Embedded payment tools make inroads

Last year may have been a quiet one for payments mergers and acquisitions, but this year holds more potential for a surge in activity, industry analysts and investors said.

That’s largely because many venture-funded startups that previously put off raising capital may find themselves in need of an exit plan just as strategic acquirers and private equity firms are ready to pounce. 

Unprofitable venture-backed companies are burning cash with each month that passes, and “they're either going to need to fundraise more to continue funding operations, or seek out strategic alternatives,” oftentimes M&A, said Eric Kaplan, an investor at San Francisco-based Bessemer Venture Partners. 

This year, the industry will reach a point where “a lot of companies” will need to explore strategic alternatives, potentially producing attractive assets for larger payment software companies to buy, Kaplan said. 

Additionally, analysts said founders’ valuation expectations are starting to become more reasonable, and interest rates are expected to drop. Regulatory developments, too, could prompt industry consolidation, especially in areas such as buy now, pay later. 

BNPL is a saturated payments segment where economic conditions also challenge the business model, said Jordan McKee, research director at data and intelligence firm S&P Global Market Intelligence. “I’m almost surprised that we haven’t seen more (consolidation) in that space to date, but it could just be because companies are keeping (business-to-consumer) opportunities at a distance.”

Potential targets may be found in the public markets as well. Payments software company Flywire, cross-border payments firm Remitly and card-issuing fintech Marqeta could be in buyers’ sights, William Blair analysts wrote in a Jan. 2 note to investor clients. Spokespeople for Remitly and Marqeta declined to comment.

“We believe lower valuations coupled with attractive long-term opportunities will drive continued M&A activity from both private equity and strategics, especially if valuations do not improve,” analysts wrote.

Other smaller-cap companies that could be acquisition targets include e-commerce payments company Payoneer and cross-border payments company Euronet, the William Blair note said. Spokespeople for Flywire, Payoneer and Euronet didn’t respond to requests for comment.  

Acquisition strategy

It’s a buyer’s market, but large companies are being strategic as they look to acquire a capability or eliminate a threat. 

Payments has “a lot of serial acquirers,” for whom scooping up interesting technologies that support new payment use cases or distribution mediums is core to their business model, said FTV Capital Partner Rob Anderson. 

“I think you will see the larger strategics that tend to be serial acquirers start to be more active” over the next 12 to 18 months, extending from their core propositions into growth areas, said Anderson, who’s based in the San Francisco area.

Private equity firms are expected to be on the hunt for targets as well, especially given the potential for more distressed properties.

On Tuesday, card network American Express said it’s selling fraud services company Accertify to tech-focused private equity firm Accel-KKR.  

Armed with capital, many PE firms now have “great experience in payments, so they’re more of a strategic buyer than they may have been in the past,” said Sam Wares, director of client success at Omaha, Nebraska-based payments consulting firm The Strawhecker Group.

There hasn’t been as much selling by PE firms as Wares would have thought, based on purchases they made five or so years ago. “I could see there being some trading within the PE-owned payment companies this year, and then at the same time, more activity with newer acquisitions,” he said.

As a pack of floundering businesses seek safety, first movers could get more than the laggards. 

The payments industry is also likely to see “a bunch of smaller companies merge with other smaller companies,” predicted Jeremy Jonker, co-founder and managing partner at Bay Area-based Infinity Ventures.

Possible strategic acquirers

Card networks Visa and Mastercard and digital payments pioneer PayPal may also consider acquisitions this year, as they seek to broaden their services. 

Visa is likely to continue to be acquisitive, but focus more on international assets given the regulatory scrutiny applied to deals within the U.S., Jonker said. In the past seven months, Visa has acquired Brazilian fintech Pismo and plans to buy a majority stake in Mexico payments processor Prosa.

New PayPal CEO Alex Chriss was behind the acquisition of Mailchimp while at tax software company Intuit. “I’d almost place a bet on PayPal potentially looking to make some acquisitions outside the payments industry, and more in areas like loyalty or marketing,” said McKee, who’s based in the Washington, D.C. area.  

So far, Chriss has demonstrated he’s at least interested in selling, with PayPal last October agreeing to sell its returns software business Happy Returns to shipping company UPS for $465 million, just two years after PayPal purchased the outfit. 

Many expect Worldpay, once fully spun out from Fidelity National Information Services, to be an active acquirer. Indeed, that’s one of the main reasons FIS sought to spin off the merchant business. 

Pursuing a point-of-sale asset could be part of Worldpay’s acquisition strategy, McKee said. “If you think about what Fiserv has with Clover, Worldpay doesn’t have an equivalent,” he said. “So maybe they’re looking at some of the software point-of-sale capabilities out there, like a Lightspeed or a Toast.”

Jonker doesn’t expect much M&A activity from debt-saddled Worldpay, but believes FIS CEO Stephanie Ferris will be aggressive in acquiring assets post-spin-off. Executives at Jacksonville, Florida-based FIS have also said they’re on the hunt for small acquisitions, particularly in the company’s capital markets division. 

With more companies at discounted valuations, a strategic and active acquirer, such as Fiserv, is likely considering possibilities. The payment processor recently announced the hiring of an enterprise growth officer who will focus on M&A. 

Fiserv seems to lack a specific embedded payments offering to sell to software platforms, McKee said, whereas rival FIS acquired Payrix in 2022. Finix, Tilled and Infinicept could all be potential targets in that realm, McKee said. “There’s a number of startups in that space still that are likely looking for an exit,” he said.

Payabli co-CEO Joseph Elias Phillips said his company, which offers a payment platform for software companies, is healthy and not looking to be acquired. But the startup has fielded “a lot” of acquisition interest from larger companies recently, said Phillips, who’s also Miami-based Payabli’s co-founder.

Jonker also mentioned business payments company Bill and Canadian firm Nuvei as likely buyers in 2024. The year could also see banks “wake up” and use their balance sheets to acquire innovative technologies, he said.

Spokespeople for Lightspeed Commerce, Toast, Finix, Tilled and Infinicept didn’t immediately respond to requests for comment.

Battles over card interchange fees, also known as swipe fees, will take center stage again this year, with payments industry forces clashing over them in Washington, at state capitols and in the courts.

While retailers, merchants and consumer advocates seek to rein them in, bank card issuers and partner networks are poised to push back, promising an escalation of tension over credit and debit fees.

“That is a topic that will continue to get a lot of attention in 2024,” said Andrew Bigart, an attorney specializing in payments at the law firm Venable in Washington.

The proposed Credit Card Competition Act is ground zero for the fight. That congressional legislation aims to lower fees by introducing more competition into the processing of credit card payments. It would require bank card issuers to give merchants access to an alternative network to Visa and Mastercard, which dominate the industry.

Republican Sen. Roger Marshall, a sponsor of the bill, has vowed to maintain his crusade to bring the bill to a floor vote. On the other side, Electronic Payments Coalition Executive Chairman Richard Hunt said late last month that his organization is fully funded to fight it.

“I really think that if we get this to the Senate floor, we have the votes to pass it because it’s the right thing to do,” Marshall predicted last month in an interview with Payments Dive.

For debit transactions, the Federal Reserve is also steering a path through the warring interests this year in considering a proposal to lower the cap on interchange fees that can be imposed when consumers use debit cards.

At the state level, some legislators are taking matters into their own hands, passing new laws that restrict the surcharges merchants can impose to recoup credit card processing costs. Such laws were passed in New York last month, and in New Jersey in August, with more states potentially following suit.

While the state laws increase pricing transparency for consumers by restricting the growing use of surcharges, they also hand a win to the card companies seeking to cap amounts merchants can add to transactions.

Visa and Mastercard have made progress in resolving decade-old litigation brought by merchants over such fees, but new lawsuits keep popping up. One filed against Visa last month in federal court in San Francisco has stoked interest from independent sales organizations integral to processing card payments. It may draw more ISO plaintiffs, and maybe merchants, as it seeks class-action status, said James Shepherd, an industry consultant.

FedNow gathers momentum

Real-time payments are bound to play an oversized role in payments and banking industry conversations this year following the launch of the Federal Reserve’s new instant payments system FedNow last year.

Key questions are: How fast will FedNow be adopted by banks, and how quickly will the financial institutions develop use cases to speed up U.S. payments for consumers and commerce?

The Clearing House CEO David Watson expects 2024 to be a “pivotal year” for real-time payments, he said in an interview last month. “The dialogue for real-time payments with FedNow live is going to get bigger and better,” he predicted. TCH has offered the rival RTP real-time network since 2017. “The gloves are off,” Watson said. “We can move forward.”

To the extent that additional banks sign onto FedNow, one by one that will increase the size of the ecosystem and attract more participants, industry professionals say. Still, persuading banks to adopt the ‘send’ functionality, in addition to the less risky ‘receive’ feature, will be essential.

Watson said TCH and Fed leadership are aligned “when it comes to the way this country needs to go and what it needs to do” to move forward on real-time payments. Despite having the biggest economy in the world, the U.S. is racing to implement real-time payment tools already common in other countries, such as China, Brazil and India.

JPMorgan Chase, the largest bank in the U.S., and smaller ones, such as Maine Community Bank, are among several hundreds of financial institutions that have signed on, but thousands more are still sitting on the sidelines. Other industry players such as fintech Plaid, the payments software company ACI Worldwide and technology company Jack Henry & Associates have also embraced FedNow.

While there may be relatively “slow adoption” of real-time payments, banks may be incentivized to shift to real-time payments as an alternative to the credit card networks, said Gary Stein, who is the chief portfolio officer at industry consulting firm 99Fintech. 

The instant payments systems may become more appealing to banks, on a relative basis, if passage of the Credit Card Competition Act compresses interchange. “There's going to come a point at which these new forms of payments, and pay-by-bank at point of sale and other things like that, are going to gain momentum and create some competition,” Stein said.

Faster payments to egg on B2B digitization

Adoption of digital payments in the business-to-business arena is likely to pick up this year, partly thanks to FedNow’s launch.

Compared to consumer payments, B2B payments evolution has occurred more slowly; it’s an area where paper checks still have a notable presence, making up a significant percentage of B2B payments. 

“Because of the technology capabilities that are available, we're starting to see that acceleration,” said Erika Baumann, director of commercial banking and payments at Datos Insights. The sizable opportunity in that segment has inspired a host of companies large and small to jump into B2B payments.

Although there’s no shortage of potential business use cases for real-time payments, “where we're still trying to figure things out is through the larger adoption,” Baumann said.

Real-time payments are garnering more attention because the expanded messaging capability such payments offer simplifies B2B payment transactions, said David Ritter, director of financial services strategy at IT consulting firm CI&T. Full invoice details can accompany a request for payment, making it easier to reconcile, he noted. 

The movement toward faster payments in B2B has become evident as some accounts payable tools have rolled out real-time capabilities, said Scott Reynolds, a senior associate at consulting firm The Strawhecker Group.

Embedded payments are expected to spiral upward too, as more companies seek to streamline the payment experience and integrating financial tools into software becomes easier.

Because they’re faster than automated clearing house payments and cheaper than receiving payment by card, real-time payments will “start to chip away at both of those payment types, as it gets embedded in these fintech and third-party payment tools,” Reynolds predicted. 

The digitization of global trade – which is highly paper-based – is also poised to foster more B2B payments because it lowers barriers to processing payments, increases efficiency and reduces costs, Reynolds said. Big banks, including Bank of America and Citi, have launched new initiatives related to trade digitization.

Consolidation revs up

With increased acquisition activity and companies shuttering due to financial constraints, the payments industry may be smaller by the end of the year. 

That’s especially likely in areas saturated with players offering services, such as embedded finance or buy now, pay later, analysts and consultants said. Regulatory dynamics in the U.S. and abroad may also spur consolidation in the sector.

BNPL companies in particular face a grim outlook, given intense competition, rising regulation, tough economic times and persistent losses, Moody’s Investors Service said in a report late last year. That firm predicted few BNPL companies will remain independent. 

“Any place you’ve seen a whole lot of new market entrants, you’ve got an 18 to 24-month runway before you start to see either those companies fail and their intellectual property gets soaked up, or distressed properties getting acquired,” said Aaron Press, research director of worldwide payment strategies at IDC Insights.

Strategic acquirers such as Fiserv, Fidelity National Information Services and Global Payments are expected to be active, picking off small fry whose valuations have fallen. Upstarts that are starved for capital may also be more open to being acquired as an exit plan. As they evaluate potential targets, big payments companies “have the ability to be picky now,” said Drew Glover, general partner at venture capital firm Fiat Ventures.

Payments giants may see those current circumstances as opportunities to expand their offerings by snapping up companies with cross-border payments capabilities or payment services for software platforms, said Jordan McKee, research director at data and intelligence firm S&P Global Market Intelligence. 

In a bold forecast, CB Insights predicted this month that commerce company Shopify will acquire digital payments startup Stripe and that card issuer American Express will absorb spend management software firm Airbase. An Amex spokesperson declined to comment, and a Stripe spokesperson didn’t immediately respond to a request for comment.

Serial strategic acquirers may find themselves competing for deals with private equity firms circling their prey in a distressed environment. “With valuations down at a more realistic place, the private equity buyers are increasingly interested in the sector,” McKee said.

As startups consider their futures, mergers and acquisitions could occur earlier in company life cycles than they have in the past. “That’ll change the dynamics because you’ll have a lot of smaller companies getting acquired,” said Joshua Silver, CEO of Atlanta-based payment services startup Rainforest. 

On the flip side, would-be acquirers have also become mindful of snapping up businesses before they become too pricey. “You might actually see an acceleration, where more corporate development teams are saying, ‘Hey, we need to be making these acquisitions earlier,’” said Oban MacTavish, the CEO of New York-based data fintech Spade.

More digital wallets arriving

Tech giants Apple and Google will be trying to move past a 2023 spent taking on legal challenges and regulatory crackdowns on their digital wallets. The Consumer Financial Protection Bureau scrutinized both companies’ control of contactless payments on their smart devices. And Apple reportedly offered to open up its NFC chip to rivals in Europe. But leading the companies to open up their payments businesses won’t be easy.

“My first gut [instinct] is this is gonna be somewhat of a fight with Apple and Google,” RegAlytics CEO Mary Kopczynski said in an interview. “This is a private company’s technology and the government would be coming to basically tell them how they can use it and I feel like both companies are going to push back really hard on that.”

One competitor to watch is Paze, which quietly launched last year. Since it is backed by the same group of big banks behind peer-to-peer payment service Zelle, this e-commerce only digital wallet will enjoy a head start in terms of consumer trust. It will be well-positioned to take a bite out of PayPal’s large slice of digital commerce. It’s expected to slowly add more users and more merchants in 2024. 

Another wallet entrant may be X, formerly known as Twitter. The social media platform has 14 of the 50 state licenses it needs to become a full-fledged payment app. But even if the payments feature has a limited roll-out, it could make a compelling case to small businesses tired of paying credit card interchange fees, according to NMI Chief Product Officer Tiffany Johnson.

X could negotiate with acquiring banks, or handle payment processing in-house to offer small businesses a cheaper way to accept customer payments, Johnson said in an interview. Then, every time a small business accepts a payment via X, it would drive revenue to the social media platform.

Apple, Google and Samsung spent the last year stuffing some states’ driver’s licenses into their digital wallets, and others are expected to follow suit in 2024. Similarly, in Europe, a digital wallet pilot program is paving the way for free, secure digital IDs and peer-to-peer payments.

“One thing that is perfectly clear, whether you look at Europe or the U.S., or anywhere else in the world, is that wallets are going to accept evermore credentials,” OpenWallet Foundation Executive Director Daniel Goldscheider said in an interview.

With more cards, buy now, pay later loans and fintech savings accounts, wallets will try to help users keep track of it all. “You can see the marketplace responding this way for a more holistic approach for consumers managing their financial lives, such that they are able to store all of these different apps and services in one place and have them actually communicate so that I as a consumer have a better snapshot of my larger financial picture,” Consumer Reports Director Delicia Hand said in an interview.

Meanwhile, the CFPB is looking to regulate big tech companies like banks. The bureau has proposed a rule that would subject them to regulatory oversight that already applies to banks.

Fraud overshadows payments progress

Regulators and lawmakers are also paying attention to a recent explosion of payments fraud driven by a rise in digital transactions. The industry will keep grappling with the ramifications of that increase this year, just as new risks are surfacing with real-time payments.

Banks, processors, card networks and a host of intermediaries and fintechs are all affected by ballooning fraud. Dark web incursions have been routine for years now, with cybercriminals finding ways, often through credit card breaches, to pry into consumers’ accounts and transact fraudulent payments. More recently, the rise of scammers that entice consumers to make payments under false pretenses is causing trouble.

Just last month, Democratic Sens. Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio and Jack Reed of Rhode Island put PayPal and Block on notice that the lawmakers are not satisfied with the companies’ responses to inquiries regarding reimbursement for customers duped on Venmo and Cash App payments apps, respectively.

With the growth of push payment fraud, via account-to-account payments and peer-to-peer payments, there will be a regulatory focus on figuring out who’s responsible for that and how to protect consumers, said Venable’s Bigart. “You’re going to continue to see that getting attention, especially as these services grow,” he said.

There are also concerns that as the industry races to adopt real-time payments, which can significantly increase the speed of payments, there will be faster fraud, with less ability to reverse transactions. That emerged as a serious concern for potential users of FedNow during an online discussion hosted by the Fed last month.

Fraud is showing up in emerging technologies as well as paper checks, noted Kristen Larson, who is of counsel for the law firm Ballard Spahr in Minneapolis. “There's been all these emerging payments (types), as payments are shifting to electronic payments, and new types of fraud to monitor,” she said.

As the industry advances digital payments, fraud will keep challenging its progress.

 

More companies will enter the payments business in 2024, according to Endava Executive Vice President Scott Harkey, who noted companies embedding payments in their offerings during the past year.

They are following the example of ride-sharing app Uber, which allows riders to enter their payment information once, and then have payments happen in the background, said Harkey, who is EVP of financial services and payments.

He is also the London tech consulting firm’s global head of marketing, based in Charlotte, North Carolina, according to his LinkedIn profile. He spoke to Payments Dive about the firm acting as an integrator for Paze, a bank-backed digital wallet from Early Warning Services.

Editor’s note: This interview has been edited for clarity and brevity.

PAYMENTS DIVE: What kind of effect do you think Paze will have on the digital wallet market?

SCOTT HARKEY: I won't say that this is the Apple killer or the PayPal killer. It's not that. I don't think it's meant to be that. I think about it the same way I think about Zelle. There was a lot of criticism of Zelle like, “Why do we need another P2P service? There's already Venmo, there's already PayPal.” And my response, which is the same response the banks would give, is always, “We're not saying those go away.” 

What predictions do you have for payments in 2024?

The thing that we both see happening and I think will play out the most into next year is broader and broader embedded payments. The idea of payments being integrated into multiple channels, use cases, companies. 

The perfect example is the Uber experience. The idea of Uber as a transportation company taking payment APIs and embedding them into the experience in such a way that you never really have to interact with it. That's what we see being replicated across all kinds of industries.

Can you provide an example of a specific industry embedding payments? (For reference, Turo is a peer-to-peer car-sharing app.) 

We work with a European car manufacturer. Part of their model is they allow for peer-to-peer rentals of your vehicle. Kind of like Turo, where you can rent the car, but they facilitate the whole thing. In the same app that you use to manage the car and interact with the car, you can actually mark the car available for rent, and then someone else can rent it. And it's facilitated by the car manufacturer. 

That all sounds cool. But the even cooler part is the money exchange part of that, because that would be a friction heavy experience. If I rent you my car, okay, are you gonna pay me? When are you paying me? Do you pay me before? Do you pay me after? How do I know you're gonna pay me? What if you mess it up? All that's been handled in the platform.

I rent out my car. I set a rate for it. I get paid if it gets rented. It all just happens. And again to me, that's the perfect example. This is a car manufacturer, right? This is not an Uber-type service or a Turo that's built a whole product based around car rentals. It's a car manufacturer saying part of how they're going to go to market is going to be able to create this shared network. And to do that they're going to facilitate the payment. 

Do you think the U.S. will have a super app for payments like WeChat in China?

I've learned that there are actually pretty different cultural dynamics about the preference around choice. In the U.S., we prefer choice. There's a reason we don't have super apps, right? We don't want an answer to everything. We want five choices so that we feel like we can pick the one that best suits us. 

And other cultures, especially in some Eastern cultures, that's not the case. And as such those super apps emerged in those markets because of that consumer preference and behavior for a more singular answer.

I think consumers in the U.S., in particular, like choice. They like options. They can pick what works best for them.

The good news for 2024 is that payments professionals have a slew of substantive conference events to choose from. The curse is that it will be hard to pick just a few, especially if budgets are tight.

Of course, there’s always Money20/20, which hasn’t even taken place yet this year. That October conference in Las Vegas offers a vast sea of speakers, booths and events, but its sheer size may leave payments professionals feeling like the event is less on point. And while the conference rolls out top speakers, like Consumer Financial Protection Bureau Director Rohit Chopra at last year’s event, the agenda is packed with a string of C-suite presentations that can feel like an endless loop of ads.

In 2024, there will be plenty of payments-specific conferences to choose from, even some that drill down into sub-categories of payments. Here’s an overview of the 2024 conferences the Payments Dive staff and their contacts found most compelling, though it’s by no means an exhaustive list.

Keep in mind that journalists typically don’t pay registration fees so we may have a different calculus than industry professionals with respect to cost factors. Also, we limit our review here to those events taking place in the U.S., even though there are appealing options elsewhere in the world.

Having attended the Nacha Smarter Faster Payments conference in 2023, that’s one we’d point to as featuring timely topics and providing purely payments-focused information. Last year, presentations covered everything from real-time payments to buy now, pay later to business-to-business payments fraud. Its speakers typically include a balanced mix of influential federal officials, company executives, regulators and consultants. That conference convenes in Miami on May 6.

Speaking of federal officials, the Federal Reserve banks also host symposiums and other events that zero in on payments. The Chicago Fed’s Payments Symposium typically picks a theme and builds its forum around it. For instance, this year’s symposium, “Accelerating Innovation and Inclusion in Payment Networks,” focused on instant payments, digital currencies and cybersecurity, among other topics. The bank hasn’t presented a theme for next year yet, a spokesperson said.

The Philadelphia Fed hosts a fintech conference every year that’s also highly relevant to payments, with an exploration of how new technologies and startup enterprises are changing the payments landscape. Like the Chicago Symposium, that event has typically taken place in autumn.

Similar to the Nacha conference, but with more of a banking perspective, is The Clearing House’s annual conference, which this year is occurring in November. That confab considers the state of payments as a part of the broader banking market and the current economy, with a heavy dose of regulatory and policy-making talk. Recent banter has centered on real-time payments in the wake of the Fed’s recent launch of a new instant payments system called FedNow.

Payments professionals particularly interested in real-time payments may want to attend meetings offered by the Faster Payments Council. With one get-together in spring and another in the fall, that organization’s gatherings touch on cross-border payments, checkout technology and open banking, among other themes related to faster payments. The next meeting in Orlando begins on March 27, but to join in you must be a member.

Big associations host many of the most valuable payments conferences. The Electronic Transactions Association’s Transact conference, beginning April 17 in Las Vegas, features mainly payments processing executives as speakers. This year, they included NMI CEO Vijay Sondhi, Fortis CEO Greg Cohen and Global Payments CEO Cameron Bready, just before he stepped into that top post.

The Innovative Payments Association will host its conference in Washington, D.C. on May 5. That trade organization focuses on the new technologies that payments players are providing and that consumers are encountering in daily commerce. In the past, its discussions have zeroed in on prepaid cards and digital wallets, among other subjects.

More specialized events include the Women in Payments Symposium in Washington, D.C., starting Feb. 28. It’s sponsored by the Global Association of Women in Payments and features female leaders in the industry offering perspectives on gender parity as well as diversity issues in payments. Of course, its agenda also delves into a range of other payments topics.

For an event focused on payments security, there is the Secure Technology Alliance’s Identity and Payments Summit, starting Feb. 26. The theme for next year’s conference in Tucson, Arizona is “Trust, Security and Privacy in a Hyperconnected World.” This year’s event featured Visa’s chief risk officer for North America as well as the Atlanta Fed’s head of payments product management. The STA also holds a fall payments forum beginning Nov. 7 in Charlotte, North Carolina.

Some trade associations in the industry, including acquirer and clearing organizations, also have regional chapter conferences. They’re particularly beneficial for regional networking as well as updates on local payments technology and strategies. For instance, the Northeast Acquirers Association has a conference beginning April 3 next year in Albany, New York, followed by additional events hosted later in the year in different places by the Midwest Acquirers Association, the Southeast Acquirers Association and the Western States Acquirers Association.

Automated clearinghouse associations across the country have their own local gatherings, including those hosted by the New England ACH Association, which meets beginning May 20 in Ledyard, Connecticut, as well as the Upper Midwest ACH Association.

We didn’t spot any universities digging into the payments space for conferences (email us if you see one), but Georgetown University Law Center’s DC Fintech Week, starting Nov. 6 this year, will likely again feature speakers from companies and trade groups operating in the payments sphere. It also attracts politicians and regulators influencing policy who give their views of issues related to the industry.

As far as conferences hosted by media organizations, Payments Dive doesn’t offer one, but some outlets do. American Banker hosts a payments conference annually in May with next year’s conference taking place beginning May 6 in Hollywood, Florida. Its Payments Forum draws professionals from a variety of industries that touch payments. Also, The Economist this year is sponsoring the CPI Global B2B Payments Summit starting Oct. 17 in New York, though it’s not clear if it will take place next year as well.

JPMorgan Chase will offer small and medium-sized businesses embedded payroll services powered by Gusto, Tomer London, co-founder and chief product officer of Gusto, said in a company blog post last week.

Chase Payment Solutions will use Gusto Embedded, an application programming interface customized for any business software platform to combine payments, banking and payroll, with a single sign-in via chase.com, he said.

Chase Payment Solutions’ payroll offering powered by Gusto Embedded would help to simplify the process of running payroll, calculating and withholding taxes, filing with the right agencies and creating employee paystubs, according to London. The employees of Chase Payment Solutions’ customers can self-onboard, access paystubs, and pull tax documents via a secure company portal. The combination of payroll process and financial operations is aimed to save business owners time, he noted. 

“There is a big trend underway, I think with more companies focused on small business that’s a wonderful thing — a segment that’s been underserved for a long time,” Gusto CEO Josh Reeves told CNBC. “So the way this works, is basically a partner like Chase Payment Solutions can now broaden their offering. They can launch their own payroll product powered by Gusto. And the reason why we're excited about this is it enables us to reach more small and medium sized businesses.”

Payroll is not just about money movement but also about tax rules and compliance, Reeves explained. There are rules at the county, city and state levels apart from those the IRS has in place. This is coupled with documentation, filings and reporting, which small businesses typically do by hand, leading to mistakes and consequent fines.

Using modern technology and software can help minimize these problems, Reeves said.

Gusto serves over 300,000 small and medium-sized businesses across the U.S. Gusto Embedded, which enables bank, vertical software-as-a-service and fintech partners to leverage Gusto’s payroll API to embed payroll directly into their platforms, currently serves dozens of partners that serve more than 500,000 businesses collectively. 

Gusto’s partners using its embedded service can launch their payroll products without having to build them from scratch, Reeves pointed out. Gusto Embedded was introduced in 2021.

Over the past decade, Gusto has processed over two-thirds of a trillion dollars in payroll for several employers across the country, according to London. In 2021, Gusto acquired Symmetry Software, a technology firm that calculates payroll taxes for companies of all sizes to offer advanced payroll infrastructure faster.

“We have been exploring ways to introduce best-in-class payroll services to our SMB customers,” Jessica Young, managing director and head of product at Chase Payment Solutions, said in a statement. “Building payroll at national scale requires deep knowledge and understanding. With Gusto Embedded, we are able to decrease the time to offer a leading payroll service while increasing the value we're able to deliver to our customers.”

The regional bank failures did not impact Gusto’s payroll operations this spring, London noted. The fintech’s redundancy banking system, which has been used for years, helps keep the payroll running in case a banking partner faces any disruption.

“We created Gusto Embedded for companies like Chase that are committed to helping small businesses be successful — and continuing to innovate to deliver on that commitment. We want to make it easy for companies to access the best and most reliable payroll solutions so they can help their customers’ businesses grow, as well as their own,” London said in the blog post.