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Embedded B2B payments integrate payment processing systems directly into business software platforms that manage day-to-day operations, such as customer relationship management (CRM) systems, enterprise resource planning (ERP) software, or other business applications.
This integration enables seamless payment handling within existing tools, reducing the need to switch between platforms or rely on external payment systems. With these integrations, businesses can manage tasks such as payment initiation, reconciliation, and reporting all within a single platform, making financial operations more efficient and reducing the potential for errors.
Why are B2B Transactions Essential?
Given these challenges, it’s no surprise that the B2B payments market size was valued at $72.30 trillion in 2022 and is projected to reach $174.38 trillion globally by 2030. In the United States alone, B2B payments were projected to reach $197 billion in 2023, with continued growth expected through 2031.
Benefits of Embedded B2B Payments
Embedded B2B payments streamline financial operations for businesses, enabling them to build stronger, more valuable relationships with banks and clients.
Streamlining Processes
Embedded payments simplify business operations by automating payment processes, reducing manual errors, and speeding up transactions. By automating billing, payment initiation, and reconciliation, businesses achieve quicker payment cycles and smoother cash flow, allowing teams to focus more on growth than administrative tasks.
Cost Efficiency
Integrating payments within existing software lowers transaction costs. For instance, embedded ACH payments reduce fees compared to traditional payment methods, such as wire transfers and cross-border transactions.
With the addition of instant payment options, businesses can further streamline their processes, accelerating cash flow while avoiding the higher costs often associated with rapid fund transfers. This approach also lowers the cost of managing high-volume transactions, providing long-term savings for businesses that process frequent payments.
Enhanced Security and Compliance
Embedded payments include advanced security features like tokenization and encryption to protect sensitive payment data. These security measures safeguard customer information and help ensure compliance with standards like anti-money laundering (AML) and know-your-customer (KYC) requirements. By automating compliance, embedded payments reduce fraud risks and support regulatory adherence.
Challenges and Considerations
While embedded B2B payments offer numerous benefits, businesses must be mindful of potential challenges when implementing these solutions.
One potential pitfall is integration complexity. Many companies operate on legacy systems, and embedding payment functionalities into these infrastructures can require significant time and technical expertise.
Poorly managed implementation can introduce security vulnerabilities, potentially exposing sensitive financial data.
Overcoming Integration Challenges
To integrate embedded B2B payments successfully, look for technology partners who offer robust, scalable solutions and understand your current systems' intricacies. Prioritize platforms that provide API-based integrations to streamline the process and minimize disruption. Testing compatibility with your current systems ensures a smooth transition without affecting other business operations.
Security Concerns
Robust security protocols are essential when implementing embedded payments. Best practices such as end-to-end encryption, tokenization, and multi-factor authentication help prevent fraud and data breaches.
Regular system updates and security audits can help identify vulnerabilities early. Partnering with trusted providers who prioritize security further reduces risks and assures regulatory compliance.
Implementing Embedded B2B Payments Best Practices: Step-by-Step Guide
Each step—from assessing needs to selecting technology partners and integrating with existing systems—brings businesses closer to efficient B2B payment processes.
- Assess business needs: Identify specific payment challenges and opportunities for automation within your current systems. Determine which inefficiencies are costing the most time, resources, and money.
- Involve cross-functional teams: Engage with stakeholders from finance, IT, product teams, or other team members who can contribute. This collaboration ensures that all implementation needs are addressed smoothly.
- Select technology partners: Choose a provider with experience in embedded payment solutions and strong API-based integration capabilities. Ensure the platform offers the flexibility and security needed for seamless integration with your systems.
- Confirm system compatibility: Test the infrastructure's compatibility with the new embedded payments solution. Identify and address any gaps between the current systems and the new platform.
- Conduct thorough testing: Test the system extensively to catch any potential integration or security issues before launch.
- Implement gradually: Use a phased implementation approach to minimize disruptions and allow teams to adjust to the new system. Prioritize areas of your payment process that can benefit most from early integration.
- Monitor and optimize: Continuously track system performance and gather user feedback. Identify areas for improvement and adjust as needed to meet your evolving business goals.
Embracing the Future of Embedded B2B Payments
Embedded B2B payments are transforming how businesses handle transactions. As digital payment solutions become more widespread, the demand for faster, more secure, and scalable systems continues to grow.
With new instant payment capabilities, businesses can now process transactions in real-time, accelerating cash flow and enhancing customer experiences. Staying ahead of these trends—by adopting instant payments and other innovative solutions—offers businesses a valuable competitive edge.
At the center of this transformation, Modern Treasury provides the API-driven solutions businesses need to modernize payment operations. Modern Treasury enables companies to optimize their financial operations with seamless integration, robust security, and efficient payment workflows.
Modern Treasury is a trusted partner for businesses ready to embrace embedded B2B payments, streamline processes, and drive long-term growth.
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Everything you need to know about the payment rails that power the world’s economy, from ACH and wires to RTP, FedNow, and more.
ACH credits and debits are two kinds of ACH transactions. Whereas a credit involves depositing, or “pushing,” funds into a bank account, for a debit, funds are withdrawn, or “pulled,” from an account.
The two kinds of financial institutions in the ACH network are ODFIs (Originating Depository Financial Institution) and RDFIs (Receiving Depository Financial Institutions).
US companies moving money internationally will likely weigh the pros and cons of SWIFT vs. Global ACH when it comes to attributes like speed and cost.
The Clearing House (TCH) is a banking association and payments company owned by 20 of the world’s largest commercial banks.
For business-to-business (B2B) companies, embedded payments integrate payment processing directly into software platforms
ACH (Automated Clearing House) is a payment processing network that facilitates electronic transfers between banks in the United States. It enables automated electronic debiting and crediting of checking and savings accounts. ACH payments work by batching transactions together, which are then processed at scheduled daily intervals.
A return is a credit or debit entry initiated by the Receiving Depository Financial Institution (RDFI) that returns a previously originated payment to the Originating Depository Financial Institution (ODFI).
ACH return codes identify the reason an ACH payment was returned by the recipient's bank. They make it easier to spot and resolve payment failures.
An ACH reversal refers to an erroneous ACH payment that a payment originator requests to take back, or reverse.
Payment rails are the underlying systems and networks that facilitate the movement of funds between parties in financial transactions.
Pix is Brazil’s instant payment platform that launched on November 16, 2020. Created and managed by the Central Bank of Brazil, Pix enables fast payments and transfers at any time, year-round.
A Standard Entry Class or SEC code is a three letter code that describes how a payment was authorized by the consumer or business receiving an ACH transaction.
A SWIFT code, also known as a SWIFT ID or Bank Identifier Code (BIC), is a unique 8-11 character code assigned to a bank for SWIFT wire transfers.
SWIFT payments or international wires are global payments made through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks and financial institutions in the United States.
The Clearing House Interbank Payments System, or CHIPS is the largest private sector USD clearing system for wire transfers.
Electronic check presentment (ECP) is the process of electronically submitting a check to a bank for payment.
An electronic funds transfer (EFT), also known as a direct deposit, is the digital transfer of money between bank accounts. As digital transfers, they reduce the need for manual input and paper documents.
FedACH is the automated clearing house (ACH) service of the Federal Reserve Banks.
Part of the FedACH system, FedGlobal ACH offers low-cost and efficient cross-border ACH payments.
FedNow is a new payment rail that enables faster bank payments for financial institutions of any size, in any community, 365 days of the year.
Fedwire Funds Services, commonly known as Fedwire, is a real-time gross settlement transfer system that allows participating financial institutions to send and receive same-day fund transfers.
Fiat money is a form of currency issued by a government and declared legal tender, though not backed by a commodity.
Global ACH can help companies move money from US-domiciled accounts across borders using local rails. Learn how and when to use this payment rail.
The National Electronic Funds Transfer (NEFT) is a centralized payment system that facilitates transfers between certain bank accounts across India.
The National Automated Clearing House Association (Nacha) is responsible for overseeing the Automated Clearing House (ACH) Network, which is used to send money electronically between banks throughout the United States.
RTP (Real-Time Payments) is a payment processing network used to send money electronically between banks in the United States. It transfers funds between two bank accounts instantaneously and is available year round.
A Request for Payment (RFP) is an ACH Network message that can be used by businesses to send electronic invoices to their customers.
Same-Day ACH is an improvement to the ACH network that allows the processing of credit, debit, and return transactions several times a day.
Wire fraud is a serious criminal offense that uses electronic or interstate communications methods to defraud someone out of money or property.
A take rate refers to the fees online marketplaces (such as Amazon or eBay) or third-party service providers (such as PayPal) collect for enabling third-party transactions.
A wire transfer is an electronic payment made through a global network, allowing for fast, irreversible, foreign or domestic electronic money transfers.
ACH APIs enable companies with high transaction volumes to write software that automates payments over the ACH network.
An ACH credit refers to the process of electronically depositing, or “pushing,” funds into a bank account using ACH.
In an ACH debit, funds are electronically withdrawn, or “pulled,” from a bank account using ACH.
A Notification of Change (NOC) is used to notify the sender of an ACH payment to correct or change information related to a customer’s bank account.
A pre note or prenotification is a zero dollar payment to validate the account and routing details of a bank account before debiting or crediting it.
An International ACH Transfer—also known as Global ACH—is an ACH payment made cross-border from a US-domiciled account.
The issuer identification number (IIN) is the first eight or nine digits on a payment card tied to the financial institution that issued the card.
Originally known as Bankers’ Automated Clearing System (BACS), BACS Payment Schemes Limited clears and settles direct debit, BACS direct credit, and current account switch service in the United Kingdom.
The Bulk Electronic Clearing System (BECS) is a streamlined electronic payment method used to process low-value, bulk transactions in Australia and New Zealand.
The Faster Payments Service (FPS) is a banking service in the United Kingdom. The FPS was instituted in order to reduce payment times between accounts held by different customers.
The Single Euro Payments Area (SEPA) is a system of payment schemas that standardizes cashless transactions in euros.
Unified Payments Interface (UPI) is a real-time payments system for mobile applications designed and launched by the National Payments Corporation of India.