IRS advances innovative Direct File project for 2024 tax season; free IRS-run pilot optionprojected to be available for eligible taxpayers in 13 states Internal Revenue Service

Embedded payments allow customers to skip the additional steps of the checkout and instead use a single-click button on the website or app that they can use to pay. Not surprisingly, Buy Now, Pay Later helps to stimulate impulse purchasing behavior because shoppers only have to pay for a fraction of their purchase up front, making it far easier to justify discretionary spending. When combined with the invisibility of embedded payments, the overall shopping experience becomes even more enticing for consumers to engage in. In the same way that Uber users order and pay for their ride simultaneously, customers can place and pay for their merchandise simply by tapping ‘place order’ and saving potentially hundreds of carts from being abandoned.

Small businesses can take advantage of embedded payments to gain access to loans and financial services with flexible payment options. One example of this is the buy now pay later (BNPL) model offered through providers like Klarna. These allow your customers to spread the cost of their payment out over time with instant financing approval, making purchasing easier. You can provide an integrated payment platform for your app users with Pay.com. Our embedded payment solutions fit seamlessly with your brand’s online presence.

Solutions

The embedded finance space shows signs of continued growth in almost every vertical, driven by factors including the modernization of legacy businesses, open banking, alternative payments and money movement, to name a few. The 2020s will bring embedded payments infrastructure to the forefront, priming a massive wave of innovation and new revenue opportunities. Embedded finance has created quite a buzz in banking and fintech circles, and for good reason. It is estimated that revenue from embedded financial services will reach $230 billion by 2025, a 10-fold increase from $22.5 billion in 2020.

The term is used in several different contexts, so what are embedded payments, and how do they work? In fact, there are multiple commercial and technical models that have emerged to support various business scenarios. Jumping into the deep end of the pool too soon could backfire, causing you to lose focus on your core software, alienate customers and waste time and money. It’s important to understand the differences so that you can choose the model best aligned with your maturity, resources, and customer profiles.

Banking

Embedded payments are not only ubiquitous, but they are also increasingly complex, allowing for a growing list of integrations. As payment-centered apps add on new features such as microloans (installment payments) and digital wallets, they are starting to look more and more like embedded banking apps. APIs can also assist businesses with following embedded payments examples payment industry compliance requirements. Through the use of industry-standard encryption protocols and security measures, APIs delivered from leading payment technology providers help to protect sensitive payment data during transmission. Security and compliance is always a top priority when it comes to accepting and managing payment information.

This is being practically done by Walgreens, where the myWalgreens rewards app is now connected to a credit card from Walgreens. Consumers may get member-only Walgreens specials, cash rewards, and faster checkouts while still using it just like any other credit card. Embedded payments is a term for payment solutions that are built natively into a SaaS company’s product.

How can I let my app users accept payments?

Taxpayers in Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming may be eligible to participate in the pilot as their states do not levy a state income tax. Washington has also chosen to join the integration effort as a partner for the state’s application of the Working Families Tax Credit. For states that do levy a state income tax, Arizona, California, Massachusetts and New York have chosen to partner with the IRS for the 2024 Direct File pilot. The IRS anticipates the pilot will be available in those states as well in 2024. Taxpayers participating in the pilot will have access to help by IRS employees staffing the Direct File customer support function. IRS customer service representatives will provide technical support and provide basic clarification of tax law related to the tax scope of Direct File.

• Embedded payments are becoming increasingly popular among businesses and consumers alike.
• Outside the accounting department, this means your engineering team can refocus on core products.
• Gathering Information – A business should assess the kind of data it wants to get from customers and the marketing strategy it will utilize with an embedded payment system.
• Up until now, accessing the payment technology needed to embed features would require lengthy vendor-onboarding processes, addressing compliance concerns and navigating archaic technology of legacy infrastructure.
• We’re globally recognized for our innovative approach towards delivering business values and our commitment to client success.
• As Granville noted, “If you are embedding an account, you’re actually putting yourself in a position to harness the power of all the funds that are moving through your ecosystem.

It offers massive potential for fintech companies to work with non-financial businesses to develop and expand the market. The embedded payment industry’s rapid evolution will occur over the next 4 to 8 years as investors continue to pour money into the sector. In a recent conversation with PYMNTS, Granville invoked the magic words of 2021 — “consumer experience” — to illustrate the power of embedded payments.

What are the benefits of embedded payments?

APIs and web services deliver a secure and reliable way to accept payments, as well as transfer data between software systems. By using secure encryption, tokenization, and authentication protocols, businesses are able to ensure that sensitive payment information is protected across all customers. There’s so much more that goes into payment processing than we realize, but embedded payments make it simpler. Embedded payments make sense if your long-term technology benefits justify these upfront costs. This can happen if you process many transactions and want to save on third-party transaction charges.

For one, receptionist and admin roles often experience high turnover, so a short training period is crucial to helping your business operations run smoothly. We take on the heavy lifting of the implementation; building the mobile responsive portal, matching your brand, and providing detailed setup instructions. We provide a URL specific to you and can work with your Web designer to set up the service on your site. If you’re running Shopify or WooCommerce, for instance, a lot of this work is done for you. Since Stripe is so popular, a lot of apps have created plugins and customized flows to help you integrate payments on your website without code.

The Bottom Line: The Importance of Understanding Embedded Payments and How to Maximize this Up-and-Coming Payment System

ISVs own the merchant relationships and are typically responsible for all customer-facing activities, from sales and marketing to pricing and support. That way,  they can answer customers’ questions about technical features, rates, and downgrades to declined transactions, chargebacks, and ACH reject codes. Without in-house sales and support expertise, ISVs may experience low up-take for embedded payments, which could hurt revenue projections and profits. Worse, inadequate customer service could damage their reputation and risk losing business for their core software. One of the primary benefits of embedding API-driven payment acceptance technology within your applications and interfaces is increased efficiency across your A/R organization.

Payment gateways and payment processors do more than just process transactions. They let you embed a payment form or button on your website, securely take in credit card details, and trigger all the necessary notifications to help you deliver your products or services on time. And then, every few days, the platform will pay out everything you’ve received. Ecommerce is booming like never before, making embedded payments central to merchant success. The embedded finance market is expected to exceed $138 billion by 2026, led by “buy now, pay later” embedded payment tools.

Stripe’s embedded payments solution

Embedded payments are a powerful way for platforms and software providers to offer a complete solution to their users, who can manage their businesses and payments in one place. They eliminate the need for third-party payment providers, reduce costs and complexity, enhance user experience and satisfaction, and create new sources of income and value. Embedded payments are the future of finance, transforming how businesses and customers interact and transact. Many companies now provide APIs that make it simple for programmers to include payment processing in their applications. The simplicity of paying for goods and services without switching between applications or accessing their physical wallets to take out a credit or debit card has become second nature to consumers. Embedded payments enable future transactions to be made with just a tap of a digital wallet or by safely storing payment information.