Founded in 2017, Prommt is a Dublin-based start-up helping high-end merchants simplify their payment systems.
Embedded finance (EmFi) is not new. The broad concept encompasses a wide variety of fintech activities from buy-now-pay-later schemes popularised by the likes of Klarna to simply paying directly on a retailer’s website rather than being redirected to a payment page.
For a more pedagogical explanation, a PwC expert says, EmFi brings “[financial] services directly to customers within the context of their existing digital experience”. This seamless integration of financial services into non-financial platforms has grown rapidly since its early days more than a decade ago – getting a further boost after the pandemic as people get more comfortable with tech.
The EmFi market is valued at around $31bn in Europe and is set to grow to more than $117bn in the region by 2035. Around the globe, it is estimated to reach $7trn in value by 2030, with companies such as Stripe leading the way right from Ireland.
In the Irish context, these services are removing traditional banks from the equation, says Prommt founder and CEO Donal McGuinness. However, banks play a role behind a lot of these offshoot products, he elaborates.
Like most ‘new’ terms, embedded finance is quite broad, he says, but it’s generally fintech companies rather than banks pushing these services.
Moreover, with traditional banks exiting the Irish retail banking market, these new-age companies are stepping in to offer innovative ways for us to interact with finance. According to Enterprise Ireland, the Irish fintech sector attracted nearly €1bn in investment over the past five years.
Founded in 2017 and based in Dublin, Prommt is making waves in the ‘pay by link’ EmFi market, providing its services to a variety of businesses from hospitality and high-end retail to builders’ merchants.
“In Ireland in particular, I suppose we don’t have a lot of choice within the banking sector,” McGuinness tells me, but “hopefully that’s going to change soon”. Experts suggest that although many banks feel left out, a customer-focused strategic approach to EmFi can open up new business opportunities and introduce new customers.
Inclusivity
The rise of non-banking platforms has created a new reality for banking, where customers have an increasingly seamless experience. This proves advantageous to businesses, which see an increase in revenue, and customers, who find it easier to interact with payment systems.
These services also open up opportunities for the previously unbanked in developing parts of the world to interact with financial systems for the first time. PwC notes that for many smartphones could be a way into interacting with banking services.
McGuinness tells me that nearly all of the checkouts done using Prommt’s payment links are completed on Android or iOS devices, rather than a laptop. “I think the point is that everyone is really, really comfortable with paying with their mobile phone … not just GenZ or Millennials … we see no resistance to that right across the age groups.”
And besides opening up the financial world, another obvious positive outcome of EmFi is that it makes transactions faster and smoother.
According to McGuinness, some of Prommt’s clients have seen around six to nine minutes of savings per transaction. In addition, the start-up also tokenises the customer’s card data, which means returning customers don’t have to input their information again – saving further time down the line.
“So all these things save an awful lot of time for the merchant and the customer,” he says.
Prommt provides its services to business that haven’t been able to integrate e-commerce into their way of selling.
“There is a reasonably large percentage of businesses [that] cannot sell easily online,” McGuinness explains. This is because their product or service is relatively bespoke, requiring customers to interact with an expert or a personal shopper to fill their ‘cart’. Either this, or the products or services customers are purchasing are expensive enough to warrant further interaction.
“If you’re ringing a hotel to book … an event or a wedding, you’re talking to somebody – that’s a consultation … or I’m ringing a builder’s merchant to order a truck full of sand and timber.
“All these merchants tend to be in a position where they need to take a card over the phone. So, real old school.”
Prommt addresses these issues by giving merchants a series of tools that they can use to turn what is essentially an insecure, time-consuming and risky transaction into something that’s smooth and fast.
The start-up works with a number of hotels where it integrates its services into their property management systems. So when customers call to book a hotel, they receive emails with a payment link automatically, requiring no manual posting by the person at desk.
McGuinness also points to high-value retail. He says that these retail stores have “very nice websites but they’re not used as much as you think”. The start-up works with several big brands such as Michael Kors, Selfridges and Brown Thomas.
“People tend not to want to buy a $25,000 handbag on a website – they want to talk to a personal shopper.
“If you were on a personal shopping session, you could post the payment into the chat or you could send an email. The customer pays securely and the goods are dispatched.”
Open banking
Open banking is a financial model through which banks give third parties access to a user’s account data through secure interfaces. Although often conflated with embedded finance – these two are not the same.
McGuinness feels that the next frontier in e-commerce services, one that’s evolving very fast, is built on the back of open banking. He refers to it as “embedded banking”. These allow for near real-time transactions, which allows for cash to flow much faster as opposed to general bank transactions that take time to process.
Giving an example, McGuinness points to ride services that provide their drivers with a bank account associated with their company. Through this, drivers get paid in real time after the ride rather than having to wait a week or a month.
“This is really important in a lot of those businesses for cash flow purposes. You obviously need to [be able to] buy your stock so you can sell.
“I think these embedded finance products are really good … not so much when the money is at rest, but [when it comes to] moving the money around.”
McGuinness believes that the traditional banks are catching up and hopes that in the next couple of years Ireland sees growth in this area similar to what has been seen in the UK.
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