Optimize Your Product Lineup by Integrating a Payment Ecosystem on Your Platform

Embedded payments are table stakes for businesses. If customers can’t pay for your product or service online or in-app, they may not buy it. That’s a pretty straightforward case to add payment features to your platform. 

One way to provide an online payment option is to embed a widget into your app. But adding payment methods à la carte doesn’t offer benefits beyond just enabling payment. You need more than a PayPal or Venmo integration to reap the full benefits of embedding payments. By taking a piecemeal approach, companies are missing out on the most important potential benefits of integrating payment features. 

For the greatest flexibility, profitability, and breadth of options, you can work with a banking as a service (BaaS) provider to create a holistic payment ecosystem on your platform, which gives you the ability to launch innovative new products that make it easier for clients to do business, send payments, get paid, or even get a loan. 

Key Takeaways

• Building your own holistic payment ecosystem can help you improve customer experience, increase user retention, and ultimately boost revenue. 
• Centering your ecosystem around bank accounts gives you access to a complete set of payment rails to serve customer needs.
• To build a payment ecosystem safely, work with a BaaS provider that can help you stay compliant with regulations.

What is an embedded finance payment ecosystem? 

An embedded finance payment ecosystem is a financial network with an interconnected system of payment rails that you can integrate with your existing platform. Taking an ecosystem approach centered around bank accounts empowers you to launch a complete slate of new products, whether you are a B2B or B2C company. It can also help you to earn interchange and additional revenue, gain deeper customer insights, build customer loyalty, and ultimately grow your business. 

BaaS provider Treasury Prime connects businesses with chartered banks through banking APIs to power these embedded payment ecosystems. With the largest bank network in the industry — we work with more than a dozen partner banks and growing — Treasury Prime facilitates direct banking relationships responsibly while offering integration with industry-leading partners in areas like card issuance and compliance. 

“A sleek and centralized payment ecosystem gives your company more control over payments processing and the payments experience,” says Treasury Prime CEO Chris Dean. “It helps you reap the full benefits of all the different payment options out there.”

Benefits of a Payment Ecosystem

Building a payment ecosystem can benefit many industries and business models. A smoother payment experience can help marketplace enterprises retain vendors. A customer rewards card can help an online retailer build consumer loyalty. Adding tools to manage cash flow can make a B2B platform stand out against competitors. 

Here are five benefits of building out a payment ecosystem. 

1. Customer behavior insights: When customers open accounts and cards through your company, you gain greater insight into how they use your product, enabling you to serve them better.
2. Customer loyalty: Building a payments ecosystem encourages your customers to engage with your platform more often. 
3. Smoother user experience: Payment ecosystems save time and effort by allowing customers to send and receive payments, and better manage cash flow.
4. New sources of revenue: Customers will be willing to pay fees to access certain tools, like faster payments or transfers, if they offer enough convenience. You can issue cards and earn interchange revenue from the card processors with every swipe.
5. Control: You choose the payment rails that suit your customer base to create innovative new products. Instead of leaving customer care to a third party, you can respond directly if a payment issue arises, keeping your users happy. 

How do you build a financial ecosystem on your platform?

To build a lasting fintech product offering competitive features and security, you need to center your product around bank accounts. That means partnering with an FDIC-insured bank to offer white-label bank accounts to your customers. 

Bank accounts support a full range of payment rails, like ACH electronic transfers, wire transfers, and access to credit and debit card networks. Accounts also serve as a necessary foundation for other services, like lending and investing. Even on their own, bank accounts provide value. When a customer stores their money with your platform, they’re motivated to commit to your service. 

“Products that store customer money are extremely sticky. They keep people coming back,” says Dean.  

Treasury Prime supports two types of bank integration:

• On-core: When you opt for an on-core model, you open every customer account directly on a bank’s core, or back-end system. An on-core model can be faster to set up but has less flexibility. 
• FBO account: FBO stands for “for benefit of.” An FBO account, sometimes called a ledger account, is a single umbrella account that your company opens on the bank’s core.  From that account, you can issue multiple virtual accounts for your customers.  

FBOs require more maintenance but allows for greater freedom for account customization and feature enhancements. It frees you from the settings instituted on the bank's core to accommodate their traditional business lines.  

One of Treasury Prime’s first steps with prospective customers is to connect you with a bank that meets your specific needs. Because we work with a dozen banks and counting, we’re able to support a wide range of industries and use cases. Some of our banks specialize in working with small businesses; others have experience with enterprise companies; some take a special interest in emerging use cases like cannabis banking and cryptocurrency. 

What payment rails can you embed with Treasury Prime?

Once you have set up bank accounts, your business can embed a full range of payment rails. That means you can offer your customers the payment options that make the most sense for them, and it gives you more opportunities to innovate and monetize. Here are some payment rails you can set up:

• Debit cards: The debit card is the most popular payment rail in the United States, and offers a long list of benefits for businesses that choose to issue cards to their customers. For example, you can earn interchange revenue from debit transactions, which you can either keep as revenue or reinvest into customer rewards programs to promote loyalty. Treasury Prime supports both physical and digital cards, with the added ability to embed cards into digital wallets.  
• ACH: An ACH transfer is a type of Electronic Funds Transfer (EFT) universally accepted at U.S. banks. Another benefit of ACH is that it is inexpensive as far as payment rails pricing goes, costing only pennies per transfer. 
• Checks: According to a recent PYMNTS study, 81% of businesses still issue checks. Treasury Prime is unique among BaaS providers for still supporting paper checks and remote deposit capture. 
• Wire: A wire transfer is a highly reliable form of payment because the bank or financial services company handling the transfer guarantees its delivery. 
• Cryptocurrency: With Treasury Prime, you can build a fiat onramp, which enables end users to convert fiat currency such as U.S. dollars to cryptocurrency.

To determine whether a payment ecosystem is right for your business, start by exploring your clients’ payment needs. What are their pain points? Do you have vendors who might want to get paid directly on your platform? Could businesses or people you serve make use of financing or cash advances? 

Payment ecosystem at work: Buildertrend

Buildertrend provides construction management software to contractors. One of the platform’s key functions is enabling its users to pay subcontractors, purchase materials, and manage cash flow. 

Buildertrend offers white-labeled bank accounts to home builders, remodelers, commercial contractors, and others who use the company’s platform. Adding bank accounts to their platform helps in multiple ways: It enables Buildertrend to support all the payment options the company’s clients expect, such as purchase order processing, budgeting tools, and construction estimating, as well as providing Buildertrend clients a central place to store funds. 

Doing embedded finance safely and in compliance

While technology is making it easier than ever before to create payment ecosystems, it is important to design embedded finance programs in full compliance with ever-changing fintech regulations. A BaaS provider with deep experience in the banking industry can guide you through the process to make sure you are standing up your own compliance program correctly. Some companies try to outsource all their compliance to a BaaS provider, but as we’ve seen lately, regulators have made it clear that they plan to proactively enforce rules and protect end-user deposits, and penalize those who haven’t adequately ensured compliance with government requirements. 

Unique among BaaS providers, Treasury Prime has created a 4-point compliance framework to help enterprises stand up and maintain their own robust compliance programs. Treasury Prime also partners with industry leaders like Unit21 and Alloy to provide top-of-line fraud and compliance solutions to our customers. 

“It’s much easier when you do compliance the right way, and it reduces risk for your business in the long run,” Dean says.

Ultimately, a payment ecosystem is a foundation for innovation. That can look like creating new payment tools, creating a special rewards program, white labeled bank accounts and cards, advancing funds to customers, or something entirely different. The bottom line: This is a way to set your business apart. 

 “When you pay to embed individual payment methods, that’s the end of the story. When you build your own payment ecosystem, you have the opportunity to offer a wider range of perks,” says Dean. 

Wondering how embedded banking could help your business?  Contact Treasury Prime — Find out why Tearsheet named us the Best Banking as a Service company for the second year in a row.  Talk to the best embedded finance team in the industry.