The emergence of contactless and frictionless payments has already transformed the digital payments experience. At the heart of this transformation are embedded cards, i.e., cards integrated directly into the fabric of apps, products, services, and entire ecosystems such as loyalty apps, retail ecosystems, and wearables – making the entire shopping experience smoother while making a payment. This has led to a very high level of customer expectations in terms of personalization, and in turn, adoption too has rocketed.
A report by Juniper Research states that embedded finance, including embedded card services, is expected to exceed $7 trillion by 2026, representing 10% of all financial transaction value globally. This demonstrates the extent to which embedded cards are already proving themselves to be a foundational part of payment infrastructure.
The Silent Revolution: Embedded Cards in Digital Wallets
Digital wallets, like Apple Pay, Google Pay, and Samsung Wallet, have become ubiquitous in recent years. However, the integration of embedded cards has truly elevated their functionality. This innovation has not only streamlined the payment processes but also enhanced security and convenience in our daily lives. For example, when you add your credit card to Apple Pay, it doesn’t just store the card number. Instead, it creates something known as a “Token” – a unique identifier used for transactions. This process happens behind the scenes, silently revolutionizing the payment landscape. As digital wallets become more popular, embedded cards will only get more integrated into our daily lives.
Creating a True Omnichannel Experience
With online and in-store shopping increasingly intertwined, brands want to offer an omnichannel payment experience at every touchpoint. This is where embedded cards do well. Whether tapping your phone at a physical POS, redeeming loyalty points within an app, or paying for an online order, embedded cards ensure the payment process is not only easy but also seamless, frictionless, and uniform. An example of this is Walmart’s Walmart Pay. You could embed your payment cards directly in the app and then use them to pay in-store, use promotions or deals, and even manage Curbside pickup with just a tap, allowing a uniform online and in-store shopping experience.
Making Payments More Flexible and Convenient with Buy Now, Pay Later (BNPL)
BNPL services have gained wide popularity in recent years. According to Worldpay’s 2022 Global Payments Report, BNPL is set to account for 24% of all e-commerce transactions by 2026. Embedded cards are driving this growth by making the entire experience seamless. With BNPL built directly into the cards you’re already using, it’s effortless to opt for flexible payment plans without missing a beat. What makes embedded cards even more exciting is how they enhance the BNPL experience by connecting payments with loyalty programs and rewards.
Klarna, a leader in the BNPL space, has integrated its card directly with H&M’s mobile app. Shoppers can split payments with Klarna whether they’re shopping in-store or online. But what’s even more interesting is how the Klarna card is integrated with H&M’s loyalty program. Customers can make payments through the app while also collecting loyalty points and accessing personalized offers. As BNPL gains traction, we will see that embedded cards will become increasingly critical to delivering on shoppers’ convenience and flexibility expectations.
Acting as a Guardian of Your Digital Transactions
Alongside the growth in digital payments, there’s a corresponding growth in threats. Embedded cards address this risk by enhancing payment security. Banks and payment processors are building various mechanisms to instantly detect any possible fraudulent activity and offer more secure forms of authentication. Further, tokenization is one of the most impressive features of embedded cards. During any transaction, a “Tokenized card” replaces sensitive card data with a unique code or secure “token” that cannot be used more than once. Even if a hacker gets hold of that token, they won’t be able to use it! With fraud prevention, tokenization, and virtual cards all rolled into one, embedded cards allow us to enjoy safer and more secure transactions.
From Loyalty to Lifestyle: The Future of Embedded Cards
Embedded cards are transforming retail from customer loyalty to payments. But with the right solution, retailers will stay ahead and succeed massively.
How exactly will embedded cards drive your business’s success? Comviva has created a comprehensive guide, providing actionable tips on how you can use embedded card technology to build deeper customer relationships and make payments easy.
Download your copy of our latest Global CXO Report on The Future of Payments: From ‘Transactions’ to ‘Experiences’ to see how embedded cards will transform your business.
