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
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
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