The emergence of embedded finance has supercharged the digital transformation of B2B payments and commerce.
Embedded payments are, increasingly, everywhere. With the news Tuesday (Aug. 6) that Web Monetization is coming to Google Chrome, allowing website owners to receive embedded micro-payments as an additional way to generate revenue, the implications the rise of embedded payments could have for online B2B commerce and marketplace platforms, as well as the opportunity for small- to medium-sized businesses (SMBs), is top of mind for both firms and the financial institutions servicing them.
Traditional B2B transactions often involve lengthy payment cycles and cumbersome processes, including invoicing, purchase orders and manual reconciliations. Embedded finance can speed these processes by integrating payment solutions directly into B2B platforms. Companies can offer instant credit lines, automated invoicing and real-time payment tracking, reducing friction and accelerating the sales cycle.
By integrating financial services directly into the B2B experience — and offering services such as payment, lending, insurance and other financial products — companies are increasingly embracing their potential benefits.
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As businesses seek more efficient ways to manage payments and working capital, embedded finance is emerging as a transformative force in B2B commerce. That’s according to Alan Koenigsberg, senior vice president and global head of large, middle market, industry verticals and working capital solutions at Visa, who told PYMNTS that while embedded finance has been a staple in consumer eCommerce for years, its application in the B2B space is gaining momentum.
In a separate conversation, Jim Colassano, senior vice president, RTP, product development and strategy at The Clearing House, echoed that analysis and told PYMNTS that the next stop for embedded finance is B2B commerce.
Research in “The Embedded Finance Ecosystem: Logistics and Wholesale Trade Edition,” a PYMNTS Intelligence and Carat from Fiserv collaboration, finds that a majority of marketplaces (57%) are “highly interested” in further innovating their existing digital wallet offerings.
In June, Amazon Business, Amazon’s online business-to-business procurement store, announced a number of new features to help large business customers simplify the way they shop for business supplies. Among the company’s offerings, the Amazon Business App Center includes integrated shopping, accounting management, expense management, rewards and recognition inventory management and business analytics.
As embedded payment solutions gain traction in the B2B space, businesses face the challenge of integrating these solutions into their existing technology stacks. Eric Frankovic, general manager of corporate payments at WEX, stressed to PYMNTS the importance of deep industry knowledge and strong partnerships in overcoming these challenges.
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Beyond B2B commerce, the rise of embedded finance also presents numerous opportunities for SMBs, which are often the lifeblood of economic growth but commonly face unique challenges in accessing financial services from traditional providers.
Embedded finance can democratize access to capital by leveraging transactional data and advanced analytics. B2B platforms can offer personalized financing solutions that are faster and more flexible than traditional bank loans. This can empower SMBs to invest in new technologies, expand their product lines and enter new markets.
PYMNTS Intelligence in “The Embedded Lending Opportunity: U.S. Edition,” a study commissioned by Visa, revealed that more than four in 10 small businesses (42%) surveyed report that they are very likely to switch providers to access embedded lending.
By integrating financial services into their platforms, SMBs can offer a more seamless and convenient experience for their customers. This includes everything from instant payments and credit options to integrated insurance and investment products. A superior customer experience can drive loyalty, increase sales and provide a competitive edge in a crowded market.
“We see merchants that are looking for ways to increase conversions,” especially over the past year and a half of high inflation, Sunil Sachdev, senior vice president, head of embedded finance at Fiserv, explained to PYMNTS. “They don’t want to be financial institutions, and they don’t want to underwrite credit. But at the same time, they want to be able to help their customers buy more stuff.”
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