EXPERT FORECAST : BANKING AND FINANCE

Embedded payments have firmly entrenched themselves in the fabric of the global e-commerce scene , showcasing their profound impact . Johannes Kolbeinsson , CEO of PAYSTRAX , foresees a promising trajectory for embedded payments , yet underscores the vast reservoir of untapped opportunities they harbour .

But while the payment system is quickly becoming the go-to method when shopping online and for in-app purchases , it will need to shake off current doubts about its ability to create truly seamless payments – particularly around the current user experience , the authentication process and whether or not we can really call them embedded payments .

The growing dominance of embedded payments

There is a growing consensus that every company is becoming a FinTech company . Apple ’ s recent foray into mobile wallets and credit cards has shown how it can become a lucrative market for general tech companies , while Shopify has also moved quickly to combine its e-commerce offering with seamless payment options .

There is a lot of logic behind businesses like this shifting into FinTech – they like streamlining operations , they like systems , and they like control . They also love any opportunity to keep consumers within their apps and therefore more likely to make final purchases .

This consensus extends into the current hot trend in financial systems – embedded payments . Back in 2020 , revenues from embedded finance payments stood at around US $ 16 billion – by 2025 , they ’ re forecast to top US $ 140 billion . The ease and convenience driven by one-click checkout buttons in apps such as Uber and buy-now-pay-later platforms like Klarna is seeing the method quickly become the next dominant force in payments .

However , the excitement around the new payment innovation needs to be tempered with its current limitations . For embedded payments , issues of fraud protection , authentication and the core user experience are all barriers that need to be overcome if we ’ re to experience truly seamless and instant payments .

Still plenty of friction

Arguably the most crucial consideration for companies taking on embedded payments has to be risk management . Making the online experience as safe as the in-store experience for many companies should be the driving issue when onboarding new financial tech .

The problem right now is that many companies are jumping on the bandwagon without doing the proper due diligence . Businesses are relying on themselves to relay and curate embedded payment architecture across their platforms without the requisite technological knowledge . This requires a fine creation of three foundational layers of service , digital infrastructure , transaction processing and service enablement .

This is important , as the user experience sits alongside risk management as one of the core reasons why people would use such a method . We saw this with PayPal ’ s innovative and helpful email and password payment system in 1998 . But whereas embedded payments have certainly www . intelligentfin . tech

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