Overview

Today’s consumer journey is an omnichannel experience, seamlessly blending online, in-store, and mobile channels. Businesses, recognizing this shift, are increasingly focusing on enhancing the customer experience by embedding payment functionalities directly within their digital business platforms. This strategic move not only streamlines transactions but also fosters deeper customer engagement.

Frost & Sullivan's analysis estimates the global embedded payments industry revenue is experiencing rapid growth, surpassing $37 billion in 2024¹. This surge is primarily driven by the escalating popularity of mobile apps and e-commerce, particularly among businesses seeking to integrate relevant payment options within their customer journeys.

As embedded payments gain traction, their scope extends beyond accepting digital payments and basic transaction processing. Consumers increasingly expect seamless experiences across various touchpoints and prefer a combination of payments and loyalty applications (e.g., digital offers and smart incentives). This convergence necessitates a holistic approach to customer engagement, where payment solutions are seamlessly integrated with loyalty programs to enhance the overall customer experience and drive deeper brand loyalty.

Businesses seek integrated solutions that offer comprehensive payment core features, robust reporting, and insightful customer analytics. Payment Service Providers (PSPs) are responding to this demand by developing sophisticated offerings that cater to these evolving needs. The advent of next-generation technologies, such as open APIs and cloud computing, significantly accelerated this evolution. PSPs leverage these next-generation technologies to facilitate seamless and faster integration, enabling businesses of all sizes and across various sectors to seamlessly integrate payment capabilities into their platforms.

Leading brands like Apple, Google, and Walmart have already embraced embedded payments, recognizing their potential to enhance customer conversion rates, boost transaction volumes, and unlock new growth opportunities. Furthermore, established e-commerce global and regional providers like Amazon, Flipkart, and Shopee are actively developing their own embedded payment capabilities, leveraging their existing user bases and technological prowess. By integrating digital wallet features within their mobile app ecosystems, these providers are not only streamlining payments for their customers but also expanding their revenue streams and solidifying their position within the digital commerce landscape.

Forward Thinking

Embedded payments will play an increasingly pivotal role in shaping the future of commerce and digital financial services. The use of next-generation technologies and data points generated through these embedded solutions will enable businesses to:

• Personalize customer experience: Analyze customer behavior to tailor product offerings and recommendations, for deeper customer engagement and loyalty.
• Develop innovative financial products: Leverage data insights to create new verticals and innovative financial products such as micro-loans and saving accounts.

Furthermore, PSPs are exploring new avenues for growth beyond traditional payment processing. PSPs can create more integrated offerings for their clients and drive more sustainable growth, by offering adjacent value-added solutions such as fraud management, marketing systems, data analytics, and device management platforms.

In an increasingly global world, businesses prefer working with PSPs that can seamlessly operate across borders, simplifying complex integrations with local payment rails and partners. This necessitates the development of global platforms with robust local capabilities, including payment options, service support, and effective risk management. To achieve this, PSPs will need to strategically partner with or acquire local companies to access their unique market expertise and payment networks.

To learn more about Frost & Sullivan’s perspectives on the global embedded payments market and competitive profiles of service providers, please visit:

• Growth Opportunities Analysis: https://store.frost.com/growth-opportunities-in-embedded-payments-global-2024-2029.html
• Frost Radar™: https://store.frost.com/frost-radartm-embedded-payments-2024.html

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