If you’ve looked to improve your current payment set up with embedded payments, you might be doing so because:
Your current customer payment experience is incredibly clunky. You want to streamline your payments experience but you struggle to find a way to automate and build with your current arrangement.
Accepting card payments can be expensive, which can affect your bottom line.
Payments take too long to settle and you want to know if you can make payments within minutes, not days.
Doing file transfers to make payments is clunky and error-prone both for your finance teams and customers. Manual reconciliation is a burden on both your teams and customers as payment volume increases.
Embedded payments are applicable to all types of companies: SMEs looking to improve their customer experience, software providers looking for new revenue opportunities and large corporates that want to offer more payment methods.
To help you understand how you can leverage embedded payments to solve these problems (and more), we spoke with our CFO Andrew Griffin. In this article, he explains to us:
Modulr enables companies of all sizes to unleash the power of embedded payments. Contact us today to see how we can help you change the way your business handles payments.
What can you do with embedded payments?
Embedded payments are a subset of the growing embedded banking and finance industry. This movement takes core financial services offered by banks and other institutions, and wraps them inside modern tech protocols like application programming interfaces (API). Essentially, embedded payments allow you to create accounts and move money with software.
With this service, companies and their customers can access once inaccessible financial services like:
Direct access to payment networks which allows them to settle payments instantly.
Account opening tools to give each customer a dedicated account to make payments, accept transactions, and store deposits.
Payment cards to their customers to make it easier to transact with other businesses and services.
Data insights to learn more about their customers’ behaviour and find new ways to offer a more personalised user experience.
The reality is that the current payment system is broken. It shouldn’t take three business days to settle a payment. It shouldn’t be standard practice to depend on clunky file transfers to pay transactions in batches. It's not acceptable to use payment methods with processing times that don't match your payment windows. It shouldn’t take days and a mound of paperwork to open an account.
When done right, embedded payments can reinvent your business model, regardless of what industry you’re working in. It’s already happening in the B2C space with companies like Airbnb and Uber – why can it not happen in B2B as well?
Embedded payments operate 24/7 and with near-instant feedback loops. This speed lets companies complete tasks like opening accounts or making payments in seconds – both of which traditionally take hours or days. By embedding payments, startups, SMEs and corporates can now create personalised and engaging experiences, lower costs, and even create new propositions they didn’t know were possible. The possibilities are almost endless.
Here are the three main ways embedded payments can make a big difference to your company, whether you're a startup, SME or large corporate:
1. Redesign and improve your payment experience
The traditional global payment experience wasn't built for the online world. The backbone of these systems is decades old, and, as a result, many businesses built their processes around what’s now archaic infrastructure.
Take the reconciliation process for a lending company as an example. When customers repay their loan instalments via traditional banking, they'll need to add their loan's reference number to each transaction to make it easier for the lender's finance team to track and reconcile repayments.
However, this manual process can take hours and even days, especially if there is any oversight or if a customer makes a typo in the number.
Finance departments then have to follow up each payment to make sure it matches with a transaction in their system. A single lost payment can take precious minutes or even hours to resolve. As the business scales, time compounds, leading to employee frustration, slower services, and dissatisfied customers.
Embedded payments eliminate this problem overnight. With embedded payments, companies can now instantly create a dedicated account for each one of their customers or transactions with an API. Each account gets a dedicated account number and sort code which customers use to send funds to and from.
Whenever a payment event happens on the account, the API sends a message to the company informing them about it. Finance departments can use this information to update the books. You can then use these notifications to build an automated logic in your system that changes your customer's payment status or moves your customer through the next step in your product journey.
Imagine a marketplace business that relies on payment confirmation to finalise a deal between a buyer and seller. Under traditional payments, the two parties would need to wait while the buyer’s funds moved their way through the bank, the payment processor and the marketplace platform. Through embedded payments, the funds go from the buyer’s account to the seller’s in under a second. Both parties get an immediate update that the funds have been processed, so you can confirm deals a lot more quickly.
2. Save money on payment transactions
Card payments are expensive to process for pay-ins and pay-outs. Although they are convenient for consumers (thanks to decades of adoption and a lack of alternatives), they can seriously affect your bottom line. With embedded payments, you no longer have to rely on them to power your business.
With a payment API, you can let customers pay you through multiple means including bank transfers, direct debits, and Open Banking Payment Initiation, and all with a click of a button. By offering multiple payment options, you’ll achieve two goals:
A reduction in costs thanks to less reliance on cards.
A better customer experience by offering your customers the ability to pay in the way that works best for them.
Embedded payments makes these cost savings possible, and allow consumers to have many more options when it comes to paying.
3. Scale with less effort while uncovering new revenue streams
Embedded payment technology lets you scale in ways that are not possible with many traditional payment service providers.
Banks will often only process payments in one geographic region. For example, say you’ve validated your business model and product in the UK and are ready to operate in the EU. It could take months to set up a bank account in that region, get the right licences and customer experience in place. With the right embedded payments provider, you could enable SEPA and other EU-based payment infrastructure with little more than a few lines of code.
International expansion isn’t the only part of your business that can scale with embedded payments. Since the technology runs on modern software design, there’s no real limit to the amount of services you can add or access. If you deal with over 100,000 transactions annually, having the necessary infrastructure powered by an API is vital.
For example, say you have a payroll software business that lets companies calculate each component of a wage. Normally, you would let your customers download a file for them to upload on their banking portal to complete the payroll process, then reconcile off of bank statements.
With embedded payments, you could allow your customers to transfer payroll directly from your platform into each worker's account. From there, it’s a matter of clicking a button on your platform, and the salary is on its way to the worker. For you, not only are you offering a more comprehensive product, but also generating additional revenue from this service.
How to embed payments into your company with Modulr
As an embedded payment solutions provider, we assist companies in the UK and EU in redesigning their business models with payments. Here’s a step by step of how we work with companies:
Step 1: Set up a consultation
The first step in your embedded payments journey starts with a conversation between you and one of our experts. (Click here to set up your first chat with us). We’ll ask you what pain points you’re trying to solve as well as where you see your business going and how you see payments interacting with that vision.
Once we’re ready to work together, we’ll put together a service level agreement (SLA). This agreement will set the minimum conditions for what we’ll deliver to you and your payments experience. You can then use the standards laid out to build your product and market it to your customers.
Step 2: Get your dedicated team of experts
You’ll then receive a dedicated team or “squad” of Modulr experts. These individuals cover all facets of the business including product, compliance, technical and business. Their goal is to help you maximise your embedded payment potential. They’ll be with you from day one and beyond to assist you with any query or problem you might have.
Step 3: Start creating with our modular building blocks
As a Modulr customer, you’re free to pick and choose from any of our many embedded payments features. These include:
Unlimited Electronic Money Institution accounts that let you create dedicated accounts with unique account numbers, sort codes or IBANs for each one of your customers or transactions.
Virtual cards. This feature lets you create virtual Visa or Mastercard payment cards for you and your customers. With it, you and your customers can make payments over these still popular networks while also staying on top of your reconciliation needs.
With the help of your squad, you can implement whichever features you need to get your embedded finance solution off of the ground.
Step 4: Connect your system to ours via API and go live
After you test your new solution in our sandbox, you only need to change a few lines of code to go live. Once you do, you and your customers will experience the full power of embedded payments.
Step 5: Add and remove features as you see fit
We built our embedded payment products to be modular (hence the name). With us, you can add and remove whichever features you need to. That way, you can evolve with your market and customers while never having to worry about keeping up.
Why choose Modulr as your embedded payments provider?
We’re an embedded payments provider, which means we help companies implement all the use cases described above.
Why choose us? Here are a few reasons:
Settle payments in seconds thanks to our UK and EU scheme connections
Your customers expect your platform to run 24/7. Your payments infrastructure should, too. With Modulr, you can make payments any time of the day or night, seven days a week. Our solution gives you a true, real-time payment experience to scale with thanks to our API. You won’t need to key instructions into a bank portal or create and upload a file to make payments in batch runs.
We can offer this level of instant, always-on payment processing due to four factors:
Our consistent uptime. We have a 99.99% uptime.
Direct connections to the main payment systems in the EU and UK. We participate directly in payment schemes in Europe. With Modulr, you get access to these systems without any other middlemen which allows you to settle payments as fast as possible.
Our EMI accounts let you settle payments on our books. We hold an EMI licence, which means you can create EMI accounts for your and your customers. These sit on our books, so you can make payments between them instantly, any time of the day (more on those below).
Our API connection can handle high payment volume. You initiate payments and receive confirmation from our API. You can send one payment instruction or thousands at a time; our API can handle it.
Get full visibility and automated reconciliation with our accounts on demand
Your bank will never be able to create thousands of bank accounts for you or your customers. With Modulr, you can do just that thanks to our API-driven payments and EMI licence. This means you can create individual accounts for your customers and facilitate payments and the movement of funds around the clock.
Each account comes with an account number and sort code or IBAN based on currency, providing oversight and automating reconciliation. Our API sends you transaction notification so it's easy to match payments and build customised payment flows based on specific milestones.
Leveraging our API, you get oversight and can set up automatic reconciliation. Our API sends you transaction notifications via webhooks when they happen so you can automate reconciliation and build customised payment flows based on specific milestones.
Creating an EMI account for you and your customers is a quick, four step process:
Onboard customers as usual.
Send an API request to create a customer profile in our system.
Once identity verification is complete, request the creation of an EMI account, with optional limits.
Instantly receive account details for immediate use.
To see how this looks in practice, let’s take an online marketplace as an example. With EMI accounts, buyers can pre-fund their accounts via bank transfers to make purchases on the spot. When they do, the money moves from the buyer’s account to the seller’s at that instant. Reconciliation is immediate as you know exactly who transferred what from the webhook notification.
Read our API reference documents to learn more about how our EMI account creation process works.
Receive high uptime and compliance commitments for greater service reliability
Your embedded payment solution should create opportunities, not liabilities. With Modulr, you can implement embedded payments knowing that:
Our system is always there when you need it with our 99.99% uptime.
We’ll send your payments out to the payment schemes as we receive them so they’ll settle as soon as possible.
We keep you and your customers safe through continuous compliance and transaction monitoring.
Handling your customers’ money means asking them to trust you. Breaking this bond through payment delays, compliance issues, or other problems – even if it isn’t your fault – is frustrating and harms your business.
Our regulatory requirements and licence as a payment and electronic money institution mean compliance is our first priority. With Modulr, you’ll know that we handle you and your customers' funds to the highest standards required of us by the FCA and De Nederlandsche Bank.
We run 24/7 with virtually uninterrupted uptime with a promise to give you fast access to the external payment systems you depend on. We don’t run any of our payments in batches and we manage each transaction individually. Combined with our EMI accounts, you can build your product around instant payments and full visibility.
Embed payments as you see fit with API-first software
Your payment setup shouldn’t get in the way of your products or stack. With our API, you can add embedded payment features without upending your existing tech infrastructure, interface design or customer experience. This technology makes it easy for you to build and manage your custom payment system.
All of our products pass through our API, which means you can add and remove features as you see fit. Whenever you want a new feature on your platform, it’s a matter of adding a few lines of code into your system. Likewise, if you no longer need a service or feature, all you need to do is remove it from your stack, and you’re set. We also designed our API reference documentation so your developers can move fast and keep your platform relevant to your customers’ needs.
For example, say you wanted to add SEPA payments to offer your services to customers in the eurozone. Your tech lead on this project can consult our API reference on European Payments and get to work right away in our Sandbox. By the time your Modulr team authorises the feature in your Modulr account, all the tech lead needs to do is move the code into production, and you’re all set: you’re now able to accept SEPA transfers. Whatever your embedded payment needs are you can solve them with our products and API.
Who is Modulr’s embedded payments solution good for
Companies of all sizes and industries use Modulr for their embedded payment needs. These are some of the sectors where we help businesses succeed when it comes to handling payments.
Fintech and financial services
We help financial services firms offer better solutions to their customers. In some cases, we help startups and scale ups build disruptive products that attempt to improve the status quo.
HyperJar, for example, uses our Faster Payments and EMI accounts to make saving easier for consumers.
In other cases, we give legacy institutions modern tools to improve their existing products. Hodge Bank uses our technology to deliver a better savings experience and keep failure rates low with our Confirmation of Payee feature.
The travel industry runs on a sophisticated virtual card solution, but that doesn’t mean we can’t improve it. Our virtual card services let travel companies create payment cards for each transaction or booking that they process.
Modulr customers can issue either multi-use cards or one-off cards. Firms operating in this space use this product for three important reasons:
Eliminating fraud: One-off cards expire after a single transaction which removes the risk that a bad actor could steal the details and funds.
Automating reconciliation: Companies link funds to each booking or transaction which lets them account for them without effort.
Reducing costs: As an issuer, we can cut out many of the card suppliers necessary to issue and process cards. In turn our customers can earn an incentive and save on supplier fees.
To the last point, many of our travel customers use the savings to collect additional revenue. Our benefits for travel companies go beyond just cards. Successful firms like Pax2pay use our embedded payment services to complement their card offering by adopting Faster Payments and SEPA payments with our API at the core.
Payroll and accounting
Companies offering B2B payroll and accounting services use Modulr to add even more value to their products. Payroll companies can bridge the gap between payroll calculation and payment with our EMI accounts and Faster Payment tools.
Accounting tools like Sage and Xero use our technology to offer in-platform payment functionality for their customers. Combined with our automated reconciliation through webhooks, these businesses provide instant reconciliation that complements their value proposition as a better way to manage money.
Marketplaces use our embedded payment tools to improve their customer experience and increase volume. EMI accounts are a popular feature for these platforms since they can assign one for each of their customers. Whenever a buyer and seller close a deal, the payment settles in our system immediately.
Both parties can fund their activities and withdrawal earnings thanks to the account number linked to each EMI account. These platforms also incorporate our webhooks into their software logic to trigger other events, which improves customer experiences and opens the door to new products.
Discover how Modulr's API can embed and help facilitate your accounts payable.
Any company needing to innovate the way they handle payments for the better
Our embedded payment solutions can work in almost any situation imaginable. Our tools can help your company make payments a driver of revenue and product innovation. If you have an embedded payments idea for your business, we’re ready to assist you in making it a reality. Contact us now to get the conversation started.
How Modulr helped BrightPay add payments to payroll
BrightPay, a UK payroll software company, partnered with us to address customer requests for better ways to pay salary. Previously, BrightPay customers needed to download payroll calculations for manual processing with their banks, resulting in time-consuming transfers and potential errors. The reconciliation process was also tedious. To tackle these issues, BrightPay leveraged Modulr's:
Faster Payment rails
API to enable direct payroll payments on their platform
This product offering allows their customers to make instant transactions with automatic reconciliation through webhook notifications. This not only streamlined the payroll process but also allowed BrightPay to introduce a new revenue stream by charging for the service. The partnership improved customer experience and created additional income through Modulr's embedded payment solutions.
Learn more about our work together: BrightPay brings fast, secure payments to payroll, powered by Modulr
Embed your B2B payments with Modulr
Modulr helps companies of all sizes and industries incorporate embedded payments to make the most of payments. Contact us today to see how we can help you succeed with payments.