded payment tool. Other examples include embedded lending and embedded insurance. 

What are embedded payments?

Embedded payments refer to digital payment options that are embedded within non-payment apps. These tools allow non-finance or non-fintech merchants to accept payments. It can refer to embedded payments available at checkout on e-commerce sites, payments by SMS or text, or closed-loop payments where retailers own the whole transaction. 

Embedded payment can also refer to tools like Zelle, which is embedded in banking apps and allows peer-to-peer cash transfers. 

One wildly successful example of embedded payments is the Starbucks app, which holds more customer money than many banks. When users transfer cash to the app, the funds can only be used for purchases from Starbucks. The result is that Starbucks owns the whole transaction, improving payment processing costs. The coffee chain incentivizes the use of its closed-loop payments system by offering rewards. Starbucks has also expanded to offer a rewards credit card

Another major example is payments processor Square, which utilizes embedded banking and embedded payments features across their system and products. The company owns a bank, which is embedded in its offerings to businesses. Businesses can use Square’s Merchant Acceptance Platform to embed payment options in their shopping platform. Additionally, Cash App can function as an embedded payment product, and Square’s Afterpay product enables merchants to accept payments in installments. 

What is embedded banking? 

Embedded banking refers to tools that allow you to access your bank account information or interact with your bank account from a non-bank website or app. For example, some accounting platforms like Treasury Prime client Bench allow business owners to view their business account balances within the accounting app. Investing tools and apps can also allow this. 

The line between embedded payments and banking has blurred as payment-centered apps add on new features. PayPal, for example, allows users to store cash on a PayPal debit card as well as open PayPal credit accounts, in addition to facilitating payments. Users can even order a physical PayPal Cash Card to draw from their PayPal balance at brick-and-mortar retailers. Together these features make PayPal’s offerings almost like neobanking services

Leading embedded payment tools

Embedded payment providers empower merchants to accept payments online or in their app. Some top providers include: 

The role of BaaS in embedded payments — for fintechs and banks

Ecommerce is booming like never before, making embedded payments central to merchant success. The embedded finance market is expected to exceed $138 billion by 2026, led by “buy now, pay later” embedded payment tools. 

Depending on your business model as a fintech or non-financial services company, you may seek to partner with an established embedded payments provider or build your own embedded payments solution. To do so, your company can work with a BaaS platform to embed accounts and various payment rails into your applications. Depending on the payment rail you wish to support, you can also partner with a merchant acquiring bank.

High-quality embedded finance tools depend on strong partnerships among trusted parties. A banking as a service (BaaS) provider can connect fintechs with the right partners, providing an API interface for integration. The most important qualities to look for in a BaaS provider are transparency and expertise. Seek a provider with deep finance industry connections, and that will allow you to contact your bank partner directly.

Treasury Prime has seen clients like Bench and Zen Business have great success by embedding banking services in their products. We are available to answer your questions about whether embedded finance may also work for you. 

Developers interested in using Treasury Prime’s tools can familiarize themselves with our offerings by visiting our Sandbox. To learn more about how Treasury Prime can help your bank or fintech grow through collaboration, get in touch with our team.

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