Kate Hampton, Chief Strategy Officer at NMI, recently shared her views and insights with Crowdfund Insider.
As noted in the update shared with CI, embedded payments are revolutionizing the financial landscape, with major companies like Google Chrome leading the way. By integrating embedded payment technology, Google Chrome enables website owners to receive direct payments from visitors, transforming online transactions.
This shift shows the rising movement of integrating embedded payments to increase transaction experience and maintain a consistent consumer experience. Adopting embedded payments is crucial for businesses to stay competitive and meet industry standards. Businesses that fail to offer a seamless payment experience risk losing customers to competitors who do.
Kate Hampton, Chief Strategy Officer at NMI, outlined why businesses must prioritize embedded payments to stay current and catch up. She explained how embedded payments increase consumer engagement and retention by attracting customers who prefer easy and convenient payment options.
Our chat with Kate Hampton is shared below.
Crowdfund Insider: How do embedded payments help businesses create a better overall customer experience?
Kate Hampton: Embedded payments enhance the overall customer experience by providing a seamless and consistent purchasing journey across all platforms. By integrating the payment component directly into the cardholder’s point of interaction–whether through a mobile app, in-store checkout or kiosk–embedded payments further simplify the payment process.
This integration ensures a smooth and efficient transaction experience, regardless of the shopping method. Embedded payments enable merchants to quickly shift payment capabilities by integrating payment processing directly into their existing platforms, allowing for seamless updates and faster adoption of new payment methods. This not only enhances the customer experience by making it more personalized and efficient, but it also ensures customers always have access to the latest and most convenient payment options.
Crowdfund Insider: How does this improved customer experience boost customer retention?
Kate Hampton: Customers are more inclined to return to a merchant when their payment needs and preferences are met, with 76% saying they prefer businesses to accept card payments. Embedded payment technology ensures a smooth checkout process, which enhances customer satisfaction, thus boosting loyalty and retention. Creating the most convenient and flexible payment experiences possible goes a long way to help keep customers coming back.
Convenience is key, as 84% of customers say it is the primary reason for choosing their preferred payment methods, showing the importance of meeting payment needs to encourage customer retention. Embedded finance also increases customer confidence, knowing they are paying with a business’s secure solution across different channels. By consistently offering a streamlined checkout experience, businesses can significantly improve customer retention and build a loyal customer base.
Crowdfund Insider: What are the key differences between embedded payments and traditional payment functions?
Kate Hampton: The key difference between embedded payments and traditional payment methods is that they are integrated directly into a business’s management software, making them an integral part of operations. Unlike traditional payments, which lag in adopting new technologies, embedded payment systems seamlessly incorporate new innovations. By embedding the payment step within management software, developers can present it at the most appropriate moment and customize the experience with additional value or payment methods.
This capability allows businesses to adapt quickly and stay competitive in a rapidly evolving payment landscape. Merchants can better cater to consumer preferences by providing flexible payment options, unlike traditional payment methods. By leveraging embedded payment technology, businesses not only enhance customer satisfaction but will also gain an advantage in a competitive market.
Crowdfund Insider: What future trends do you see in embedded payments, and how should companies prepare for them?
Kate Hampton: We are just beginning to explore the potential of embedded payments, which are quickly reshaping the financial landscape as technology becomes an integral part of daily life. This transformation is changing how both customers and businesses manage transactions. Embedded payments are becoming the industry standard, with major players like Mastercard making moves to prioritize embedded payment systems.
An emerging trend to watch is how AI will transform the payments landscape, and embedded payments specifically. AI personalizes payment experiences by analyzing consumer data and adapting to real-time preferences. Additionally, AI is being integrated to detect and prevent fraud, identifying threats before they affect businesses. As AI continues to advance, its integration into embedded systems will provide businesses with new ways to engage customers and stay ahead in a rapidly shifting environment.
Crowdfund Insider: Are there benefits of implementing embedded payments for merchants beyond just improving transactions? Do they help improve business management and other functions?
Kate Hampton: Embedded payments have many advantages for merchants and their businesses. Most notably, embedded payments increase consumer spending since customers are more likely to make more purchases when it’s easier to pay and when they clearly recognize the value of their purchase and who is involved. In fact, nearly a quarter of U.S. online consumers have abandoned an order in the past quarter alone solely due to a “too long or complicated checkout process.”
Embedded payments also help merchants easily implement different payment technologies, and consumers are more likely to spend more when their preferred payment method is available. For example, nearly two-thirds of Gen Zers say they spend more money when they are able to pay with a digital wallet.
The unsung potential of embedded payments lies in its ability to serve as a central hub, streamlining data management and enabling merchants to share information across multiple functions efficiently. This approach to embedded payments creates a broader use by offering practical solutions for managing and integrating financial processes within business systems. Overall, embedded payments can help merchants leverage payment data to make data-driven decisions and improve their business efficiency.
Crowdfund Insider: How can software platforms ensure they are well set up to build out embedded payment capabilities?
Kate Hampton: Embedding payments into a current software platform is no small task and requires developers to understand financial technologies, systems and regulations. Software platforms must consider the full payments ecosystem and ensure that any solution they are embedding is compliant with regulations like the Payment Card Industry Data Security Standard (PCI DSS).
That said, security should also be a main focus of embedding payments in order to effectively manage risk and reduce the chance of fraudulent transactions. Embedded payments must also be set up to maximize the revenue earned from transactions or else merchants will not be getting the full advantage of embedded payments. Structuring these payments toward revenue sharing and monetization, scaling the volume of payments processed through the platform and optimizing payment processing costs can all help software platforms maximize revenue earned from embedded payments.
Crowdfund Insider: Are there any potential challenges or considerations businesses should be mindful of when implementing embedded payments?
Kate Hampton: Cost is always a challenge for businesses looking to implement embedded payments but ultimately, the benefits of embedded payments far outweigh the costs by boosting revenue and customer retention. Technical knowledge and implementation can be challenges as well for businesses integrating embedded payments on their own. One of the best things a business looking to implement embedded payments can do is to collaborate with a payments partner who can quickly and easily walk them through the implementation process and ensure embedded payments are maximized within their technology stack.
Crowdfund Insider: Is there still a place for traditional payment methods like cash or check alongside embedded payments? Is it still valuable for merchants to accept these payments?
Kate Hampton: Overall, payments must be digital-first in order to prioritize new technologies and evolving consumer payment needs. Embedded payments are the best way to meet modern consumer payment expectations today and prepare businesses for future payment innovation.
There will always be older consumers who prefer to pay with traditional payment methods like cash or physical credit or debit cards so these methods are not going away anytime soon from most retail settings. There are some scenarios where we will see cash going away. For example, 72% of all vending transactions are now cash-free, so it would not be surprising to see vending machines or kiosks in the future that do not accept cash. In these settings, embedded payments are ripe for adoption, as they are integrated directly into software at the merchant’s point of interaction, allowing for customized experiences based on the cardholder’s identity and context.
It’s always most valuable for the merchant to accept whatever payment method their consumer prefers, and embedded payments are the best way for merchants to accept a variety of different payment methods, as well as quickly implement new payment technologies.
Customers are more inclined to return to a merchant when their payment needs and preferences are met, with 76% saying they prefer businesses to accept card payments. Embedded payment technology ensures a smooth checkout process, which enhances customer satisfaction, thus boosting loyalty and retention. Creating the most convenient and flexible payment experiences possible goes a long way to help keep customers coming back.
Convenience is key, as 84% of customers say it is the primary reason for choosing their preferred payment methods, showing the importance of meeting payment needs to encourage customer retention. Embedded finance also increases customer confidence, knowing they are paying with a business’s secure solution across different channels. By consistently offering a streamlined checkout experience, businesses can significantly improve customer retention and build a loyal customer base.