Rimma Katz
[0:06]
Welcome to the Payments Journal podcast. I'm your host, Rima Katz. Payments are evolving. No longer just a transaction; they're becoming invisible, seamlessly embedded into the platforms that we use every day. Today, we're exploring the frontier of embedded finance, how companies are rethinking platform strategy and creating experiences where money moves behind the scenes, almost without us noticing. Diving deeper into this topic, I'm joined by Matt Downes, President of Worldpay for Platforms, and Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research. Great to have you both here. To kick things off, Matt, how do you define payments that disappear, and why is this concept gaining traction in embedded finance?
Matt Downs
[0:49]
Yeah. Payments that disappear is, um, you, you, you start to see it in your own life, right? Whether it's you're ordering food, maybe you're getting a rideshare. You know, you as a consumer enter into this transaction without even knowing it, right? I mean, you order the car, you jump into it, you're doing whatever. When you get out at the destination and, you know, whether it's five minutes or 24 hours, you might go back in and tip or provide some comments to that driver that supplied the ride. But at the end of the day, you didn't actually think about the transaction. It just kind of came l- right along. So, to me, disappearing payments is how do you make it really easy for the consumer, right, to, um, be able to interact and transact? And there's a flip side, right? If you're that driver of that transaction, you didn't think a whole lot about it either, right? You picked up, and you verified the name of the rider. Maybe you had a chit-chat, maybe you had your radio on. When they get out, you weren't worried about, "Is this a good transaction? Am I going to get paid?" That's really where payments that disappear are there. And, you know, the second part of that question is why is it happening? Because consumers want ease. Consumers don't want to see the friction.
Christopher Miller
[1:53]
You know, Matt, one of the things that I think is interesting about this is, you know, when you say payments disappear, we ask this, I think the obvious next question is, to whom? And so, look at the examples you gave. You've got a rider and you've got a driver. From the driver perspective, literally they do not care, right? They trust that the platform that they're on will make the money appear in their account in, you know, whatever way they've, they've arranged, whether that's a direct deposit or pay for Easy Pay or what- whatever the case is, right? From a consumer perspective, though, disappearing is, is kind of different, right? There are still pieces of that transaction where control is important. Selecting the payment type is still an important thing. So, customers want to see something, right? And, and I think that's the art of designing a disappearing transaction. It ... I don't... We might call them, what? Transparent transactions or translucent, right? You can see through them, but you don't have to do all of them. And I think it's, it's interesting that, you know, building a solution that supports all of those is actually very challenging because you must be able to support all the way through the design elements that get down to, you know, what does that interface look like and then all the way back to the seamless handling of the payment processing itself.
Matt Downs
[3:01]
Yeah. No, Chris, it's a great point. We think a lot about that. Consumer choice is super important, right? It's kind of that question today, the business I lead; we power into the thousands of software companies helping them create these really slick, experiences. But coming back to making sure that that consumer, whether they want to end up, see the transaction. Maybe they got a wallet preference. Maybe they want to use a DDA. We want to help that consumer be able to elect that, but maybe art experiences where they don't have to think about it every time. And more importantly, make it super easy for that small business to where they don't have to think about, "How am I going to get all this set up?" That we're working with a software company to provide that really slick experience that still allows consumers to be able to do it the way they want but not really have to think about it a whole lot. If they choose not to.
Rimma Katz
[3:52]
Matt, Worldpay's research shows that 90% of SMBs now consider embedded finance essential. What's driving this urgency and how are platforms responding?
Matt Downs
[4:02]
Yeah. I think it goes... It's almost the same as the first one, and it goes back to that consumer experience. And consumer experience, consumer expectations, right? You know, I kind of go back to Amazon did a big unlock and advantage to the consumer, right, when they first really launched and got e-commerce at scale and consumers were really kind of saw a different way to be served. We're kind of hitting this one the opposite way at Worldpay. We've recently launched a product called the Embedded Finance Engine. It's been a long beta process. But effectively what it is, it allows software companies to go beyond payment acceptance. Really into this realm of how do I become a financial service? How do I bring financial service products to these small businesses, right? Either for the small business to consume or to offer the consumer, right? Without naming names, you can think of two or three marketplace transportation companies that are now providing solutions to their clients that kind of are beyond payment acceptance. And payment acceptance is helpful because you can see the inflows and now you can start thinking about, "How do I underwrite service, use some of that data to help, help both businesses and consumers?" But whether it's buy now, pay here, later, working capital, banking and cards, et cetera. One of the things that makes our offering super unique that I believe the businesses and consumers win is, you know, if you go into a large brick and mortar national bank, they think of you as a business and they're looking at your credit score but they don't actually understand what you do. So whether you're running a dry clean press, whether you're, you're an operator of a restaurant, maybe you're a doctor, physician, you run a veterinary business, that software company understands you really, really well and they understand the workflow and the nuances there. One of the great things is bringing these financial products in; they can kind of be custom tailored per vertical, and that's, that's a whole new spin on finance. So embedded finance has taken off, one, because software companies and businesses have needs that need to be met. And then but, it's co- the poll's coming from the bottom from the consumer that wants to be able to, you know, leverage a buy now, pay here later, right? Et cetera.
Christopher Miller
[6:00]
You know, Matt, I was talking to my sister-in-law the other day, and, uh, she works on a platform that has financial services, and they were talking about a use case of delivering targeted lending within verticals, right? Just like you mentioned. And so, I won't share the specific vertical that she works on, but let's use veterinary, right? It's a great example of how the concept isn't new. There's been vertical targeted financing for a long time, but it's historically been a cardboard sign and maybe a weird phone call, right? And not something that you could hi- take care of on the, the veterinarian's website where you booked the appointment, where you, you know, got the follow-up information. To be able to deliver the lending product with, say, quick approval and, and integrated directly so the doctor knows, all that kind of stuff, that is a substantial advantage, right? And what she was telling me about it was that there is consumer demand for that sort of easy access, and obviously it helps the business to be able to offer that sort of product. But what I was really thinking about was distributing this kind of product. If you are a vet, the last thing you want to do is evaluate a bunch of different lending programs and take seven sales calls from seven lending programs to evaluate the one, right? If you already have a payment processor who can integrate the lending product directly to that experience, that's a substantial advantage in terms of what that specific segment of the market is really looking for, right? Which is a solution that meets the need at the time with a minimum risk and, potentially, you know, a much better choice, right? Vets were not trained to evaluate the, (laughs) the nuances of a, of, of finance partnerships, so I'm, I'm really struck by those opportunities and how the being embedded in vertical SaaS platforms, those OS of, of a certain business kind of things we've talked about, uh, it's, it's a real opportunity, and we see people talking about that every day.
Matt Downs
[7:47]
Yeah. We have this concept we call the everything platform, and the reality is not every software company is going to want to go beyond their core domain. But to the extent of their aspirations and the needs of their businesses, Worldpay is going to be there. And look, we’re bringing best‑of‑breed product, Chris. Maybe to hit a couple of points of what you touched on: one, we’ve made it super simple for that vertical software company to do it. The Embedded Finance Engine offers a super widget. It’s a low‑code product that you can code in two hours. Not only does it enable a loan, but it also allows a tile in that software to flip through. So, if that happens to be in their workflow software that day, there may be an offer for a bank account or an offer for a loan. Our beta product—we over‑beta’d it, to be honest, because we really wanted to make sure it was super slick—we’re seeing a 95% pull‑through. All of it is pre‑underwritten, because as the merchant provider, you can see the ins and outs of the business. We’ve effectively already provided them front‑of‑the‑line access through merchant processing, and we’re working with a third‑party provider that’s really good at origination and underwriting and thinks about it in a modern, digital way. In that example, the vet can literally click a pre‑approved loan, be funded in 48 hours, and the repayment comes right out of their merchant schedule. The best part is they never have to leave the veterinary software. The entire experience—from offer through origination to loan—is done right there without ever having to leave the platform. So again, it allows software companies to do it easily and allows businesses to avoid extensive research. It’s presented in a brand they believe in, because they’re running their business on that software, and that technology company is a very trusted advisor.
Rimma Katz
[9:30]
I feel like we can’t have this conversation without also mentioning the role that AI plays in the space. On that point, Matt, what is the role that AI plays in enabling smarter, more seamless embedded finance experiences?
Matt Downs
[9:44]
Oh, this is such a good question. We’re leveraging AI in multiple ways across the business, but specific to this embedded finance concept, we’re using AI around the underwriting portion of the engine to understand who is the right fit for the product and to predict who is going to take it and how it performs. As we understand where we’re putting what we call flex loans to work, we also leverage AI to put predictive offers out there and say, “We think this business type has a higher propensity.” The goal is to put that offer natively right into the software.
We’re still early, but we have plans to leverage AI more from a go‑to‑market perspective in the next version of the product. Ease of use and leveraging AI to make sure the product is presented in the right way are going to be a big part of this offering’s success. There are a couple of big platforms that have already found financial services success. But if you’re a small‑ to mid‑cap software company, this is a whole new vector. Your board is not thinking about how to turn you into a bank. A lot of the product design focused on how to do this at scale without putting technical, operational, or financial burden on vertical SaaS software companies. The punchline is that AI is a big part of how we’re planning to do that at scale.
Christopher Miller
[11:08]
One of the points of view we’ve articulated about AI is that many people and businesses will not directly consume AI. They will consume it in a secondary fashion through platforms and services they already use. An obvious example is AI integrated into an email system. The same concept applies here. Choosing AI tools is a skill — a technical muscle many organizations won’t have. Having AI embedded directly within products is key to making that capability available, particularly in this segment. A vet is not going to shop for different algorithms to identify good financing offers for potential clients. But when AI is embedded and delivered at scale, platforms have access to the data needed to bring those capabilities to life. That’s a really interesting part of the economy right now. Artificial intelligence requires data to operate, and data at scale. When it’s embedded in a platform, it becomes available to businesses whose individual data would be insufficient to generate those insights. A vet simply does not have enough payment data on its own to determine what risk profiles actually look like.
Matt Downs
[12:29]
Yeah. We’re plumbing all that in. We’re also thinking about, for many of us—whether you’ve been at it for two years playing with an LLM or you’re a new entrant—whether it’s AI, in your house, a chatbot, or whatever you’re interacting with in your life. One of the things we’re trying to do differently is recognize that you can have the data, but if you don’t help the interface and the end user understand how to use it and how to pull value from it, that’s probably the hardest problem to solve. We’ve put a lot of thought into that across the multiple AI‑related products we’re working on.
Rimma Katz
[13:04]
Matt, earlier on, you mentioned everything platforms. As we come to an end in the conversation here, how does embedded finance help platforms become everything platforms?
Matt Downs
[13:14]
It’s about many of our clients starting out as software companies. Payments are obviously close to their core because they need to provide a good experience. Their customers—small businesses—expect everything to just work. They don’t want to buy one piece of software for front office, another for back office, a separate banking suite, and an ERP. They need it all to work together, and they expect it to work out of the box. They’re really good at their trade or industry, whether that’s a dry cleaner, veterinarian, or anything else. At Worldpay, we have domain expertise in helping software companies bring payments into the stack, but we also believe those companies have daily engagement with business operators and can say, “How do we help you bring other capabilities in if you have those aspirations?” We have the data, and we believe in a best‑of‑breed model. We’ve been a horizontal enabler for many years, so we don’t need to be experts in lending, banking, or every feature. We’ve seen large platforms—think of a CRM, for example—extend horizontally and help users solve many problems within one environment. Everything platforms are aspirational. It’s a commitment to help software companies meet their customers’ needs over time. Not every company is going to want to go there, but if they want to move into different vectors, solve problems, and create opportunities for small businesses to meet consumer demand—helping businesses thrive and consumers stay happy—that’s really the essence of becoming an everything platform. It’s not for everyone, but for those with the aspiration, we’re going to help them get there.
Christopher Miller
[15:03]
It’s a real opportunity across many different verticals. As I see it in my personal life, and as we see in speaking with our clients and through industry research, the key to vertical software is workflow understanding. That means a single platform is unlikely to be the right fit for every business. What a massage therapist needs versus a yard care business versus a contractor is very different. What they have to do in their processes matters, and it changes — how many signatures are required, how changes are handled. That knowledge is deeply embedded in vertical solutions. All of those niches need to be able to take money from their customers, so payments become a core jumping‑off point for offering additional features.
Matt Downs
[15:53]
It needs to be easy to use. Being part of the everything platform, specifically within the Embedded Finance Engine as a component of that strategy, means we take on the heavy lifting — operations, payments, underwriting, liability, everything that comes with adding more capabilities. We take that burden off the software company. The goal is that it just works for the consumer without introducing complexity. As software companies think about expanding beyond their core category and adding new product suites, we’ve focused on removing barriers to adoption and eliminating things that could degrade the experience. The challenge is solving all of this in an elegant way so they don’t have to take on anything outside their core competency.
Rimma Katz
[16:39]
You both covered a lot of ground. You know, I'd love to leave the listeners with just a key takeaway that they can walk away with, something that can be top of mind, something maybe that keeps either of you up at night. On that, I'll pose that one to you first.
Matt Downs
[16:53]
That’s a good question. The key takeaway is that everything is ultimately consumer‑led. If you look at everything we’ve discussed, technology is very ripe right now — through advances in AI and in how platforms can be integrated. The consumer will ultimately decide whether these approaches are successful. We believe software companies have the right to win, and Worldpay is focused on enabling these experiences without creating a heavy burden. If we keep our eye on how consumers respond, that’s what will matter most. This space is going to evolve significantly over the next few years, and we believe our strategy — powering best‑of‑breed solutions in a technically and operationally elegant way — positions us well.
Christopher Miller
[17:51]
I have two things. One is that the ever‑evolving landscape of payment acceptance options is something almost no merchant can manage on their own. The number of merchants able to independently evaluate and integrate new wallets or mechanisms is vanishingly small. That makes platforms well suited to manage that complexity and change, which feels fairly straightforward. What raises more questions for me is how AI will change software development itself. When we think about vertical platforms or SaaS businesses, what does AI mean for their long‑term value? Some argue AI is the death knell of SaaS, while others believe that’s overstated — and I fall more into that camp. Still, it’s interesting to consider how AI, particularly through reducing the cost of producing software, will affect how solutions are delivered. If you’re selling payment services, you’ll still be able to do so regardless of those changes, but it’s an important moment for thinking about how niches will be served going forward.
Matt Downs
[19:26]
I actually think it’s a jump ball. I’ve been in the intersection of software and payments for almost 20 years, and I’ve seen increasing specialization over time. Fifteen years ago, small businesses had decent options for retail and restaurants, but they were expensive and on‑prem. Cloud delivery lowered costs and opened the door for new entrants to solve very specific use cases — veterinarians, food trucks, and more. Today, we process for over 300 sub‑segment industries, and those software companies continue to get more specialized. AI will strengthen companies that already understand their customers and allow new entrants to disrupt the space. Companies that don’t deeply understand their customers may find it more challenging. Payments companies will need to evolve too — we’re already thinking about agentic commerce and how AI will reshape daily life. I don’t think the outcome is catastrophic, but it will influence who wins and who struggles. In the end, small businesses and consumers will be the real winners because they’ll be better served.
Rimma Katz
[21:14]
Really great takeaways, Matt and Christopher. Thank you both for sharing your insights, and thanks to everyone for tuning in. Be sure to subscribe for the latest Payments Journal episodes, and don’t forget to share this podcast with your colleagues and friends.