Show Notes
The most expensive resource in any small business isn’t capital—it’s time. And increasingly, that time is being swallowed up by something owners never set out to manage: payments.
The last thing business owners want to do is devote more energy to managing payment processes. Many small businesses have discovered business management software with embedded payment capabilities that remove much of the friction associated with reconciling multiple systems and statements while uncovering a wealth of valuable customer data.
Worldpay for Platforms, now Global Payments’ annual Merchant Insider Report examines trends like these that are driving payment innovation and reshaping the small business landscape. In a PaymentsJournal Podcast, Matt Downs, President, Integrated and Platforms at Global Payments, and Don Apgar, Director of Merchant Payments at Javelin Strategy and Research, explored the findings and opportunities these advanced platforms present for embedded finance.
The Payment Trends
Worldpay for Platforms’ data shows that customer expectations around payments have shifted from a “nice to have” feature to a mission-critical capability. Across the three years of this research, one of the most consistent trends has been the growing importance of software. Indeed, 85% of small and medium-sized businesses say software is more important today than it was three or five years ago.
In 2018, roughly 40% of buying decisions included payments and software as a bundled package, according to Downs. Today, that figure has climbed to 70%, meaning that when businesses switch payment providers, they increasingly want software included as part of the solution.
What's driving this increase is the growing importance of integrated workflows. Software is becoming specialized across industries, fueling demand for bundled payment and software solutions that streamline operations and reduce complexity.
“We're seeing the same in our research,” said Apgar. “Merchants want a holistic platform that that they can run their business on. Consumer expectation with regard to ease and a lack of friction have significantly increased. Business owners today are looking for an easy to use, all in one package of software and payments together that can run their business and deliver a superior customer experience.”
The Biggest Concern: Friction
One of the most surprising findings in this year's Merchant Insider report is that the payment experience itself is not the primary driver of customer retention. Instead, friction remains the biggest obstacle. Wherever friction appears, it serves as an early warning sign that churn may follow.
More than 80% of merchants surveyed said they would switch platforms for better payment capabilities. At the core, what they’re looking for is a truly seamless experience.
Businesses have come to expect payments to be invisible. Take Uber, for example. It’s difficult to tell where the transportation experience ends and the financial experience begins. Drivers don't have to worry about whether passengers will pay or whether they’ll have enough cash to cover expenses, because they know they’ll be paid quickly and reliably.
Business management software aims to provide a similar experience for small businesses by handling payments while providing merchants with visibility into cash flow and business performance. The latest improvements have gone beyond integrating payments into business software to a level that makes them not just functional but much more useful to the merchant.
Integrated payments simply connect payment processing to software, pushing transaction data back into the platform and recording reconciliation. Embedded payments go much further. They encompass the entire workflow—from customer onboarding and payment acceptance to reconciliation, reporting, and even chargeback management within the software itself. Worldpay for Platforms’ research shows that 99% of respondents are willing to consider embedded finance capa
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