The continued growth of ecommerce underlines its apparent resilience against economic headwinds and geopolitical instability. This growth presents myriad opportunities for fintech and ecommerce businesses, as they create more integrated payment experiences for end users.
Ecommerce platforms leverage partnerships with fintech companies to offer built-in financial solutions to end users, such as BNPL (Buy Now, Pay Later), one-click payments, co-branded credit cards, embedded wallets, and more. Through these partnerships, fintechs can tap into a massive user base, and ecommerce platforms offer an optimised payment experience to their customers while unlocking new revenue streams from added monetisation and revenue share opportunities. For end users, this means a more convenient and unified shopping experience. Fintech companies can reduce their Cost per Acquisition (CPA), and ecommerce grows their revenue, while end users enjoy a more secure and seamless experience. This is all paving the way to more sustainable growth.
The market value of Embedded Finance is expected to grow to USD 7.2 trillion by 2030, with insurance, financing, and payments sectors taking the lead. B2B BNPL and trade financing solutions are driving this growth, providing merchants with faster access to working capital and accelerating adoption by businesses and consumers.
Meanwhile, fintech-enabled marketplaces and platforms are commanding higher valuations than their counterparts, demonstrating the power of Embedded Finance to enhance customer experience and drive business growth. Through 2024, we expect to see a continued convergence of financial services and non-financial experiences. This trend will result in a significant portion of fintech revenue being generated through embedded channels, further solidifying the transformative impact of this emerging technology.
Wallet infrastructure empowers businesses to create digital wallets for their customers, enabling them to store, send, and receive funds effortlessly. The same infrastructure also provides a solid foundation for marketplaces and platforms to capture additional revenue streams through wallet-facilitated transactions within their apps and websites. Payment flows operating outside of a wallet infrastructure might limit customisation and hinder revenue potential. Furthermore, the e-wallets’ ability to hold funds due to their Electronic Money Institution (EMI) licence grants platforms greater flexibility to retain funds within their ecosystem when necessary.
On the operational front, a wallet infrastructure facilitates streamlined money movements within the platform, enabling marketplaces to establish multiple wallet accounts for each transaction type, including commission, platform fees, sellers’ wallets, and even buyer wallets.
This segmentation enhances financial transparency, providing both sellers and buyers with greater control over their funds. Furthermore, the same wallet infrastructure can be the foundation for building an integrated seller earnings management experience directly within the platform. This empowers sellers to track their earnings, manage payouts, and access comprehensive financial insights, streamlining their operations and fostering customer satisfaction.
Although it brings a raft of benefits, a wallet infrastructure alone is not enough to create a scalable payment flow. A payment orchestration layer brings together various payment systems into a single, interoperable ecosystem, providing greater control and flexibility in scaling payment operations. In a vendor-locked payment setup, payments data is often captured and secured in a non-interoperable token vault within a payment provider.
With the web of payment technologies in an Embedded Finance setup, building automation without an interoperable token vault can be challenging. Furthermore, managing refunds and chargebacks from multiple payment providers and payment methods could require platforms to build their own unified PaymentOps ledger – or juggle multiple dashboards of different payment providers. Both approaches are highly time- and resource-consuming.
A payment orchestration layer does not only unify the entirety of operations; it also offers a network of third-party providers such as payment methods, fraud prevention solutions, CMS, and more, allowing faster integrations.
With unified experiences becoming the new standard, we’ll see a shift in the ecommerce payment stack into a more acquirer-agnostic and interconnected ecosystem.
Leveraging both a wallet-based payment infrastructure and payment orchestration, a modern marketplace can achieve agile and scalable operations by unifying its operations in a single ecosystem and unlocking efficiency and revenue growth. This enables their whole infrastructure to be future-proof as digital commerce continues to evolve.
This editorial piece was first published in The Paypers' Fintech for Marketplaces and Platforms Report 2024 which taps into the fast, ever-expanding ecommerce industry, being the ultimate source of information for businesses looking to expand and grow their consumer base.
Francesc Altisent is VP of Product, Payments & Banking at Mangopay. Based in Munich, Francesc joined Mangopay in 2023, having previously worked at Airwallex, Amazon, and Adyen.
Created in 2013, Mangopay empowers the platform economy with its modular payment infrastructure. Built around its programmable e-wallet solution, Mangopay’s end-to-end infrastructure covers platform payment needs, from pay-in and payout to comprehensive fraud prevention and FX, for many business models and workflows. The company has 235 million end users of its services and has processed over EUR 100 billion in transactions since its inception.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now