A Treasurer’s Guide to Payment Innovations and Embedded Finance

The payments landscape has evolved rapidly in the 21st century, developed through advances in technology and regulation that have heightened consumer and business expectations. Today, we all want our transactions to be more immediate, easier to access, and available 24/7.

As such, successful innovations in the payments space are driven by the experience they provide. A positive encounter with a new payment method dramatically enhances the chances of it being adopted. Open banking is an interesting case in point because it can act as a dynamic alternative to established payment methods such as direct debits and card payments.

Thanks to API technology, open banking is also driving the proliferation of embedded payments, which create a seamless customer experience, with ‘invisible’ and frictionless payments built in – rather like the Uber experience.

In the B2C sphere, consumers can choose to purchase goods and services through innovations such as Apple Pay and Google Pay, for example. And for B2B transactions, rather than issuing an invoice with their company bank details printed at the bottom, treasurers can now simply embed a payment link into that invoice. In turn, this enables the customer to settle the invoice quickly and easily as opposed to having to access a different system to do so. As a result, AR processes and timeframes can be improved and working capital metrics may also benefit.

While the domain of payment rails and methodologies once sat outside of treasury, with the role of the treasurer becoming much more strategic and innovation-focused, treasurers are in an ideal position to drive the internal discussion around adopting new payment methods. Specifically, they can explain to other stakeholders which methods work best for the business in terms of cost and time – and in the future, potentially also carbon footprint.

But that’s not to say there won’t be pushback from the business around switching up payment and collection methodologies, especially from niche departments that are used to legacy flows. Nevertheless, the benefits of removing friction from payments are becoming much more evident, particularly in today’s hyper-competitive world, where the company that is easier to do business with will be the one that will get paid quicker and acquire and retain more customers.

Fortunately, treasurers are not alone in this drive towards more efficient payment and collection processes. Senior management increasingly understands the importance of accepting some of the initial pain associated with putting a new payment method in place because of the benefits it will reap further down the line.

Banks too, are on hand to help. At NatWest, we’ve been on our own journey of payments innovation. Thanks to our broad range of customers, we regularly review our payments propositions and evaluate whether we are delivering the right experiences.

Serving both businesses and consumers enables us to learn from and share best practice around B2B and B2C payments experiences, helping companies to understand how certain payment types and related APIs can add value.

Throughout this Guide, as in everyday business, we consider all payment opportunities, including longer-term developments such as blockchain and CBDCs, through a customer-centric lens. Ultimately, if a payment form has a good business case and delivers added value, corporates and consumers will adopt it – and this is where treasurers can play their part in shaping the future, alongside their banking partner(s).