Colm Lyon, the Founder and CEO of FIRE, an embedded payments business, shared his insights on how the sector has evolved into the “hot topic” it is today. Lyon explained that FIRE has been a regulated business in the UK and Ireland since 2010, specialising in delivering customized payment processing solutions to approximately 1,500 businesses, helping them automate and streamline their processes to save time and money. For some customers, this means providing thousands of accounts or debit cards based on their specific business model.
Fire sees three major trends that have converged over the last decade to create the new era of embedded payments:
Regulation: Changes like the European Payment Services Directive and, about ten years ago in the UK, central banks opening up settlement accounts to non-bank financial service providers. This regulatory shift allowed non-banks, such as payment service providers like FIRE, to access payment systems in a way they previously could not.
Technology: The advancements of technology means people can carry multiple bank accounts in their pockets and pay without a physical card. For businesses, this translates to being able to access their accounts and data without having to log into a financial institution’s portal.
Changing Expectations: Driven by the instant nature of modern communication, there is now a growing need for instant payments. Businesses and individuals expect to send money and have the recipient instantly receive the funds and an accompanying notification, whether that’s a phone alert or an update to a business’s ledger system.
When businesses attempt to embed payments into their own systems, Lyon noted that the biggest challenge is not a technology hurdle, but a fundamental change in operations, specifically, how they realize they have been paid and how they will pay out.
The primary obstacle they face is that their existing banks often can’t provide the necessary services. Traditional banks may lack the required API to integrate directly, or they may be unable to open thousands of accounts in real-time, forcing businesses to rely on manual forms. Ultimately, businesses are seeking to incorporate the functionality of a third-party product into their systems to achieve the automation, savings, and efficiency they need.