Businesses must digitize to keep pace with a growing market. Adopting payment automation is a part of that – because it helps small and medium businesses to drive long-term growth and value creation. Digitizing your payments helps you to effectively meet the changing demands of consumers and capture a larger market share. Embedded finance is one such area that has drawn a fair amount of attention in recent times. And for good reason. Not only does it simplify the buyer experience, it also creates newer ways for a brand to engage with buyers and build loyalty and trust. While embedded finance has many use cases in B2C payments, its benefits are huge in B2B payments as well.
So, what is embedded finance and how does it help B2B payments? Let’s take a look.
What is Embedded Finance?
Embedded finance is the integration of financial services and tools with the products and services of a business or any non-financial organization. That means that within your checkout flow, you embed other financial services or offerings, such as a credit loan, or a Buy Now Pay Later (BNPL) option. It could also be a third-party digital wallet in the list of payment options you offer to your customers.
These services were earlier the mainstay of banks, but since, new fintech players have emerged who offer embedded finance services. Embedded finance simplifies and streamlines the purchase and payment process, and offers a great UX for brands and buyers alike.
Embedded Finance for B2B Payments
Successful businesses rely on partnerships with suppliers, vendors, and other partners. And payments are one area that strongly affects this. By improving the payment experience, a business improves its relationship with its partners. Embedded finance supports businesses in offering a consistent and reliable payment experience.
Many B2B payments are recurring. To save time and costs, it’s good to offer these clients the choice to pay in one of their preferred payment methods. With embedded finance, you have the option to offer flexibility in terms of currency and payment options.
In the B2B sector, brands need to offer better support to enable partners to:
- Find the right payment solution.
- Help them avoid payment delays.
- Give them clarity on payments completed and due.
- Offer security, compliance assurance, etc.
Embedded finance supports all of this.
How Embedded Finance Improves B2B Payments
Businesses selling to other businesses need scalable solutions that can be easily integrated into their existing platforms. The potential of embedded financial tools for B2B payments is immense. These solutions are flexible and can work for any business in any part of the world.
Here are 4 ways in which embedded finance improves the B2B payment experience:
1. Flexible Lending Options with BNPL
By offering your business clients additional time to pay you can drive more sales apart from building a trusting relationship with them. With the surge in demand for flexible lending options, BNPL for business payments is gaining traction. Businesses need trade credit – an important short-term, interest-free financial loan. With options like buy now, pay later (BNPL) instant trade credit is now easily available and that too interest-free. As a business, you can both offer and avail of BNPL for your B2B payments.
Know more: How to Use BNPL for B2B Payments
2. Real-Time Payment with Options like Push Payments and Request-to-Pay
On-time payments are a necessity for businesses but B2B payments are known for their delays. Embedded payments solve this problem with the option of real-time payments through push payments and request-to-pay.
While push payments are initiated by the payer or buyer, request-to-pay is initiated by the payee or seller. These payment methods are swift, secure, and transparent, enabling you to make or receive payments immediately and with lesser chances of fraud. Also, it reduces transaction fees while offering you a single platform to manage your finances.
3. Security and Fraud Protection
Consumers prefer safety when doing online transactions. Using embedded finance solutions for B2B payment verticals helps improve security, making fraud prevention faster and more efficient. It helps you gain data-based insights that make it easier to understand, identify, and effectively mitigate risks. You also get to implement stronger customer authentication (SCA) with options like two-factor (2FA) and multi-factor (MFA) authentication that make transactions more secure.
Moreover, there are options like escrow services to eliminate the risk of fraud and non-payment in high-value transactions. Escrow services allow the service provider to collect, hold, and disburse funds only when both buyer and seller have fully met the terms of the agreement.
4. Integrated Financial Services
Embedded finance offers tailored solutions and stronger financial support to businesses. With more revenue, reduced liability, financial advice, valuable data, regulatory adherence, and more, embedded finance brings extended value to help simplify business operations in more than one way.
Optimize Your B2B Payments with Novalnet
B2B payments require effort and attention, especially for large-volume transactions. With the right payments partner, you will find it easier to automate your payments, embed the required AI-based solutions for end-to-end financial support, and more. As a global PSP who are trusted advisors to Europe’s leading brands when it comes to payments, we help businesses build customer trust and create a safe user experience. Learn more about our approach to embedded finance for B2B payments by speaking to us directly. Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.