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02/16/2022

Embedded Payment Ecosystems and Today’s Consumer

Grocers can own the entire customer experience
Derek Tanis
SVP, Consumer Partnerships, Netspend
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Derek Tanis

The digital payments tide has turned, and consumers are steering this ship: McKinsey data indicates more than four out of five U.S. consumers used some form of digital payment in 2021.

Consumers have become comfortable transacting in digital environments, and it’s up to businesses to own those experiences by meeting them in the here and now. This means having payment options that flow seamlessly into the decision-making process — or at the point that they’re ready to transact.

For grocery leaders, payments are a key component of the customer experience. The transaction, however, must be threaded into that experience so that consumers don’t have to think twice about the payment itself. Embracing embedded payment partnerships that lean on innovative technology achieves this goal by integrating fast and simple transaction options during any stage of the customer journey.

The Expanding Embedded Payments Ecosystem

What’s driving the digital payment momentum is the rise of embedded payment ecosystems that have made transacting across any payment environment ubiquitous. The demand for digital payments solutions have spurred financial and nonfinancial companies alike to embrace the embedded payment model to build payments and commerce experiences around consumer lifestyles.

By 2030, 73% of global consumer payments will be processed by nonfinancial institutions, according to market research firm IDC. This makes a case for embracing embedded payments partnerships today to get ahead of the curve. Today, consumer lifestyle decisions drive payment choice and how transactions are conducted — it’s no longer about the payment mechanism or solution. Consumers simply care about the outcome.

The payment decision for consumers comes during two specific times of a purchase decision: the front end or back end of the decision-making process. This is where meeting customers in the here and now comes into the mix. Payments are a key driver of the commerce experience, and not making it easier to transact can lead to customer churn. For grocers, the goal is to transform those experiences by embedding payments into the purchasing decision itself so that customers can transact faster and on their terms. The key to making this experience possible is embracing partnerships that support payment integration across multiple commerce environments.

Unlocking the next stage of growth is about creating new financial experiences that delight customers. Businesses are no longer driving the payment formula — everyone in the ecosystem is playing a larger role in a larger lifestyle or commerce decision. The good news for both financial and nonfinancial brands is that there are immense revenue benefits of having a customer either spending or keeping their funds in a company’s branded payment ecosystem.

Where Revenue Opportunities Exist

Meeting your customers in the here and now presents ways to land and expand your customer base, which can lead to new revenue opportunities. Integrating digital banking, payment accounts or digital wallets into a branded business ecosystem creates a new business model for businesses looking to monetize payments on their terms. The customer experience is the thread tying all of this together.

Embedded payments provide value-added tools that can turn any payment or banking service into a revenue-generating tool. The value-add for the customer is using embedded payments to meet them when, where and how they want to transact. Whether it be through instantly issued virtual cards, physical card options, real-time funding and card controls, contactless payments, personal financial management tools, or rewards, embedded finance presents an entirely new business model to attract new customers.

By embedding payments deep into the back end so that customers get a better front end payment and checkout experience, grocers can own the entire customer experience. Whether it be the click of a button or the tap of a fingerprint, embedded ecosystems that encompass everything a customer needs to make a purchase decision in one move is what consumers expect today. Meeting your customer in the here and now addresses that demand, and creates a long-term customer nurture stream to continually build and innovate upon.

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