Accelerate your business with issuing and embedded finance
It is no secret the macroeconomy in 2023 has created a level of uncertainty. As a result, businesses must adapt and innovate to improve their bottom lines and diversify their client base.
If you, like so many companies, are thinking along these lines, you should consider expanding embedded finance, such as card issuing , into your offerings.
First of all, you may be asking, what is embedded finance? Let’s break it down.
As we all know, financing, liquidity, and cash management are crucial to any company’s successful operations, and for fast moving businesses, traditional financial institutions don’t always cut it. As a result, non-financial companies are finding opportunities to address this gap in innovative ways, using technology platforms like Stripe and Marqeta as the underlying infrastructure.
Sounds novel? Embedding finance into an established company’s offerings is actually a relatively old concept – arguably pioneered by the auto industry with large auto companies spinning up financing arms of their firms. You have probably experienced this – if you have ever shopped for a car at a dealership, you were likely offered financing options by the auto manufacturer themselves. This venture was and is still successful in both reducing friction for consumers to purchase their brand and importantly – making their brand stickier with the purchaser.
While the car dealership is a well-known example, many companies today are innovating by embedding finance offerings into products, including a category of payments technology called Issuing
Credit Card Issuing technology – your next secret weapon?
Credit card infrastructure is extremely complicated, from a regulatory and technology standpoint, yet use-cases for card issuing infrastructure are plentiful. Many companies are innovating faster by partnering with firms like Stripe and Marqeta to expand their offerings and drive revenue streams.
Let’s start with a consumer-focused example – a pandemic favorite, DoorDash. DoorDash partners with independent delivery pros called Dashers, to pay for and pick up food orders at the point of sale, and deliver to homes and businesses. How do the Dashers pay for the orders? They use something called a Red Card, a proprietary, instant-issue physical card (powered by Marqeta) which facilitates the transaction at the point of sale. The magic part – the Red Card approves and funds orders only if the details and amount are accurate, and receipts, tips, and earnings for the Dasher are all accurate. This structure greatly reduces fraud and enables Dashers to pick up orders efficiently (which boosts their earnings), and ultimately, consumers benefit from this seamless payments operation.
Now, let’s look at an example with a bit more complexity in a B2B use-case. If you’ve ever taken a business trip on your employer’s dollar, chances are you’ve used a software called Navan (formally known as TripActions) to book your reservations. Navan is a company that helps other businesses manage their corporate travel and expenses, but of course – travel payments and expense reimbursement is a key aspect of these operations. In 2022, Navan launched an expense management offering – a card issuing infrastructure with built-in controls – to manage spend, automate expense reconciliation, and (importantly) move money faster between parties, helping make booking and conducting travel seamless for employees, and moving funds faster to the travel vendors plugged into the platform. As you can imagine, this unique offering will help cement Navan into their customer’s operations, making it harder to replace given the seamless way it facilitates critical business travel. In this way, partnering with Stripe to leverage their Issuing solution has helped Navan grow their payments and expense solution 5x!
How might Issuing be leveraged in a vertical like construction and the trades?
Let’s take an example we see all around us in cities across the world – construction projects. This work is generally run by a General Contractor (GC) that oversees the project’s ultimate success, but many individual components are specialty trades, and require contracting to specialist trades called subcontractors – for example: electrical, HVAC, and millwork, each company supplying a multitude of pros on the job site at any given time, and taking a cut of the overall project budget. With so many parties involved, it’s common for scheduling clashes and disruption of supply ordering, and any on-the-job purchases like hardware runs, gasoline for transport, or even team lunches are often expensed on the spot by individuals, and later reconciled tediously behind the scenes.
Imagine if these GC’s partnered with a technology firm to develop a card-issuing program that had automatic controls for specific pre-approved expenses already accounted for in the project’s budgets? Not only could this help individuals on the jobsite save their hard-earned money by using a pre-approved card for on-the-spot expenses, but it could save many hours of manual reconciliation by back-office teams, enabling them to focus their efforts on more productive tasks.
Tying it all together
In light of the economic uncertainties in 2023, forward-thinking companies are seeking innovative approaches to enrich customer experiences, bolster loyalty and retention, optimize operational efficiency, and diversify their product offerings. Fintech firms, in particular, are undergoing significant transformations to meet these demands, with embedded finance solutions such as Card Issuing showing great potential.
Apart from the advantages listed above, certain firms providing platform services to other companies can explore substantial monetization prospects. One such opportunity lies in capturing a portion of the transaction volume facilitated by the company’s successful card program.
If your firm is considering embedded finance offerings such as Card Issuing, the Yeeld team would love to hear more. We’ve worked with companies of all sizes to help ideate and implement embedded finance solutions, from working capital loans to card issuing programs.
We’d love to hear what you’re building – shoot us a line at info@theyeeld.com!