Member Article

5 Ways Embedded Payments Fuel Growth for Digital Platforms

By Sadra Hosseini, CEO of Ryft.

E-commerce stores are united universally by a common enemy, the cart abandonment problem. And it’s a significant one at that, resulting in a staggering estimated loss of £18 billion in annual sales revenue. However, amidst this challenge, the solution lies in the form of embedded payments, and making the checkout experience easy for customers.

Picture this: a potential customer visits your online store, browses through the products, adds items to their cart, but then hesitates at the checkout. The reasons behind this hesitation are varied - from clunky payment processes to security concerns. This is where embedded payments step in, transforming the way transactions happen and, more importantly, rescuing your lost revenue.

What are embedded payments and why should I care?

They refer to the integration of payment capabilities directly into digital platforms. This integration allows users to make transactions seamlessly without the need to redirect to an external payment gateway. By embedding payments within their platforms, businesses can provide a frictionless user experience, reducing the likelihood of cart abandonment and increasing conversion rates.

Recent surveys of US and UK adults identified “complicated checkouts” and a lack of payment options among the top cart abandonment reasons. The survey also found that including a “buy now, pay later” option can increase conversions by 44%. Making the checkout process easier for the consumer is key.

1. Strategic Convenience and empowering customers

If a consumer is shopping online for a new pair of shoes, with embedded payments, they don’t have to go through the hassle of being redirected to a separate payment gateway. Instead, they can simply enter their payment details right there on the platform they’re using.

But the benefits of embedded payments go beyond just the user experience. For businesses, they can also lead to increased revenue.

2. Catalysing Conversions

E-commerce sites can benefit from a 35% increase in conversion rate through better checkout design.

One of the simplest ways to achieve this is to ensure that consumers can purchase their goods via a same-page checkout system.

This has been a particular focus for Amazon and TikTok. Amazon’s ‘1-Click’ patent alone is estimated to be worth billions of dollars, and a recent increase in TikTok Shop popularity in the UK, with their 3-Click checkout. We’ve also recently seen this reflected in the partnership between Amazon and Meta, to enable social-media shopping with a frictionless experience.

49% of survey participants stated that they would be willing to abandon a purchase if the merchant involved had failed to provide a same-page checkout.

The integration of embedded payments can have a significant impact on profit margins for digital platforms. They contribute to higher conversion rates and increased overall sales. The direct handling of transactions allows platforms to reduce reliance on third-party payment processors, resulting in cost savings and improved profit margins.

3. Uncovering unseen data value

Embedded payments also enable businesses to gather valuable data and insights. By having the payment process integrated into their platforms, businesses can track customer behaviour, preferences, and purchasing patterns. This data can be used to personalise the user experience, offer targeted promotions, and improve overall customer satisfaction.

Providing personalised offers can be an important part of the customer experience and has played a role in the success of the likes of businesses such as Uber, Netflix, Instagram, and Airbnb just to name a few.

4. Diversifying Revenue

One key revenue stream facilitated by embedded payments is transaction fees. Digital platforms can charge a small percentage or fixed fee for each transaction processed. By handling payments directly, platforms can increase their share of revenue from each transaction, enhancing profitability.

5. Enabling broader market access

They provide avenues for businesses to introduce additional revenue-generating features. For example, platforms can offer premium payment services, such as expedited checkout or enhanced security measures, for a fee. By providing value-added services, platforms can increase customer loyalty while generating additional revenue streams. To conclude, embedded payments are not just a solution to cart abandonment; they are a strategic investment in the future of your business. From enhanced convenience to data-driven insights, to catalysing conversions, the benefits are multifaceted. And most importantly, they result in an approximately 35% increase in conversion rates when your payment process is optimised.

This was posted in Bdaily's Members' News section by Ryft .