Time To Be More than a Processor

Embedded financial solutions boost independent businesses and can make them clients for life.

The financial services industry is changing. While payment processors and traditional financial institutions will always have a place and purpose, they are no longer the only trusted options for financial services.

Embedded financial solutions—the integration of value-added financial services into software offerings—is set to redefine how consumers and businesses build and manage relationships. Non-financial companies, from tech and software-as-a-service companies to retailers, are diversifying their offerings to include financial solutions. Examples include omnichannel payment processing and lending, localized payment options, and cash advances.

When our company expanded into the embedded financial-solutions space, we wanted to bridge the gaps between merchants, consumers, and suppliers to create seamless payments technology for our customers. And in recent years, we added Lightspeed Capital to our financial offering to make funding accessible for independent businesses.

Embedded financial solutions present exciting opportunities to independent merchants. For these businesses, working with a company that offers a range of financial products supports business growth and success.

When it comes to financial services, customers are seeking holistic, direct experiences, according to a McKinsey report. Embedded financial solutions are addressing that need. They offer an integrated experience that combines the point of sale with payments and other financial products, reduce redundancies for independent businesses, and offer the flexibility to scale.

Businesses and their end customers benefit from these contextual, seamless experiences. Lightspeed can now unlock new use cases and often use proprietary customer data to improve financial access while reducing costs for end customers.

One-Stop Providers

Small businesses face systemic issues in payments. These include accessing, understanding, and using technology that can enable them to maximize their business potential.

Running a business can be time-consuming and complicated because these merchants are forced to rely on patchwork solutions. And if business owners don’t have access to the right services, it can become costly.

Forward-thinking companies recognize that they can further empower their customers by offering embedded financial solutions to make key products and services available in one place for merchants. Payments and capital are and will continue to be two of the biggest offerings of embedded finance.

Using an all-in-one solution for every business need, from POS to payments, consolidates the entire experience and simplifies operations.

For example, an independent business working with a POS provider that doesn’t offer embedded financial solutions will have to work with one or more third-party solutions. Now, let’s say they’re looking for funding to scale their store to a new location. That’s another financial product they’ll have to look elsewhere for—most likely a bank. Queue the lengthy application process, personal credit checks, and waiting period.

Managing a business this way can be exhausting. Instead, imagine how much easier it is to have the tools and technology you need at your fingertips with one provider. Businesses will be more likely to stay loyal to companies that can touch on different needs and deliver powerful solutions to their customers.

In working with one company, independent businesses get more value. They won’t have to work with multiple providers to run their business. They will have access to valuable data, payments reporting, and accounting and analytics so they can find new ways to increase sales. All operations become streamlined, resulting in fewer errors as well as money and time saved.

Plus, one-stop providers deeply understand the businesses they work with. They have insight into business history, sales records, trends, and consumer data. This means merchants receive top-tier, personalized customer service.

One prominent example that captures the power of embedded finance is embedded payments. In our experience, seamless payment processing is at the top of the list of merchant requests. So we built an embedded-payments platform.

With embedded payments, your payment processor communicates with all of your sales channels from within your POS system to process transactions efficiently and without error. It’s much easier for merchants to accept payments and consolidate crucial information in one convenient platform.

It’s a massive time-saver. For example, there’s no need to manually input transaction information, which greatly decreases errors and simplifies the sales process.

Capital is a powerful tool that businesses need to maximize growth and sales, but it isn’t often easy to get. Small businesses traditionally have to go to banks or lenders to acquire funding. Lengthy applications, intense credit checks, and long waits are the norm.

As well, small businesses are often seen as less established, making it difficult for them to obtain funding. They can be limited by cash-flow requirements, their ability to put up collateral, and other factors that generally make funding from traditional institutions difficult to access.

That’s where embedded financial solutions come in. A POS provider that also offers business funding or loans can give independent merchants a huge leg up, allowing them to invest in their business’s growth.

Removing Barriers

A company with embedded financial solutions has greater insight into its merchants’ businesses. Information on business history combined with data from POS and payment reports paints a comprehensive picture, giving companies the means to provide funding to a merchant based solely on metrics related to their business.

Large businesses with multiple store locations or a global footprint can benefit from embedded financial solutions as well. It’s much easier to operate several stores when the POS provider and payment processor you use allows you to scale easily both online and offline.

For small and medium-sized businesses, embedded financial solutions remove many of the common barriers to success. It’s not easy for these businesses to juggle patchwork solutions, which impede growth. Embedded financial solutions can help these owners reach their full potential.

—JP Chauvet is the chief executive of Lightspeed Commerce.