The Evolution of Embedded Payments: A Q&A With Industry Leaders

How Embedded Solutions Are Pushing Payments Forward: A Conversation With Industry Leaders 

Greg Myers: Welcome to NMI Payment Playbook. Today, we’re starting our three-part series on trends affecting payment providers. During this series, we’ll be discussing embedded payments, AI in payments, government regulations and more. 

On today’s episode, we’ll focus on embedded payments and how they’re shaping the industry. I’m joined by special guests Peter Galvin, who is the Chief Marketing Officer at NMI, and Austin Talley, the CEO and Founder of Everyware.

To get started, Austin, will you tell us about yourself and your company?

Austin Talley: I’ve been a software engineer for over 20 years. Prior to becoming the CEO and Founder of Everyware, I was in the grind in the programming world, but I always dreamed of developing my own software product that would be “everywhere,” hence the name of our company.

Today, our platform is a combination of communications and payments. We’re a one-stop solution, so vertical software companies have everything they need to act like a payment processor and capitalize on new revenue streams. Our platform allows them to make money on credit card processing while offering a better overall experience for their customers.

Myers: Peter, can you also tell us about yourself, your background and your role here at NMI?

Peter Galvin: I’ve been in the SaaS (software as a service) business for the last 25 years, mostly focusing on product and marketing. Prior to NMI, I was with security-focused companies, specifically focusing on security and encryption for EMV payments and end-to-end credit card transaction processing and PCI compliance. I’ve been with NMI for about two and a half years, and I’m responsible for marketing and our go-to-market execution.

Myers: As you both know, one of the biggest trends in payments is embedded finance, including not just payments but loans, payroll, checking accounts and other types of fintech solutions. Austin, can you speak to this trend, specifically addressing the payments side of things?

Talley: This trend has been around for quite some time, but it really accelerated throughout COVID-19, when everyone was forced to go digital. Although it was an adjustment, moving from paper statements to faster solutions like sending out a text message has helped cut costs and solve a lot of problems for businesses. 

In the future, I see embedded payments being treated much more like a card-present transaction with cheaper interchange. If you think about tap-to-pay solutions, those are embedded payments on our iPhone or Samsung devices. I believe this trend is going to be around for a very long time; I don’t see us going back to the old way of pulling credit cards out of our wallets.

The Value of Embedded Payments for Providers, Businesses & Consumers

Myers: That makes a lot of sense. Peter, in your opinion, what is the value of embedding payments? Can you address this from a partner, merchant and consumer level?

Galvin: Absolutely. I agree with Austin that embedded payments have really digitized paper processes. I think there are a number of different advantages to embedded payments — especially thinking about a seamless buying and checkout experience. 

First of all, it simplifies the entire payment process by integrating payments into the wider buying environment or application. As Austin mentioned, it makes payments a lot faster and more convenient, so consumers can pay digitally instead of pulling out a credit card.

For partners, this can lead to more efficient processes, automated reporting, better insights into what people are buying and how they pay. So embedded payments solutions can reduce a lot of the manual efforts and operational costs that partners have had in the past. 

If we think about merchants, there are a lot of similar benefits there, like better operational efficiency and a better way to understand the customer journey. Merchants are always trying to maintain the customer relationship, and these solutions make that a simple process. If merchants have embedded payments as a part of their overall offering, it gives them a competitive advantage over businesses that don’t. It also allows merchants to control the entire experience for their customers so they can pay faster and more conveniently. 

When you consider consumers themselves, the best payment experience is one you never had. Embedded payments happen as part of your interface with a software or application; you’re not taken to another site and don’t have to do anything specific to make a payment. The payment information is already there — you can pay with a simple click. So, for consumers, that integrated experience leads to more comfort around the payment, the brand and the overall security.

Embedded Payments & Vertical Software Solutions

Myers: Let’s talk about embedded payments within vertical software companies. Obviously, a large part of what NMI does is serve those types of customers. Peter, what does NMI provide to software companies?

Galvin: We provide an embedded payments acceptance platform. That means software companies can use our platform to onboard merchants, underwrite merchants and then quickly take payments. One benefit is that they can do this in a number of ways. For instance, they can use an API to integrate with our system, or they can use no-code or low-code applications to create checkout experiences.

So, we provide our partners with the ability to manage the entire life cycle of a merchant from the initial prospecting and underwriting to onboarding them to the NMI gateway (or even a third-party gateway) and integrate with a processor so they can quickly take payments. 

We do all of this through our partners. We’re a white-label service that enables our partners, so they’re the ones providing these services, and we’re the backend infrastructure. 

Then, once software companies start taking payments, we can provide full reporting to both the merchant and the partner so they can understand what’s happening in their payments environment, what their residuals might be, if there are any chargebacks, etc. So they have all of that information in one system. 

Myers: Austin, what is your perspective on vertical software companies and ISVs using embedded payments?

Talley: We’re starting to see a shift where software companies are acting like payment processors. These vertical software companies need a one-stop solution where they can act like a payment processor, so to speak, and be able to open new revenue streams. Whether it’s a white label solution, a semi-integrated solution or a fully integrated solution, they need something that encompasses everything from underwriting to onboarding to life after the merchant is up and running. 

Technologies Powering Embedded Solutions: SoftPOS and Contactless Payments

Myers: We’re continuing to see embedded payments proliferate in the software segment of the market, with some estimates saying that 50% of small businesses are already using software for payments. It’s a huge number.

Peter, what are some of the other technologies you’re seeing in this space around biometric, softPOS and contactless payments? Where do you see those kinds of other technologies fitting into the conversation?

Galvin: What’s so interesting about this space is that we started with giant, horizontal software companies like Salesforce and Workday, and now we’re moving to very specific, vertical offerings. For instance, we have partners who have software companies that are providing niche offerings to companies that create software for gyms, spas, hair salons, home services like plumbing, electrical, HVAC and others. There are even examples of practice management software for doctors and dentists that give patients the flexibility to pay in person, online or via text. 

Going back to what Austin said, one of the biggest trends we’re seeing is with software companies trying to monetize these payment streams within their software solutions. In the past, they would hand that payment capability to someone else. Now, they want to integrate payments directly into their platform so they can make money from those transactions and ensure they’re PCI compliant. 

When you consider softPOS and contactless solutions, we’re going to see physical payment devices start to be replaced by either phones or tablets or laptops. For example, you’ll start to see more instances of someone getting a text with their medical bill, or using a digital wallet on their phone to tap another phone to pay. As we see fewer payment devices and more of an integration with phones and tablets, I think we’ll see more industries replace their POS systems for more generalized, flexible digital payment options.

Myers: Austin, do you have anything to add?

Talley: Absolutely. It’s like Peter said — we all now have a terminal in our pocket, so we’re going to start seeing that shift more and more. In fact, Visa is coming out with its cloud tokenization product that turns nearly every device into a terminal. That means once a consumer transacts on the device, and the device is trusted and verified, it acts the same way as a card-present transaction. The device leverages a cloud-based token and, as soon as it is used, becomes provisioned in the network. Because that process allows devices to make card-present transactions, consumers can’t issue chargebacks for purchases made on that tokenization network.

I’ve been saying this for a long time, but our devices are really becoming our identities. If someone using their device for a purchase tries to issue a chargeback, we can easily see their phone number, fingerprint, and other data points that will prove the person is who they say they are. It’s great to finally see this taking place in comparison to traditional, older payment terminals.

Key Takeaways

Myers: Peter, Austin, can you give us a brief summary of the key takeaways?

Galvin: I think the first thing to remember is that software and embedded payments are here to stay. Software, as people say, is eating the world, and that’s the direction payments are going to go in. As an NMI partner or payment company, it’s important to think about how you’ll participate in that embedded payments lifecycle and how you’ll provide value to that marketplace.

The second thing we’re seeing is a shift in consumer payment preferences. We’re seeing the digitization of payments with more digital wallets, digital payments, etc. That’s where payments are moving towards. 

Finally, consider how you’ll integrate and embed payments into your system. Make sure that you have an understanding of what APIs you need or what low-code or no-code solutions you want to use. As any partner or software company looking to embed payments, it’s crucial to understand the vertical you support and what payment needs those merchants and end-consumers have. What offerings can you provide so those merchants can be successful?

It’s not always a one-size-fits-all solution; a practice management system in a dental office versus a software application for a gym will be very different. So understanding how a consumer wants to use those solutions and how they might want to pay becomes very important as you’re looking at embedded payments.

Talley: The future is full of white space, which is really exciting to see. Especially with the FedNow program making it easier to move money faster, we’re seeing a shift in consumers and businesses as they change the merchant landscape similar to how CashApp and Venmo changed peer-to-peer money movement. It’s really exciting to see businesses and consumers starting to interact with each other much faster than they do today.

Tune in to the full episode here.