Retail software has absorbed much of the payment experience that once sat outside the core product. Embedded payment solutions in retail integrate transaction processing into a retailer’s app, website, or point-of-sale (POS) system. This model is reshaping how retail platforms are built, monetised, and differentiated.

The global market for embedded finance products was estimated to be worth $92.2 billion in 2024. Below, we’ll discuss how embedded payments work, compliance obligations, and how to decide between building your own payments infrastructure and using a partner.

Key takeaways

• Onboarding, money movement, and settlement happen inside the platform with no separate payment provider for companies to set up or manage.

• Platforms earn a share of every transaction their businesses process, which means revenue grows with business volume.

• Once a platform embeds payments, compliance requires active management. How much responsibility falls on the platform depends on the account model and how the underlying payments infrastructure is configured.

What are embedded payments for retail?

Embedded payments are when a software platform has built payment acceptance directly into its product so businesses don’t interact with a payment provider separately. Payment processors and banking partners still handle authorisation, settlement, and funds movement behind the scenes, but customers don’t leave the app or website they’re already on.

How do embedded payment solutions work for retail platforms?

When a company signs up on a platform using embedded payments, the onboarding flow includes identity verification and underwriting, such as Know Your Customer (KYC) checks, business verification, and sometimes risk scoring based on the business’s category and expected volume. This happens within the platform’s user interface (UI), but the actual verification runs through the underlying payments infrastructure. Once it’s approved, the business can accept payments immediately.

The process is simple: a buyer pays, funds settle to a pooled account held by the platform or its infrastructure provider, and the platform then routes the correct amount to each business minus any fees. The platform controls settlement timing, reserve policies, and payout schedules within whatever constraints the infrastructure provider sets. The platform earns the difference between what it charges businesses and the underlying processing cost.

What are the benefits of embedded payments for retail platforms?

Embedding payments into a retail platform changes the revenue model, the business relationship, and the competitive position. Here’s how:

• Recurring transaction revenue: Every time a company processes a sale, the platform earns a share. That revenue scales with business volume with no additional work from the platform.

• Faster merchant onboarding: When payments are embedded, businesses don’t need to negotiate a separate merchant account or integrate a third-party gateway. The platform handles it, which can decrease the time it takes a new business to start selling.

• Unified data: When payments flow through the platform, the platform sees everything, including transaction volume, average order value, refund rates, and seasonal patterns. That data can improve product decisions, underwriting, and business support.

• Higher retention: A business that processes payments through a platform is usually less likely to leave than one that uses only a platform’s inventory or order management features.

• Competitive differentiation: Embedded payments remain a meaningful differentiator across many retail verticals. Platforms that have added them tend to have an advantage in business acquisition.

What embedded payment use cases exist across retail verticals?

E-commerce platforms, marketplaces, B2B distributors, and vertical software-as-a-service (SaaS) companies all have reasons to embed payments. But the use case looks different in each context.

E-commerce platforms

A platform that serves independent online retailers can embed checkout, payment links, and buy now, pay later (BNPL) options directly. Businesses get a full payment stack without stitching together separate components, and the platform earns on every order.

Marketplaces

Multiseller marketplaces have some of the clearest use cases for embedded payments. The platform collects from buyers, holds funds, and routes payouts to sellers; it also manages splits, refunds, and disputes in one place. Without embedded payments, marketplace operators can face complex reconciliation problems and often can’t control the buyer experience end to end.

B2B retail

B2B transactions in retail have historically relied on invoices, net terms, and direct debits. Embedding payments into B2B platforms lets suppliers accept card payments or bank transfers without leaving their order management systems, and it lets platforms offer features such as automated invoicing, payment reminders, and early payment options.

Vertical SaaS

Software built for specific retail segments can embed payments at the centre of business operations by owning data on sales, inventory, and customer behaviour, instead of just managing one part of it. The more specialised the vertical, the more useful that data becomes. Because the platform can spot patterns, flag anomalies, and reveal insight that a general-purpose tool would miss.

Should retail platforms build or partner for embedded payments?

To build payments infrastructure from scratch, you need to apply for bank sponsorship, manage your own compliance programme, build fraud tooling, and maintain all of it as regulations change. It’s potentially a multiyear project.

Platforms generally choose between two partnership models:

• Payfac-as-a-service: The infrastructure provider handles licensing and bank sponsorship. Meanwhile, the platform handles submerchant onboarding, funds routing, and revenue sharing without becoming a registered payment facilitator (payfac), a service provider that refines how businesses process payments by acting as a “master merchant” itself.

• Full embedded payment providers: These go further by offering prebuilt UI components, compliance infrastructure, risk tooling, and global payment method coverage by default. The platform configures and deploys these measures, instead of building from scratch.

What compliance and risk considerations apply to embedded payments?

Embedded payments shift compliance obligations onto the platform in ways that a standard payment gateway integration doesn’t. Here’s what you need to know.

Payment Card Industry (PCI) scope

Every platform that accepts card payments must meet PCI security standards, but how much work that involves depends on how the platform handles card data. Platforms that use hosted payment fields or prebuilt UI components—where card details are entered directly into a form controlled by the payment provider rather than the platform—have a much lighter compliance burden. Platforms that handle raw card data themselves take on the full set of PCI requirements, which is substantially more involved.

KYC and AML

As a payfac or sponsor bank programme participant, the platform is responsible for Know Your Customer (KYC) and Anti-Money Laundering (AML) checks. Business documentation should be collected at onboarding, checks should be run against sanctions lists, and processes should be in place to flag and investigate anomalies. Failing here creates regulatory exposure for the platform.

Chargeback liability

In many embedded payment structures, the platform bears some financial responsibility for chargebacks. Platforms need clear policies on reserves, dispute management, and business termination.

Funds flow compliance

How money moves from buyer to platform to business must be carefully structured. The specifics depend on jurisdiction and how the platform’s legal arrangement with its infrastructure provider is structured. Platforms should work with legal counsel to ensure their funds flow designs are appropriate for the markets they operate in.

How do retail platforms scale embedded payments globally?

Payment methods, currencies, regulatory requirements, and merchant onboarding rules all vary by market. Consider the following.

Payment methods

Card acceptance is the baseline, but it’s often insufficient. Real-time bank transfers and digital wallets dominate in parts of Europe and Asia, and BNPL sees strong adoption in many countries including the UK, Australia, and Germany. A platform that expands into new markets should consider supporting the payment methods buyers there use.

Multicurrency settlement

Businesses often expect to be paid in their local currencies, which means the platform needs to handle conversion and manage currency risk or pass those decisions to its infrastructure provider. Payout timing varies, too. Settlement windows that work in the US might not meet business expectations in markets where faster settlement is the norm.

Regulatory requirements

KYC documentation requirements, data residency rules, and payfac regulations vary substantially by country. A platform that onboards US companies with one set of requirements will need a different playbook for Europe and another for Southeast Asia or Latin America.

Infrastructure

Stripe Connect can dynamically show 40+ payment methods, handle multicurrency payouts, and manage country-specific compliance requirements for merchant onboarding. Platforms configure which payment methods to display, which currencies to support, and how payouts are structured; Stripe manages the underlying compliance requirements and money movement.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don't have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, value-added tax (VAT) and goods and services tax (GST).

• Build new lines of revenue: Optimise payment revenue by collecting fees on each transaction. Monetise Stripe's capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards and more on your platform.

Learn more about Stripe Connect or get started today.