In our last blog, we explored why online marketplaces and on demand services are embedding payments, in particular.
In this, the third blog in our five-part series, we take a look at the evolution of the online marketplace specifically, and the role embedded financial services will play in its next iteration.
During the dotcom revolution, online marketplaces soared in popularity and these platforms have become some of the best-known brands in the world. With the explosion of the internet in the 1990s, online marketplaces became commerce powerhouses, seizing market share every year from traditional companies. Online marketplaces continue to evolve considerably, transforming into a dominant part of our worldwide economy.
The success of the online marketplace is inextricably linked to advances in payment technology. Fast, efficient payment solutions have become instrumental to their growth and evolution.
What Are Embedded Payments?
Embedded payments are changing the game for financial services.
It’s a concept that’s been around for a while now and one you’ve likely already encountered. If you’ve ever hailed an Uber or ordered takeaway through Deliveroo, then you’re already familiar with the concept of embedded payments. Put simply, embedded payments are a financial service that has been embedded into a non-financial platform to create a seamless and customised user experience.
How are Embedded Payments Changing the Online Marketplace?
Embedded payments allow businesses to differentiate their online marketplaces by offering a smooth merchant experience with less friction, and a 'stickier' proposition.
Clever online marketplaces are leveraging and reshaping their business models by embedding payments into their merchant offering and positioning themselves at the forefront of eCommerce innovation.
Embedded payments covers a full suite of capabilities, including Faster Payments, Direct Debit transactions, accounts, cards and Open Banking. Enabled through APIs, embedded payments are set to radically transform financial services.
How Can Online Marketplaces Benefit From Embedded Payments?
But how can online marketplaces benefit from embedded payment solutions? By utilising the power of embedded payments, online marketplaces can:
- Provide merchants with full control over their finances
- Enable embedded financial services functionality (such as accounts, bill payments and money transfers)
- Allow merchants to easily access and manage funds and balances
- Allow merchants to immediately spend their earned sales with a prepaid business card
- Enhance the consumer payments journey
- Differentiate from their competition and create lucrative new revenue streams
- Boost long-term merchant loyalty
- Gain insight into merchant behaviour and financial activity, to improve future product offerings
In a highly competitive market, providing merchants with full control over their finances through embedded payments will benefit online marketplace businesses as well as their customers. By offering digital payments accounts to merchants at affordable prices, with fast and easy onboarding, marketplaces can more efficiently utilise and scale their financial services capabilities, all while using less internal resource.