Almost without notice, disappearing payments have shifted from novelty to expectation in small business transactions. A traveler arrives at an airport, books a rideshare, and checks into a hotel—never pulling out a wallet or handing over a card. The transaction happens seamlessly, almost invisibly.
The same technology fueling consumer-facing apps is now within reach for small businesses. Research from Worldpay shows that 90% of small businesses consider embedded finance—the integration of financial services, including payments, directly into non-financial offerings—essential to their growth. In a PaymentsJournal podcast, Matt Downs, Group President of Worldpay for Platforms, and Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research, discussed how technological advances are making small business payments both more sophisticated and less visible at the same time.
“Why are payments disappearing?” asked Downs. “Because consumers want ease. They don’t want to see the friction.”
The Sweet Spot
While they may see the benefit of disappearing payments, a small business faces a different reality than an independent contractor driving for a rideshare company. For small businesses, payments cannot simply vanish into the background. They need visibility and control—both to verify that transactions have been completed and to manage cash flow. Likewise, consumers may prefer that payments remain somewhat visible when dealing with small businesses, so they can make more informed choices based on factors like price or payment size.
The sweet spot is a system where consumer can choose to dip, chip, or use a digital wallet—without having to rethink that decision every time they pay a small business. For the business, it means having access to a payment process that feels sophisticated yet intuitive, flexible yet low-effort to manage.
“Building a solution that supports all of those elements is very challenging,” said Miller. “You have to be able to support all the way through the design elements and what the interface looks like, all the way back to the seamless handling of the payment processing itself.”
Integrating into New Verticals
The concept of delivering targeted lending within verticals is not new, but it has not yet been fully woven into the consumer experience. For example, a veterinary office may have offered a financing plan in the past, but it likely wasn’t something a customer could access through the same website where they booked their appointment. For the doctor, providing a lending product with fast approval that integrates directly into their existing systems can become a meaningful competitive advantage.
“If you are a vet, the last thing you want to do is evaluate a bunch of different lending programs and take seven sales calls from seven lending programs to evaluate the right one who can integrate the lending product directly to the patient experience,” said Miller. “The market is looking for a solution that meets the needs with a minimum of risk.”
The beauty of a vertical solution is that it is tailored to a business’ individual needs—whether that business is a veterinary practice, a restaurant, or a dry cleaner. To be effective, the software provider must understand the workflow, revenue streams, and nuances of the business, no matter how niche.
Payments have evolved not only by becoming more complex, with more options for both payers and payees, but also by becoming increasingly specialized for the unique requirements of each business type.
“That’s a whole new spin on finance,” said Downs. “Fifteen years ago, there were pretty good payment options out there for retail and restaurants, although they were pretty expensive until the cloud drove the cost down. But that also allowed more entrants to come in and say, ‘Hey, I want to solve use cases for veterinarians or food pop-up trucks.’”
The specialization adds complexity to the process, making an embedded payment solution more of a necessity.
“In an ever-evolving landscape of payment acceptance options, the number of merchants who are actually able to manage that on their own and make decisions to add or not add or build in the integrations is vanishingly small,” said Miller. “The idea that a platform is better situated to manage that complexity and that change is kind of a slam dunk.”
Building Through AI
Artificial intelligence is an important component of these new platforms. It helps companies better understand their customers’ needs and plays a key role in driving technological development.
“It allows room for new entrants to come in and shake up weak software companies that weren’t good at understanding their customers at their core,” said Downs. “It’s going to challenge them. It’s going to have an effect on who the winners and losers are in this space. But in the end, the small businesses and consumers will win because they’re going to get better served.”
Embedding AI directly into products gives merchants access to the insights that can transform a business. While AI requires large amounts of data, integrating it into a platform allows businesses with limited data to benefit from powerful analytics. For example, a small vet clinic may not have enough payment data on its own clients to accurately assess risk profiles—but AI can change that.
While small businesses aspire to be sophisticated payment processers, they also don’t want a separate piece of software for the front office, another for the back office, a standalone banking suite, and so on. This has given rise to the notion of the “everything platform,”—software designed to help companies meet all of their processing needs in one place.
With advancements in AI and technologies that can connect and integrate multiple platforms, the ecosystem is now ripe for embedded payments to support small businesses. Very few merchants are capable of managing their payments independently while deciding which integrations to adopt. Embedded payments allow their processes to remain not only customized but also state-of-the-art.
“We take the heavy lifting, the operations, the payments, the financial underwriting, liability, everything that comes with adding more on,” said Downs. “We take that off the software company with a goal of just making sure it works for businesses and the consumer.”
