Beyond the Transaction: How Embedded Payments Are Redefining the Customer Experience

We’ve been able to pay online for more than two decades, but for much of that time, there were really only two options: credit or debit cards. 

Over the last ten years or so that’s changed. Embedded payments have introduced a whole range of methods: digital wallets, Buy Now Pay Later (BNPL), account-to-account (A2A), and stablecoins, to name but a few. In some places we’re seeing these innovations out pace traditional card payments, but even in more conservative markets, everyone is used to seeing multiple options when they come to checkout.  

This is great for shoppers; it allows them to pay on their terms. That’s what they want: 75% of consumers said that preferred payment methods are the top feature that helps turn them from would-be buyers into paying customers. The overall payments journey is crucial to their choice: one study found that 74% of US consumers and 71% of European consumers said that easier and faster checkouts are a primary reason for using digital wallets. 

There’s definitely positives for businesses too; if you can choose the right approaches, you will take a huge step forward in delivering a greater level of customer experience. 

But knowing which payment method to pick is a major challenge. There are now so many options available that it’s no wonder merchants aren’t sure which ones best suit your needs. More than half (52%) of UK retailers said changing customer preferences on payment were either extremely or somewhat challenging. 

Stop following the herd

I think there’s often a temptation to hand off responsibility to whichever platform provider talks loudest. Take a quick look at what competitors are offering and find something similar. If you’re doing the same as everyone else, at least you won’t get left behind by yourself, right? 

The problem with following the herd is that it looks at payments as an additional cost to be bolted on, not a strategic opportunity. This doesn’t deliver what customers want; instead, it creates a disjointed, challenging experience which is likely to see a lot of would-be buyers fall off before they pay. 

True return on investment comes from capitalising on consumer behaviour and preferences, using insights to enable and empower customers.. 

To achieve that ROI demands a strategy. One that allows you, as a merchant, to identify, assess and deploy the approaches that will meet both your customers’ needs and your own business goals. 

Informing every aspect of the framework is understanding what customers want. Different demographics skew towards different options. For example, in the UK Gen Z are embracing digital wallets, with 78% of 16–24-year-olds having Apple Pay or Google Pay. This drops right down to 14% of 65+ year olds. Similarly, 25-34-year-olds are four times more likely to use BNPL compared to those aged over 65. 

Age is a defining characteristic, but it shouldn’t be the only consideration; we’ve already seen that different geographies have varying expectations. For instance, A2A has a 68% share of ecommerce transactions in Poland and 64% in the Netherlands, yet makes up just seven percent of the consumer-to-business ecosystem in the UK. That’s despite 85% of UK consumers using it for peer-to-peer transactions. 

These insights are crucial to building the foundation of a personalised approach. We know tailored payment methods can drive business, and the good thing is you are already capturing data into what your customers want: through their transaction data. Payments via your website or app can show you what customers prefer, and whether there’s any variation in timing; for example, do shoppers during the working day use BNPL, while those at the weekend go for cards? 

You’ve got to optimise the experience

We must remember that for all the talk of a payments process, it is one part of the larger customer journey that starts from the first website or app visit. 

It is amazing how even small differences in the user experience (UX), like the order of payment options, can have an outsized impact on what your customers do. 

Look at Domino’s Pizza. It once ran an A/B test that changed the colour of the checkout button from red (the brand colour) to green (more of a ‘go’ colour). In percentage terms, the difference in drop-off was small; statistically, it was significant. For a business with high order volumes, it translates into millions of pounds worth of additional revenue. 

Then there’s Booking.com. It took what appears to be a counter-intuitive approach, by actually increasing friction to improve conversion rates. It tackled drop-offs at checkout by giving customers clearer information throughout the process. The additional content helped people feel more comfortable about their purchase and ensured that those who went all the way through were confirmed buyers. 

Adapting to new approaches: embracing variable recurring payments

It’s also critical that you stay up to date with new payment methods. One that’s gaining particular ground is commercial variable recurring payments (VRP). As the name suggests, VRPs do not have fixed payment timings or amounts, and allow customers to set how and when payments are made. 

This gives consumers more control over how they pay; they could make higher payments at key points in their financial year, such as around bonus season, and reduce them at others, such as after Christmas or summer holidays. 

What does this mean for you as a business? It’s an opportunity to offer even more flexibility to customers, but, as with any approach, it needs to be integrated and offered in a way that fits naturally with the customer journey. 

And that’s the central point of any embedded finance strategy: it isn’t another payment option to sit alongside cards, but part of the buying experience that feeds into and ultimately shapes the checkout process. 

A fundamental part of modern commerce

Embedded payments aren’t a nice-to-have or a bolt-on. They’re a fundamental part of modern commerce. We all need to think beyond the transaction and view payments as an enabler to better customer experiences, higher conversions, and deeper loyalty. As consumer demands and expectations continue to evolve, the winners will be those who stay agile, personalise with intent, and test relentlessly.