Embedded payment systems are payment capabilities built into a website or software. Instead of forcing users to leave their software to process a transaction elsewhere, the business providing the website or software handles payments in the product that the customer is already using. Worldwide, the embedded payment market is expected to increase at a compound annual growth rate (CAGR) of 35.5% from 2026 to 2033.

Businesses that make software face a consequential product and revenue decision in deciding where their payments should happen.

Below, we’ll outline the two main implementation models for embedded payments, where they’re taking hold across business types, and how to think about building or buying the infrastructure.

Highlights

• Embedding payments transforms software platforms into financial touchpoints and generates revenue potential that product pricing alone can’t match.

• Two models—payment facilitator (payfac) and payfac-as-a-service—offer different levels of control and compliance responsibility. Choosing between them shapes onboarding, fund flows, and more.

• Vertical software-as-a-service (SaaS), marketplaces, and gig platforms have led embedded payments adoption.

What are embedded payments?

Embedded payments are payment capabilities built into a software platform, often accessed through a website or an app. Transactions happen in the product that an individual or business already uses rather than in a separate system. For example, a contractor invoices a client through their project management tool and gets paid there or a restaurant accepts orders and settles tabs through its scheduling software.

How common are embedded payments?

The global embedded finance market, which integrates payments and services such as lending and insurance into nonfinancial platforms, is expected to surpass $7 trillion by 2030. As of 2024, less than 20% of the market for embedded finance has been addressed, which suggests most of the growth is still ahead. Application programming interface (API)–first payments infrastructure has dramatically compressed implementation timelines—what once required months of bank negotiations and compliance buildout can now be deployed much more quickly.

Vertical software-as-a-service (SaaS) has been one of the biggest adopters of embedded payments. Software built for scheduling services in specific industries, such as booking tables or healthcare appointments, has been folding financial workflows into its core products. Embedded payment infrastructure has also seen success in industries with higher card transaction volumes.

How do embedded payments work?

Before you build, you need to understand two structural models that define how platforms embed payments.

Payments facilitation

The software platform that wants to embed payments can register as a payment facilitator (payfac), which means it can onboard businesses as submerchants under its master merchant account. The platform handles Know Your Customer (KYC) checks, takes on underwriting responsibility for those businesses, and typically earns a share of transaction revenue. This model gives the platform more control and more revenue potential, but it also means owning more compliance and risk management work.

Payfac-as-a-service

A software business can embed payments in its product through a payments provider’s API. The software platform can call the API to initiate transactions on its behalf while the payments provider operates the payfac infrastructure. The platform still controls the user experience and often earns revenue share, but the provider handles the regulatory and risk heavy lifting. Stripe Connect is built explicitly for this model—it lets platforms onboard businesses, route payments, split funds, and manage payouts without becoming a licensed payment facilitator.

Once you’ve chosen a model, a typical transaction flows like this:

• Trigger: A business using the platform initiates a payment—customer checkout, invoice payment, or subscription renewal.

• API call: The platform’s code calls the payment provider’s API to process the transaction.

• Authorization: The provider handles authorization, routes through card networks, and settles funds.

• Distribution: Funds are routed to the business, sent to the platform as a fee, or split across multiple parties if the transaction involves a marketplace or multisided flow.

What are some benefits of embedded payments?

Embedded payments change the economics of software businesses in ways that compound over time. Payments become a revenue layer on top of the software layer.

The business benefits include:

• Retention: Businesses that start processing payments through a software platform they use might be less likely to churn. Once they’ve connected bank accounts, configured tax settings, and built workflows around that payment setup, the financial and day-to-day costs of switching can be significant.

• Data: Payment data is invaluable business data. Platforms with embedded payments can see transaction volume, customer behavior, and revenue trends, which feed better product decisions and, in some cases, open the door to new offerings such as financing or insurance.

• User experience: It’s easier for businesses not to have to log in to multiple apps to run their operations. Consolidating payments in the primary workflow can help reduce errors, cut reconciliation time, and keep everything in one place.

What are the use cases for embedded payments?

Embedded payments have matured across a range of industries, and the use cases span several business models and transaction types.

Here are a few examples:

• Vertical SaaS: Platforms built for specific industries (e.g., dental practices, gyms, law firms, auto repair shops) already understand their customers’ workflows. Adding payments means those businesses can invoice, collect, and reconcile without switching tools. Mindbody, Toast, and Jobber are examples of vertical SaaS businesses where payments have become central to the product.

• Marketplaces: Any platform where money moves between customers and sellers needs a way to handle that flow. Embedded payments let a marketplace collect from customers, take a platform fee, and pay out to sellers in one automated process.

• Gig and freelance platforms: Platforms that connect workers with clients must pay out reliably and quickly. Embedded payments make it possible to build instant or scheduled payouts into the product, which can be a deciding factor for attracting workers to the platform.

• B2B software: Accounts payable and receivable workflows often use software platforms. A business using a procurement platform might now pay invoices directly through it; a business using a contractor management platform might collect payments there, too.

• Small-business financial products: Platforms with visibility into a business’s transaction history are well positioned to offer revenue-based lending or early payout products. Those offerings are downstream of embedded payments; the transaction data makes them possible.

How do you implement embedded payments?

Implementation varies depending on your provider and how much infrastructure you’re building versus buying, but the core stages are consistent. Getting the architecture right before you build saves significant rework.

Here’s what you’ll need to do:

Choose your integration depth

You can embed payments at different levels of involvement. A hosted payment link is fast to build but gives you limited control over the experience. A fully custom integration puts your user interface (UI) and business logic on top of the provider’s infrastructure. Many platforms land somewhere in the middle: custom enough to feel native to their product but abstracted enough that they’re not managing card network certifications.

Handle onboarding and compliance

If you’re enabling businesses to accept payments through your platform, you must collect and verify their information: their legal name, business type, bank account, tax ID, and more. This is the nonnegotiable process for KYC or Know Your Business (KYB), the latter of which is a verification system for entities rather than individuals. Providers such as Stripe handle much of this through their onboarding APIs, but you must design the onboarding flow and decide what information to collect up front versus progressively.

Configure fund flows

How does money move in your product? If you’re a marketplace, you need to define how platform fees are taken, how seller payouts are timed, and how refunds are handled. If you’re a vertical SaaS platform, the structure might be simpler. But either way, getting this logic defined before you build is important.

Build for compliance from the start

Payment Card Industry Data Security Standard (PCI DSS) compliance, sanctions screening, and Anti-Money Laundering (AML) requirements are serious considerations. If you’re using a reputable payments provider, much of the compliance burden shifts to it, but you’re still responsible for how your integration handles card data and how you respond to fraud signals.

Test every edge case

Payments are an area where bugs can cost businesses money or cause them to lose transactions. Use your provider’s sandbox environment to test declined cards, partial refunds, failed payouts, and disputes. Get your error handling right before you launch.

How do you choose an embedded payments provider?

The right provider depends on how complicated your fund flows are, the countries where you operate, your onboarding volume, and how much compliance work you’re willing to own versus outsource. A provider’s API quality, documentation, and support matter more than they might seem at first—you will likely live with this integration for a long time.

Stripe Connect is widely used, in part, because it was built specifically for platforms and marketplaces. It can handle multiparty fund flows, cross-border payouts, onboarding, and tax reporting in a single integration. That doesn’t make it right for every use case, but it’s a common choice when platforms are building embedded payment infrastructure from zero.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It provides 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 globally 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: Optimize payment revenue by collecting fees on each transaction. Monetize 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.