How In-App Payments Are Changing Commerce

In a highly digitized economy, capturing and maintaining consumer attention is crucial. Social media platforms are evolving into all-inclusive apps that aim to capture more users by offering more functions – including payments. 

Meta’s big two platforms, Facebook and Instagram, already offer in-app payments. Now, tech juggernaut Elon Musk now aims to incorporate consumer-to-business (C2B) and peer-to-peer (P2P) payments into Twitter and eventually into “X,” his vision for an “everything app” in the style of China’s WeChat. 

Peter Galvin, the Chief Growth and Marketing Officer at NMI, recently discussed this growing trend in an article for Greensheet.com. Galvin highlights how plans like Musk’s underscore the rising significance of comprehensive commerce experiences – something end users expect in a world where convenience and speed are king. 

The quest for more convenient payment systems isn't limited to social media platforms; as Galvin points out, "24% of shoppers ready to make a purchase abandoned their carts because the site prompted them to create an account, and 17% did so because the process was too long and complicated." 

With more consumers demanding a seamless experience in all aspects of their financial lives, embedded payments that reduce checkout friction are hugely beneficial for apps trying to sell something to their users. 

The Challenges Embedded Payments Pose for App Developers and Social Media Platforms

The solution to problems like cart abandonment is to create an integrated, seamless user journey, which not only enhances convenience for the customer but also drives additional sales for the business. However, embedding payment capabilities within an app isn't as simple as flipping a switch. Galvin identifies three key areas for consideration:

Security: Software companies must ensure they’re fully compliant with the Payment Card Industry Data Security Standard (PCI DSS) when integrating payment processing into any application. Meeting PCI standards can be complex. It requires anyone accepting, storing or transmitting payment data to maintain strong network security, encrypt sensitive user data and demonstrate ongoing compliance over time through strict self-reporting requirements.

Fraud protection: Wherever there are payments, there is fraud. Protecting both businesses and users from fraudsters requires diligent transaction monitoring and advanced detection systems. Companies must also consider managing chargeback abuse as part of fraud protection, as chargeback fraud, or “friendly fraud,” is on the rise.

Infrastructure: The payments integration process has the potential to be complex. Embedding payments requires considerations ranging from setting up master merchant accounts to integrating a third-party payment gateway to ensure ongoing compliance and a friction-free experience for the end user. All can be major undertakings, even for large companies.

Galvin emphasizes that while these challenges are not trivial, the effort is well worth it, especially since embedded payments are quickly moving beyond just a nice-to-have.

"It's likely payment capabilities will soon offer more than just a competitive edge: they'll become bottom-line table stakes,” he says. “Enabling swift and secure payments can take a company's commerce experience to the next level and help build a loyal customer base."

The payments industry is evolving rapidly. As new players look for innovative ways to capture market share and consumer attention, more platforms will be looking to embed payments to minimize user friction. That represents a significant opportunity for payment providers who are ready and waiting to serve this valuable emerging market.

For more of Peter Galvin's insights on the future of embedded payment capabilities and comprehensive commerce offerings, read his full article here.