If I look at the challenges UK businesses are facing today, many of them can be traced back to a single issue: complexity.
Rising costs continue to put pressure on margins. Compliance obligations are becoming more demanding. Expectations around efficiency continue to increase. At the same time, advances in technology have fundamentally changed what businesses expect from the software and tools they use. Processes that once relied on spreadsheets and manual intervention are increasingly expected to happen seamlessly in the background.
Against that backdrop, organisations are looking closely at every part of their operations and asking a simple question: how can we reduce effort without losing control?
That's one of the reasons I find the evolution of embedded payments so interesting.
Not because payments are becoming more strategic. The market largely agrees on that already.
What's more interesting is why they are becoming strategic.
Payments increasingly sit at the intersection of critical business processes. They influence how organisations collect revenue, pay suppliers, manage cash flow, reconcile transactions, support customers and generate operational insight. They're no longer just a financial function. They're becoming part of the business operating model itself.
Our latest market research, conducted by IDC, reflects this shift. Three quarters of respondents now see strategic value in embedded payments.
That finding didn't surprise me. What stands out is that, despite recognising their value, very few businesses describe their payment and payout experience as fully integrated.
To me, that suggests the industry may be looking at the wrong challenge.
For years, we've focused on embedding financial services into software platforms. We've become exceptionally good at it. Through APIs, Banking-as-a-Service models and modern payment infrastructure, it has never been easier to embed payment capabilities into digital experiences.
Yet many businesses still experience friction. That shows that access and delivery of payment products isn't the primary challenge. The challenge to tackle is solving the complexity that surrounds payment experiences.
By Rehana Mitha
Managing Director
Edenred Payment Solutions
Index
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Historically, payments were treated as a back-office function. As long as money moved from one account to another, the job was considered done.
Today, businesses expect much more.
Payments increasingly sit at the centre of operational workflows. Organisations aren't simply accepting payments anymore. They're managing supplier payouts, reconciling accounts, monitoring transaction activity, generating reports, responding to customer enquiries and overseeing the movement of funds across their business.
It's important to note that these processes have traditionally existed across multiple systems, providers and banking relationships.
The transactions itself was only ever one step in a wider operational process.
I think that's where many conversations about embedded payments miss the point.
Businesses don't actually care about payments in isolation. They care about outcomes, like paying suppliers on time or tracking business performance with confidence.
Embedded financial products can enable those outcomes, and that's why expectations have increased so significantly.
When payments become embedded into broader business workflows, organisations start evaluating the entire experience surrounding them.
They begin asking different questions. How easily can information and data be accessed? How many systems are involved? How much manual effort is required?
Those are fundamentally operational questions. And right now, they shape how organisations using embedded payment solutions evaluate them.
"When payments become embedded into broader business workflows, organisations start evaluating the entire experience surrounding them."
Over the last decade, the embedded finance industry has done an impressive job democratising access to financial services.
Software providers can now integrate payment flows, e-money accounts, and card capabilities into their platforms without becoming financial institutions themselves.
That represents enormous progress. Yet, only 10.8% of businesses using embedded payments and payouts describe their experience as fully integrated.
To me, this is one of the most revealing statistics because it points towards a different problem.
Businesses don't experience payment processing independently from reconciliation, or reporting. They experience every stage of a payment-related activity as a single flow that informs critical decision-making.
That's why I believe there is often a disconnect between how providers of embedded payment products think about integration and how businesses using them think about it.
Providers typically think about connecting systems, while businesses are trying to connect workflows and processes.
So, while the payment capability itself may work perfectly, if the surrounding workflow feels disconnected, so does the experience.
Right now, the industry's focus should be on making payment functionality feel like a seamless part of everyday business operations.
One of the clearest findings from the research is the extent to which businesses rely on multiple systems.
More than 58% of respondents use four or more systems across payment processing, reconciliation and reporting.
Interestingly, I don't see this as evidence that businesses lack technology. If anything, the opposite is true.
Most organisations have access to more technology than ever before.
The challenge is that they have to juggle all of it at once for day-to-day business admin.
For instance, a finance team at a medium sized company might be dealing with payment platforms, banking portals, reporting tools and reconciliation systems.
However, every time information needs to be manually transferred between systems, or validate, complexity becomes visible.
That's where friction begins, and the consequences extend beyond efficiency. More systems create more processes, more delays, errors and inconsistencies.
This is why I don't think fragmentation is just a technology issue.
If businesses lose confidence in processes when they can't clearly see what's happening, it erodes confidence and the complexity becomes impossible to ignore.
Businesses participating in our market study placed particular emphasis on data visibility, when using embedded payment products.
Two thirds of respondents identified the lack of data transparency and status updates on payment transactions as shortfalls in their payout experience.
This challenges one of the industry's biggest assumptions, that everything involving payment innovation just needs to be faster.
That matters, but the finding suggests something equally important.
Many businesses struggle to get visibility into the information they need around payments. They want to know where funds are, whether a transaction is progressing as expected, and what action, if any, needs to be taken next.
Businesses rely on that information to answer customer queries, investigate issues, monitor performance and make decisions with confidence. When visibility is limited, uncertainty increases. Teams spend more time looking for answers and less time acting on them.
This is why I believe enabling more visibility and data transparency can be a differentiator in its own right for software and financial services providers offering embedded payment capabilities.
Even more important is visibility into the broader context surrounding payment operations. Businesses also need access to the data and insights that help them understand what happened, why it happened and what it means for their operations.
This is one of the reasons card-based payment models can be particularly valuable in certain scenarios. The level of transaction data available through card programs can often provide richer insights than a standard bank transfer, helping businesses improve reporting, automate processes, and make more informed decisions.
When I consider these findings, and evaluate the current market conditions, I think they point to an important shift in how software and financial services providers can create value.
For years, innovation in embedded payments has largely been measured by capability.
But I believe a more important question is emerging: How much effort does a user need to expend to benefit from those capabilities?
Functionality only creates value if it makes a business process easier.
That means the competitive battleground is gradually shifting.
The most successful providers won't necessarily be the ones with the longest feature list. They'll be the ones that remove the most operational friction.
What does that actually mean in practice?
It means reducing the number of systems businesses need to interact with, making financial admin activities part of the same workflow, reducing manual interventions, and creating greater visibility into payment experiences.
In short, it's about reducing effort and complexity.
For businesses, that can lead to better, more streamlined and efficient operations.
For software and financial services providers, it creates an opportunity to unlock new revenue streams, improve user retention and differentiate in an increasingly competitive market.
And that is a much stronger value proposition.
If there's one message I take away from this market study, it's that businesses aren't asking for more complexity disguised as innovation.
They're asking for simpler ways to manage increasingly complex financial operations.
That's an important distinction. Businesses already understand the value embedded payments can create.
What they're increasingly evaluating is whether those capabilities help them operate more effectively day to day.
When I look at the findings, I believe the next chapter of embedded payments will be about making those capabilities easier to use, easier to manage and easier to derive value from.
Software and financial services providers, that truly want to create more value for the businesses they serve, will make financial operations feel simpler, more connected and easier to navigate.
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About the expert
Rehana Mitha is the Managing Director at Edenred Payment Solutions and a long-standing leader in the evolution of payments and digital financial services. Her career spans strategy, global product leadership, and transformation roles. Today, she leads Edenred Payment Solutions with a focus on strategic partnerships, resilient infrastructure, and supporting the next generation of embedded finance across the UK and Europe. |
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