apidays New York 2023 - Embedded Payments in B2B and B2C use cases, Adrita Bhor, Paypal

apidays New York 2023
APIs for Embedded Business Models: Finance, Healthcare, Retail, and Media
May 16 & 17, 2023

Embedded Payments in B2B and B2C use cases
Adrita Bhor, Senior Director of Product Management, Paypal
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Transcript

1. EMBEDDED PAYMENTS Use cases in B2B and B2C fintech ADRITA BHOR, SR. DIRECTOR OF PRODUCT, EX- PAYPAL
3. Agenda • Introduction • Definition of embedded payments • What is the market size of embedded payments • How to build this • SWOT Analysis • B2B Embedded Payments Use Case • B2C Embedded Payments Use Case • Best practices in embedded payments • Future of Embedded Payments
4. Introduction • Product executive and business general manager, with P&L expertise in building end-to-end B2B/B2C payments experiences. • Most recently as Sr. Director of Product at PayPal leading Platform Consolidation and Enterprise API development. • As a managing director at Silicon Valley Bank, led the bank’s Direct Channel product offerings including their Banking-as-a-Service API Platform, TAG and ERP embedded payments.
5. What are embedded payments and finance? Embedded payments refer to the integration of payment processing directly into another platform or application. This integration can provide a seamless payment experience for users while also reducing the complexity of payment processing for the business.
6. How big is the market size of embedded finance? • BAIN and Company research says financial services embedded into e-commerce and other software platforms accounted for $2.6 trillion, or nearly 5%, of total US financial transactions in 2021, and by 2026 will exceed $7 trillion. • Allied Market Research estimates that the global embedded finance market size (outside of e-commerce) was $54.6 billion in 2020 and is expected to reach $722.7 billion by 2030, growing at a CAGR of 28.7% from 2021 to 2030. Another report by Mordor Intelligence forecasted that the global embedded finance market would grow at a CAGR of 15.8% during the period 2021-2026. • It includes areas of • Embedded Banking • Embedded Payments • Embedded Lending • Embedded Insurance 2023 WhiteSight
7. How do you build this? • Understand the integration use cases and different segments of customers. • Build an API Platform that allows businesses to seamlessly integrate payment, banking and financial services into traditional non-tech verticals like healthcare, construction, real estate etc., without having to build their own payments infrastructure • Build standard integration playbooks and Postman Collections for these APIs and share with clients • Allow for basic customizations and tailor payment experiences to the specific needs of the industry vertical. You can also treat them as B2B and B2C use cases API as a Product à APIs as a business (new revenue channel)
8. SWOT Analysis Strengths • Seamless and convenient • Increased user engagement and retention • Expanded customer base: Weaknesses • Third-party platform dependency • Security and fraud risks • Losing customer trust • Complex regulations
9. SWOT Analysis Opportunities • Market growth • Innovation: integrating new technologies such as blockchain, artificial intelligence, and biometrics. • New revenue streams Threats • Competition: Crowded space with all-in-one API startups like Synapse, Solidfi, Unit etc. competing with larger financial institutions • Changing consumer preferences • Regulatory changes
10. 9 Value API offerings Domestic/Glob al Status Volume KPIs Directly Monetizable VCN Global Launched X req/day txns/day Y ACH Domestic Launched Req/day txns/day Y Wires (USD, Intl.) Domestic Launched Req/day txns/day Y FX Global In Dev Booked txns Transfers Backlog PSD2 (PISP) EMEA Launched AISP/PISP requests Check Print Domestic Backlog Y Reversals and Recon Planning Y Counterparties In Dev Y Accounts Launched Z accounts/day Onboarding Domestic Deprecated -- Identity/Auth Domestic Launched -- PSD2 (AISP) EMEA Launched Search Accounts & Transaction History (Direct Connect +) -- -- -- Y Webhooks -- Launched -- Subscriptions/events IAV, Account & Counterparty verification -- Launched -- verification calls Y IDV – Identity Verification Domestic + Global Planning Y Risk Verification and Scoring Global Backlog -- Enhanced public offerings on Payments, Reversals, Reconciliation, Identity, Accounts, Search and History Risk, Sanctions Accounts Horizontal Payments SVB B2B BaaS Platform (a sample) https://developer.svb.com/
11. B2B Embedded Payments Integrate payments through ERPs like Oracle Netsuite and Sage Intacct using FISPAN ERP connectors and SVB Banking-as-a-Service APIs • FISPAN provides a central integration module for Accounts Payables, Accounts Receivables, real-time transaction history through SVB with an embedded customized UI. • Client finds the SVB app in the ERP Marketplace, gets approved and downloads the app into their ERP. • Client logs in, finds a batch of payments, selects how to pay, kicks off approval flows which reach SVB through BaaS APIs • Client finds integrated SVB transaction history inside their ERP Reporting.
12. Embedded Payments inside ERP
13. B2C Embedded Payments The classic embedded payments acceptance direct to customer use case is PayPal checkout. • Merchant integrates with PayPal’s Checkout APIs/SDK/button to start accepting payments. • Buyer clicks a payment button and logs into PayPal. • Selects the funding instrument from the wallet and approves the transaction on PayPal. • Returns to your site where you show the payer a confirmation page.
14. B2C Embedded Payments Uber’s payments platform orchestrates across its various businesses on one side and multiple PSPs on the other along with it’s own core payments facilitation capabilities.
15. Best Practices in Embedded Payments • Partner with a reputable payment service provider (PSP) - A reliable and trustworthy PSP can offer a secure and seamless payment experience for users, reduce the risk of fraud, and ensure that transactions are processed quickly and efficiently. • Ensure compliance with industry standards through your PSP - It is crucial to comply with industry standards such as PCI-DSS, 3DS, and other relevant regulations to ensure data security. • Simplify the payment user journey - easy-to-follow steps can reduce the chances of users abandoning the transaction. • Provide multiple payment options – Everything from credit cards, digital wallets, and bank transfers can increase the likelihood of customers completing transactions. • Test and optimize the payment experience - Optimizing the payment process can help reduce the likelihood of errors, improve transaction speed, and increase the success rate of payments. • Should you build or partner or buy this capability? • Understand the granularity and mapping of the APIs – how composite or atomic do they need to be so that changes can be mostly additive over time • What are the API KPIs? Growth, Engagement, Monetization metrics • Focus on internal dogfooding and adoption by sharing documentation and updates regularly and track those metrics • Stay informed of changes in the payments industry - stay informed of any changes in the industry, such as new regulations, emerging technologies, and shifting customer preferences. • Make API notifications configurable • Make the underlying processes that serve these APIs more efficient API Consumer API Producer
16. Future is beyond embedded payments White Paper
17. Conclusion • Embedded payments is an area of API integrations that is poised to grow rapidly in the next decade, transforming traditional non-financial businesses like healthcare and transportation as payment companies. • It offers several benefits, including increased convenience, improved customer experience, and reduced payment friction. • There is a green field of innovation where advancements in AI, Blockchain and Payments can be brought together, beyond just risk and fraud detection and faster settlements.