Ryan Frere, executive vice president and general manager of B2B for Flywire, believes that embedded finance in B2B is key to payments optimization in 2021. In "A Look Forward: What Executives Wish for America and the World in 2021," Frere shares three examples of how embedded B2B finance is already being utilized successfully in today's economy.
Payments have typically been the exclusive domain of banks, card issuers and FinTechs — distinct from a product or service offering and usually requiring distinct motions for both the buyer and seller to complete a transaction. But that is changing — slowly but surely. We are seeing payments become an inextricable and largely invisible part of customers’ experiences with different product or service providers. Payment capabilities and related financial services are increasingly being embedded into software that enables both buyers and sellers to minimize friction at the point of sale, enhance engagement and drive higher margins.
Ridesharing is an example we all know well. The payment process is woven entirely into the service via software. There is no need to fumble with cash or hand a payment card to the driver — it happens automatically. Apple iTunes is another. Virtually all cloud-based subscription services use some form of embedded finance. There is no separate payment motion involved to utilize the service. Most of the examples we know of today are on the B2C side. That’s no surprise, given the pace of innovation in B2C versus B2B payments over the years. But the pandemic has changed that, creating an unprecedented urgency around digitizing B2B payments.
I hope we can leverage that urgency to prioritize a lot more examples of embedded finance on the B2B side in 2021. To get there will require solutions that integrate directly into an organization’s existing AP and AR workflows, whether that means connecting to the business’ ERP system or streamlining processes and complexities with global FX, reconciliation and cash flow management. It doesn’t have to be complicated, though. It’s really more of an easy-to-access payment service via APIs than a new piece of enterprise software.
We already have good examples of embedded B2B finance to go by in manufacturing, technology and professional services:
Over time, as FinTech continues to be embedded into financial and increasingly non-financial products, it will become a less and less visible element that will add an increasingly critical level of value to both sides of the B2B relationship.
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