Unlocking the untapped potential of embedded payments in B2B

Nirav Patel, CEO of Andaria, discusses the advantages embedded payments offer in the B2B payments space.

BaaS and Embedded Finance are two emerging trends in the financial services industry. They both offer businesses the ability to integrate financial services into their own products and services, but they do so in different ways.

BaaS is a model where a licenced financial institution (FI) provides its banking infrastructure and services to third-party businesses. This allows businesses to offer their own customers banking products and services, such as checking accounts, savings accounts, and loans. However, businesses that use BaaS are still responsible for implementing and managing the financial infrastructure, as well as complying with regulatory requirements.

Embedded Finance is a model where typically a non-financial institution (NFI) integrates financial services into its own products and services. This allows NFIs to offer financial products and services to their own customers, without having to become a licenced FI. Embedded Finance providers typically handle all the financial infrastructure and regulatory compliance, so NFIs can focus on their core products and services.

Embedded Finance is a simpler and more cost-effective solution for businesses. With Embedded Finance, businesses don't have to worry about implementing and managing the financial infrastructure or having to comply with regulatory requirements.

Embedded payments can deliver several benefits in B2B payments, including:

Increased efficiency: Embedded payments can help to streamline the payment process by eliminating the need for manual data entry and reconciliation. This can save businesses time and money, and it can also help to reduce errors.

Improved security: Embedded payments can help to improve security by using encryption and other security measures to protect sensitive financial data. This can help to reduce the risk of fraud and data breaches.

Enhanced customer experience: Embedded payments can help to improve the customer experience by making it easier and more convenient for businesses to pay each other. This can lead to increased customer satisfaction and loyalty.

Expanded payment options: Embedded payments can help to expand the payment options available to businesses. This can include offering new payment methods, such as real-time payments, that are not currently available through traditional payment methods.

Reduced costs: Embedded payments can help to reduce costs for businesses by eliminating the need to maintain their own payment processing infrastructure. This can free up resources that can be used for other purposes, such as growing the business.

Embedded Payments can help NFIs to create new revenue lines. By integrating financial services into their own products and services, these businesses can offer their customers a wider range of financial products and services, which can lead to increased sales and profits.

Providing these additional services in an easily accessible way can help businesses create new customer journeys and greater ‘stickiness’ with their customers – whether those are other businesses or consumers.

Embedded Payments is a very scalable solution for businesses. As businesses grow, they can easily add new financial services to their offerings without having to invest in new infrastructure or compliance.

Non-financial entities would find this almost impossible to build and sustain in-house. Having a partner who can provide the technology, regulatory licence, payment rails, and KYC capabilities takes away most hurdles for these companies. Especially if all that functionality can be accessed via simple API integrations.

There are endless potential use cases for embedded payments. So far, the focus of embedded payments has mostly been on the consumer side, but there is a huge untapped opportunity in the B2B space too.

For example, wholesalers could provide embedded payments as an integrated service within their ecommerce platform. This would allow customers to make purchases and complete transactions without leaving the website – enhancing the user experience and reducing friction in the buying process. This would leverage P2P capabilities, allowing the wholesaler to generate either vIBANs for their respective customers or issue payment cards.

Gig Economy and Earned Wage Platforms, such as ride-sharing or freelance marketplaces, utilise embedded payments for instant payments and financial services to workers. It enables immediate access to earnings, enhancing financial flexibility.

Our embedded payments product is due to launch very soon (Autumn 2023), and we are already engaged with interested parties who want to partner with us, so we’re very excited about that. We will continue to invest in adding to our tech stack through both in-house development and strategic partnerships. The approach that we take is usually defined by the demand that we see, this makes sure we are market-led and build solutions that address real-world problems for businesses.

We also continue to invest in evolving our technology in response to market change and customer demand – this is vital for success in our industry. There are specialist areas where it makes much more sense for us to partner, rather than build in-house. Our partnerships are very important to get right, and we are already in discussion with a few key specialists in the areas where we need support to deliver the right innovations.

This interview was first published in The Paypers' Embedded Finance and Banking-as-a-Service Report 2023, which is the latest comprehensive market overview and analysis focusing on the key products and players within the Embedded Finance and BaaS ecosystem.     

About Nirav Patel

Nirav Patel is an accomplished payments and banking executive, who specialises in accelerating companies through technology and innovation. Nirav was appointed as CEO of Andaria in November 2020. He leads the company's strategic vision and drives its ambitions to become a powerhouse in Embedded Finance.

About Andaria

Andaria is a fintech and a licensed e-money institution (EMI) in both the UK and Malta.  Through the company’s global multicurrency business accounts and Embedded Finance solutions, Andaria is on a mission to make digital financial services more accessible, simple, and transparent for all businesses.