Worldpay Launches Embedded Finance Offering in the US
Move over Adyen and Stripe, there is a new sheriff in town. At least, that's how the team at Worldpay would like to frame the narrative, I guess. But what happened? The international payment provider Worldpay has announced a new Embedded Finance offering in the US, where it launched banking and lending products in partnership with Unit (Worldpay).
From Payments-Only to Full Embedded Finance Stack
Before this launch, Worldpay was a pure payment company, enabling its customers to accept payments. When this customer was, for example, a platform or a Vertical SaaS provider, then Worldpay enabled the business's customers of this platform or Vertical SaaS provider to accept payments from their own clients. This is what we would describe as Embedded Payments, and is referred to as 'Money in' in the image. Now, Worldpay also offers Embedded Banking ("Manage my money"), Embedded Lending ("Get capital") and corporate spend management features ("Money out"). The platform or vertical SaaS provider can now also offer bank accounts, loans and other features through the usage of Worldpay.
Adyen and Stripe are globally the two payment providers that likely have the most extensive Embedded Finance offerings (in terms of breadth of features). With one partnership and announcement, Worldpay is aiming to close this gap.
The Unit Partnership: A Surprising Choice?
The biggest surprise in this announcement for me is that Worldpay chose Unit as the underlying provider. Don't get me wrong, I am impressed by what the Unit team is building, and they already have some significant partnerships in place. However, Worldpay is on another level, and especially becomes the one provider that enables such a massive company to manage banking, lending, and corporate expenses (Worldpay processes 80% more transactions than Stripe, according to Unit's CEO).
US-Only Launch: Geographic Considerations
But this partnership with Unit also signals one thing: this is a US-only feature, as Unit is currently focusing on its home market. Through quick research, I found that Worldpay's revenue and payment volume are approximately 70-80% from the US, with the remaining 20-30% spread across all other 149 markets in which the company operates (Payments Dive). Thus, this fact, combined with the partnership with the US-only Unit, suggests that Worldpay's Embedded Finance will remain US-only for the time being.
Can Worldpay Compete? A Retention Play vs. Customer Acquisition
Can Worldpay's Embedded Finance offering actually compete with Adyen and Stripe? I guess we will find out. Their competitors have invested considerable time and resources in their banking and lending activities. Therefore, I would have my doubts that Worldpay can win the current customers of Stripe and Adyen. However, perhaps this launch is not so much aimed at winning new customers as it is at reducing the number of customers leaving Worldpay to obtain additional Embedded Finance features?
Before this product launch, a Worldpay customer who wanted to offer banking or lending products would either need to find a provider to integrate in addition to the Worldpay integration or migrate to Adyen and Stripe for all their embedded needs. There are pros and cons to each approach; however, I am sure Worldpay lost a few interesting customers due to the missing Embedded Finance features.
I am curious how the Worldpay Embedded Finance product offering will perform. What's your take? Is this a defensive move to stop the bleeding, or the beginning of a serious challenge to Adyen and Stripe's dominance?
