Across industries, companies are quickly realizing that embedded finance can give them a competitive edge in today’s market. More businesses than ever are integrating payment or payout solutions into their product offering, following the well-known adage that every company will eventually become a fintech company.

But when it comes to actually executing this—to actually embedding payments into your product, how can non-fintech companies get involved without sinking too many resources, or getting in over their head?

We sat down with Branch’s Chief Payments Officer Ahmed Siddiqui to discuss how non-fintech companies are entering the world of payments and best practices to go about it in the most efficient way for their business. 

Claire:  To kick things off, I thought we'd just start with a common phrase that’s become more ubiquitous over the past few years, which is that “every company will eventually become a fintech company.” Would you mind unpacking what that means exactly?

Ahmed:  Sure; to start out though, I want to quickly explain that when we say payments, it might mean one of two things. I’ll use the example of Etsy. Let’s say you sell some trinkets or something on Etsy. Etsy allows a buyer to purchase things from other sellers, since it’s a marketplace. One way you can consider businesses getting into FinTech is that they want to be able to accept payments like this, from regular consumers. 

It could be for any product or service; they just want to be able to accept payments. Now, accepting payments could mean they’re able to accept a card-based payment. It could also mean that you can accept money from a bank. And nowadays, a lot of people talk about getting paid in crypto, too. These are all ways of accepting payments. Some of the more common companies that allow you to do this include companies like Stripe or Adyen, or even Toast.

The other side of it is more of a payout; and that’s actually a lot of what Branch does. Let’s go back to the Etsy example. Now that the money has been collected by Etsy, they need to pay out the sellers. Maybe you go ahead and create that trinket and then you let Etsy know that you’ve shipped it out. What Etsy can do is they can go ahead and pay you. But for a lot of places, they’re just paying to your bank account through a direct deposit. A faster method exists, however, where you can potentially get paid right away to your bank account or to a digital wallet, which is exactly what Branch offers. 

So there are a lot of things that companies can do to enable payments or basically be a part of the fintech world and be able to offer these services. 

Claire:   How would you say that integrating payments into a company's product gives them a competitive edge in today's market? 

Ahmed: Well in today's market, if you don't accept payments online, you're already behind. So you absolutely need to be able to accept payments, but then also to send out payments or “payouts” quickly to people. If you're not already doing something there, you should be thinking about it, because people are demanding to get paid out fast—oftentimes immediately after the work is completed. 

Claire:  What would you say are the top misconceptions people might have if they're thinking of incorporating embedded finance into their product?

Ahmed:  In embedded finance, there are two opposite extremes. There's the one extreme, where people want to try and build it all themselves. And then there’s the other extreme, where people are too intimidated and just say they’re not going to do anything. Oftentimes, the people that attempt to build everything realize that it’s just really hard. And then they revert back to something that’s not particularly optimal. On the other hand, the people that are too scared to get going just don’t get going at all. 

So I would say those two opposite extremes are where a lot of misconceptions lie: people believing that they can either do it all themselves, or that it’s too hard to do anything at all. 

Claire: When a company eventually goes to evaluate whether they’re going to build, buy, or partner for this payments infrastructure, what are some key factors that should guide their decision?

Ahmed: If you have experience in building things in the world of payments, then I would recommend you go ahead and build it yourself. But it’s actually quite rare for somebody to build real payments infrastructure directly with, let’s say Visa or Mastercard, or even the banks for that matter. There’s always some sort of service in the middle that you’re actually buying. 

I like a partner-led approach, because it allows you to focus on your core business and have the partner worry about the nuances of payments. There are actually a lot of little nuances that most people don’t consider that can become a big deal. If you choose to go ahead and build it yourself, you’re adding on that additional administrative or operating burden. 

Some people may be ready for it, but the vast majority of people have a whole different business that they want to run. Why would you want to burden yourself with all these other compliance-related things? You might as well partner with someone that can actually build you a really great solution. You get to focus on your business, and they can focus on the payments and the nuances that it comes with.

Claire: To that point, what would you say are some of the biggest technical challenges that a team might run into if they do try to tackle it themselves. What are those common roadblocks that they may not have expected? 

Ahmed: Many times, it’s actually not a technical issue, because if you have a developer-led organization there are plenty of tools you can use to implement payments pretty easily. It’s the operational headache that comes with it. The developers will confirm that they implemented something, but when it’s live and in production you have things going wrong. So [you need to ask yourself], do you really have the team to support that? That’s the big question you need to ask upfront, because it’s a pretty substantial investment you’re putting in to build it all. And the ongoing expense might be too much. 

Claire:  How would you say the overall payments experience influences worker retention and loyalty?  

Ahmed: People are becoming used to getting paid very quickly. If you’re running your own small business, for example, you’re an independent contractor, and it takes you a week to get paid, you’re not able to put that capital into something else your business might need. Faster pay is not only good for small businesses, but it’s also good for any worker because it can help with their cash flow. Who wouldn’t want to get paid faster?

Honestly, I think Uber is the one that actually created the whole urgency of paying their drivers right away. And I think a lot of other industries are catching on and seeing benefits from it because people want to stay with the platforms that get them paid the fastest. 

Claire: Looking ahead, if you had a crystal ball, what do you think the next wave of innovation in payments or embedded finance will look like?  

Ahmed: I think there are a lot of opportunities for new types of modalities and different use cases. I would say that one form of payment is probably not going to be universally good for everyone. And so as these new use cases come up, it actually helps when building for that specific use case or problem. 

Oftentimes, these problems come up from people that actually don’t come from the world of payments at all. And it’s up to people like us to come up with really great solutions that work for that specific industry or that specific type of user. 

And as I had mentioned earlier, things related to crypto or stable coins or the blockchain—things that even the card networks are innovating on—these are all interesting to look at, but I always want to try and find real problems and then figure out how to use the technology to solve those problems in unique and innovative ways. 

I think there’s a lot of room, and we’re just in the very early stages of figuring out how to really unlock the potential of payments.

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