What Are Embedded Payments?

Embedded payments are everywhere—though due to their inherent nature, you may not have noticed them. Embedded payments are meant to integrate with the existing software, offering a consistent and frictionless user experience. From ride-sharing apps to accounting software, payments are becoming increasingly seamless.

Why Embedded Payments?

Embedded payments allow software developers to utilize a payment provider’s API to ingrain the many behind-the-scenes processes involved in processing a payment, from authentication to settlement. And the best part? ISVs and SaaS businesses reap the reward of a revenue stream from the payment processing fees collected on their platform. 

Real-Life Example

To illustrate what we mean by embedded payments, imagine you develop real estate management software for property managers. Now envision two scenarios: scenario A, in which payments are not embedded, and scenario B, where payments are a part of the software.

Scenario A

In scenario A, your property management customers process payments through a third-party processor. In order to accept payments, property managers direct homeowners to pay their annual dues using an external link to the processor’s payment form. While simple and convenient, this solution diverts the homeowners to another site, which can be jarring, discontinuous, and even a little suspect. Though security is (hopefully?!) covered under the third-party payments provider, with no transaction data, you have very little insight into your customers’ financials. This also adds a layer of complexity for your customer since they may be exporting transaction data from the payment provider to import and evaluate in another tool, resulting in a manual process prone to error. Plus, you leave money on the table, handing over revenue to whichever payment processor the property manager chooses. 

Scenario B

In scenario B, payments are embedded in your software using the API of your integrated payments partner. As property managers utilize your software for their daily business needs, they take advantage of the built-in invoicing functionality, which alerts homeowners to pay their dues via an alert on their HOA portal. Homeowners also receive an email with a link to the property manager’s branded payment form. Sensitive payment information is collected using drop-in fields from the provider’s API, which tokenizes and sends the data to your payment provider’s gateway. This way, payment data never touches your servers, and you ensure the security of your customers’ card data. 

Additionally, since all other transaction data is available within your solution via the payment provider’s API, you gain valuable insight into your customer’s finances while providing them with a convenient all-in-one tool unique to their vertical. In turn, this enforces dependence on your solution, increasing customer retention and generating an additional revenue stream for your business. 

The Takeaway

Embedded payments represent an incredible opportunity for ISVs to serve their clients better while driving an additional income stream. Creating a frictionless payment process within your tool increases customer satisfaction, retention rates and sales. 

Ready to start accepting payments? Check out Embedded Payments | Exact Payments.