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What Are Embedded Payments?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedSep 20222 min read

One of the best ways to keep your customers coming back is by providing a slick, effortless checkout experience. Many businesses have transitioned away from face-to-face transactions to online and in-app sales with embedded payments. The term is used in several different contexts, so what are embedded payments, and how do they work? Here’s what you need to know.

What are embedded payments on a website?

Lengthy checkout pages can be a turnoff to e-commerce customers. Embedded payments let you skip the added steps, instead providing a single, clickable button on your app or website. The customer chooses the payment method of their choice, such as Klarna or PayPal, and clicks the embedded link to finish the transaction.

One of the pioneers of embedded payment technology was Amazon, with its “Buy Now” express purchase button. Amazon customers log into their account for browsing, which contains stored payment details and shipping addresses. They can instantly complete the purchase by clicking on the “Buy Now” embedded payment link. All that’s required is a payment confirmation, with no need to fill in their payment and shipping details again. The transaction is completed in a matter of seconds. Since then, this type of user experience has become more prevalent across apps like Uber, GrubHub, and others.

What is the embedded payments definition in banking?

The embedded payments definition can also be applied to a wider banking services context. For example, online marketplaces and retailers bring banking services into their customer rewards programs. This strategy is called embedded banking. A department store might link its own rewards app to its store credit card. When the customer uses the credit card, they are rewarded with members-only special deals and a faster checkout process. Both embedded banking and embedded payments are part of the larger embedded finance group of services. Embedded finance takes these strategies further with additional services like in-app lending, insurance, and other offers.

What are the benefits of embedded payments?

There are numerous benefits of embedded payments, chief among which is the potential for increased customer loyalty. Many businesses are trying to regain consumer confidence in the aftermath of the pandemic. Brand loyalty fell from 65% to 49% during the first nine months of 2021, according to research from Omnicom Media Group. Providing a faster, smoother checkout experience with increased rewards helps bring this loyalty back up to previous levels.

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. Customers enjoy interest-free loans, fully integrated with their purchases.

GoCardless integrates with BNPL providers to collect payment in installments via direct debit, working easily with embedded payment links on your website. There’s no need for your business to bring the processing in-house – instead, everything is handled through the provider.

Should your business use embedded payments?

Whether you opt for PayPal, Amazon, or BNPL payments, there are plentiful benefits to using this form of embedded payment link. It makes payment processing easier while increasing brand loyalty and conversion rates. Providing a better customer experience gives your profit margins a boost, reducing abandoned shopping cart rates by eliminating some of the barriers that might prevent a customer from completing their transaction.

Paying with a single click makes the checkout experience much easier for consumers, which also increases purchase frequency. For all these reasons, it’s well worth considering working embedded payments into your e-commerce strategy.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.