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Nobody gets up in the morning excited about making payments....

By Alan Hawkins, PayTech Consulting

It seems like embedded payments has risen from

nowhere to become the leading trend in financial

services in no time at all. This is true in one sense, but

of course it didn’t just come out of nowhere.

Its origins can be found in the business of white

labeling, a familiar concept for many of us, with the

merchant branded credit card as a paradigm for

‘white labeling 1.0’.


The big difference with embedded payments is that it is no

longer about the form factor of the card, but about the

seamless integration into merchant applications that make

payments largely invisible for end users. It’s all about

improving the user experience, and in so doing enhancing

customer value, increasing loyalty and improving monetisation

for merchants.


This shift from white labeling to embedded payments is an

important lesson for those of us in commercial payments too:

we need to focus more on improving the purchasing process

and experience, not just in the form of the payment

transaction. In short payments are simply a means to an end

and not the end in itself.


And in the same way that embedded payments are

revolutionising white labelling, I believe that commercial

cards will be transformed by spend management platforms.

A new value chain is emerging and it is going from vertical to

horizontal; from a transaction processing focus to the

fulfilment of the customer’s purchasing process - the

customer journey.


The form factor moving from physical to virtual cards is of

course not the end game. Virtual cards are simply an

enabler of a wider trend, that can change the face of B2B

commerce. It’s already happening with embedded

payments for consumers, and banks in the B2B space need

to strategically decide how far along the purchasing value

chain they wish to participate.


Taking a leaf out of the embedded payments playbook, and

by addressing the purchasing processes upstream and

downstream of the payment transaction itself is the best way

for banks to stay truly engaged with customers and increase

the value they can offer.


This is where the convergence of commercial payments on the

buy side and embedded payments on the sell side can make a

real difference to B2B commerce.


Commercial payments are complex, layered and highly

regulated. Any given B2B transaction typically involves

multiple stakeholders (the purchaser, the budget owner, the

procurement dept, the accounts payable team etc); different

payment terms (pay on order, pay on invoice, net terms etc)

and different payment options (commercial card, A2A, cross

border payments etc). The speed and ease of these embedded

payments will need to mask the significant amount of

transactional plumbing that must be orchestrated behind the

scenes both on the sell-side and the buy-side.


And it is unlikely that many merchants will be able to address

this complexity on their own. Perhaps a key to unlock B2B

embedded payments lies not just in the merchant platform

itself, but in the software that the bank or fintech offers its

(buy-side) business customers to manage and control their

commercial cards and payments. Could the spend

management platform will be the ‘middleware’ required to

unleash the full potential of B2B embedded payments, yet still

maintain the workflow, control and processes sought by

business purchasers and administrators?


I believe that spend management and embedded payments

can and should work hand in hand in streamlining B2B

commerce. They represent both sides of a commercial

transaction. Both B2B embedded payments and spend

management are still in their infancy, but it seems that in

order to crack the B2B nut, they are better playing to their

respective strengths. Only by working together will they bring

incremental value throughout the value chain, for buyers and

suppliers alike.


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