In our previous article we outlined the history and key flavors of embedded finance. As we explained, software platforms and vertical SaaS companies benefit significantly from embedded payments. Embedded finance provides greater control over the process and diverse payment monetization opportunities. All embedded payment and merchant management features should be available to the integrator through a unified API. Integration of all target features should be a systematic and wholesome process.
In this article we will address support for web hooks as an important component of embedded payment solutions.
Why are Web Hooks so Important?
Web Hook Definition
Web hooks represent one of the key features, a unified API should support (alongside other payment and merchant management functions).
We should reiterate that the unified API provides the basis for integration between the software platform and the gateway. Usually, the information transferred through this API is related to actions that the software platform expects from the gateway. However, some events occur within the gateway itself, and there is a need to inform the software platform about them.
So, web hooks are notifications of different kinds, concerning various changes within a payment gateway. The API immediately sends these notifications to the software platform. They allow the platform providers to respond to respective changes in the most efficient way ASAP.
How Web Hooks Work
Web hooks allow the software platform to learn the important information firsthand and in full, and react accordingly. Otherwise, the platform might get information about such issues with some delay through other support channels. Moreover, notifying the platform would, probably, require some manual action (from the merchant or other entity). Only after that, the platform representatives will have to try to look into the reasons and sort out the issue.
It is, indeed, very difficult to keep track of all the transactions going through. As a result, merchants might start lodging complaints before the platform’s tech support personnel becomes aware of the respective issues.
At the same time, when a web hook notification arrives, the platform can react immediately, sometimes, without merchant even noticing the issue.
The most common web hook examples are as follows.
- processing of a payment/deposit;
- issuing of a chargeback or ACH return;
- recurring billing transaction decline (payment option stored within the gateway and used for recurring payments becomes inactive);
- update of a payment option stored within the gateway for recurring payments (through account updater logic);
- successfull onboarding of a new merchant (the merchant is ready to process payments);
- deactivation or suspension of a merchant account, for example, due to suspicious activity.
In these and other similar cases notifications will be sent to the integrator’s system.
When selecting a partner payment platform, you should check, whether it offers all your target features within a unified API. Web hooks are, usually, among these features. So, make sure that they are available and that they support notifications about all the events that you need.
Consult our payment experts at UniPay Gateway to learn more about web hooks and other embedded finance features.