Embedded payments for growth: What businesses need to know


包括 Shopify 和 DoorDash 在内的世界上最成功的平台和交易市场都在使用 Stripe Connect,将支付功能嵌入到其产品之中。

  1. 导言
  2. What are embedded payments?
  3. How embedded payments work
    1. Traditional payment facilitator (payfac) model of embedded payments
    2. Payfac-as-a-service model of embedded payments
  4. Benefits of embedded payments
  5. How to monetize embedded payments
  6. Stripe’s embedded payments solution

Efficient, high-functioning payment solutions on platforms answer a growing need in the market. McKinsey estimates that 30% of all global economic activity will be mediated by platforms by 2025, and a report from IDC Financial Insights projects that non-financial institutions’ platforms will conduct 74% of global digital consumer payments by 2030.

These trends are the result of digital platforms’ increased ability to embed payments directly into their website or mobile app, rather than redirecting customers to an external payment gateway. Making the purchasing experience a seamless part of your product experience has the potential to be a low-lift investment that can yield powerful returns. Not only do embedded payments help improve your customer experience and retention, but they also accelerate revenue growth.

We’ll cover what you need to know about embedded payments, how they work, and what they can do for your business.

What’s in this article?

  • What are embedded payments?
  • How embedded payments work
    • Traditional payfac model
    • Payfac-as-a-service model
  • Benefits of embedded payments
  • How to monetize embedded payments
  • Stripe embedded payments solutions

What are embedded payments?

Embedded payments is a term for payment solutions that are built natively into a SaaS company’s product. Embedded payments can be built and maintained directly by the platform, but they often fall within a suite of embedded financial solutions that platforms and marketplaces get from third-party providers, such as expense cards, loans, or financial accounts. Embedded payments allow customers to complete their transactions without leaving the platform’s website or mobile app, facilitating a convenient checkout experience.

How embedded payments work

For tech-enabled platforms, embedded payments can work one of two ways: natively, or using a third-party provider:

Traditional payment facilitator (payfac) model of embedded payments

The traditional method of bringing payments in-house involves integrating a payment gateway or processor into the platform, allowing for seamless transactions within the platform. The platform becomes, in essence, a payment facilitator (payfac). This way of bringing payments in-house often comes with considerable upstart and ongoing costs, in addition to major security and compliance considerations.

The payment gateway functions as an intermediary between the platform and the customer’s bank, securely transmitting transaction information and facilitating the transfer of funds. In some cases, the platform may also store customer payment information for a faster checkout in future transactions. The specifics of the implementation can vary depending on the platform and the payment gateway used, but the overall goal is to provide a smooth and secure payment experience for the platform and its users.

  • Payment form integration
    To implement embedded payments, the platform will first integrate a payment form into their website or mobile app. This form will typically include fields for the customer’s credit or debit card information, as well as any additional information required for the transaction, such as billing and shipping addresses.

  • Secure data transmission
    Once the customer has entered their payment information, the platform will use secure data transmission methods to send the information to the payment processor. This is typically done using Secure Sockets Layer (SSL) or Transport Layer Security (TLS) encryption to protect the customer’s sensitive information from being intercepted by unauthorized parties.

  • Payment processing
    The payment processor will then validate and process the payment information. This may include performing fraud checks and confirming that the customer has sufficient funds to complete the transaction. The payment processor will then send the results of the transaction back to the platform, and this information can be used to update the customer’s order status and display a confirmation message.

  • Tokenization
    To increase security, some platforms and marketplaces use tokenization, which is a process of replacing sensitive data with a unique token that can be used for subsequent transactions. This allows platforms and marketplaces to store payment information securely, without needing to transmit sensitive data over the internet.

  • Payment gateway integration
    In some cases, platforms and marketplaces may also integrate with a payment gateway, which acts as an intermediary between the platform and the payment processor. Payment gateways can provide additional features such as recurring payments, invoicing, and the ability to accept multiple forms of payment.

Payfac-as-a-service model of embedded payments

Because of the substantial costs and risks associated with becoming a payfac and building out an embedded financial infrastructure, platforms are increasingly looking to payfac-as-a-service, which provides all the benefits of embedded payments in a cost-efficient way that’s easier to integrate and faster to deploy.

This model involves working with a third-party provider who facilitates embedded payments and other financial services for businesses without requiring them to natively build and maintain the infrastructure required to run these services.

Read more about the benefits of becoming a payfac or using a payfac-as-a-service provider, like Stripe.

Benefits of embedded payments

Embedded payments offer several benefits:

  • Growth of existing revenue
    By providing a more convenient checkout experience, embedded payments can increase conversion rates and drive revenue for your platform. Embedded payments can also be a significant competitive differentiator for platforms and marketplaces because they offer a much better customer experience.

  • New revenue streams
    In addition to boosting existing revenue streams, embedded payments help platforms and marketplaces unlock new sources of revenue through transaction fees, markup or revenue share, and new lines of business such as instant payouts, in-person payments, lending, and more.

  • Greater control over customer experience
    By providing the functionality of native payment processing directly into a website or mobile app, embedded payments offer platforms and marketplaces a more nuanced ability to provide the best customer experience.

  • More efficient troubleshooting
    Having multiple third-party providers to support various aspects of your payments can mean seemingly endless barriers—and frustrating wait times—when problems occur. Bringing your payments in-house allows you to fix issues faster, without the added friction of working with outside vendors to solve problems for your customers.

  • Faster, cheaper implementation
    Embedded payments gives businesses the benefit of having native payments functionality without needing to devote the substantial time and cost spent building their own infrastructure. For example, Stripe Connect lets you go live faster with a single global integration that minimizes operational complexity and development resources.

  • Improved conversion rates
    A more refined customer experience means fewer abandoned carts and a higher number of completed transactions. For direct retailers, this means more sales; for platforms and marketplaces, this means increased user satisfaction and loyalty.

  • Increased scalability
    Embedded payments puts platforms and marketplaces in a more advantageous position to scale globally in both existing and new markets. Connect supports over 135 currencies and local payment methods through a single integration, allowing businesses to reach more customers worldwide with a global payments platform.

  • Streamlined compliance
    Requirements for payments facilitation vary significantly by country, business model, and transaction type. Stripe can help manage the complexity of compliance, licensing, and card network rules, so you can expand your business faster and decrease operational overhead. Stripe Connect automatically updates to help meet the latest payments compliance requirements—without any changes required to your integration.

  • Better data and analytics
    Embedded payments can provide volumes of actionable data and analytics on customer purchasing habits, fraud detection, and a wide range of customer and product insights, such as seasonality, and preferences by market and customer segment. The data and insights gathered through embedded payments can help power data-driven product development, optimization and refinement of offerings, and visibility into opportunities to double down on successes and divest from weak spots.

  • Faster onboarding
    Embedded payments with Connect encompasses the entire payment experience from end-to-end, including onboarding. Stripe users can take advantage of prebuilt, optimized UIs or custom-built onboarding flows, making it easy for platforms and marketplaces to get their users up and running quickly. Stripe handles Know Your Customer (KYC) obligations for payments and helps meet other requirements for payments compliance.

  • Consolidated payments management
    Embedded payments with Connect gives businesses a more comprehensive ability to track and manage transactions in ways that support many essential financial tasks. Stripe helps keep full records of all transactions so that you can easily track and reconcile payments, issue refunds, build custom reports, generate tax forms, and send funds. In the US, Connect provides gross earnings tracking and automated 1099 form generation and delivery.

How to monetize embedded payments

While the exact monetization strategy for any given business will depend on alignment with their specific customer base, business model, and goals around growth and scaling, embedded payments can offer a promising opportunity for additional revenue. Here are a few ways that platforms can drive revenue with embedded payments:

  • Transaction fees
    Platforms can charge a small fee—either a percentage of the transaction amount or a flat fee—for each transaction made through the embedded payment system. This is one of the most common methods of monetizing embedded payments since it doesn’t require any upfront costs for sub-merchants and their customers, and it’s easy to implement.

  • Subscription fees
    Monthly or annual subscription fees for access to an embedded payment system can include additional features such as advanced analytics, fraud detection, and customer support. This method is most suitable for platforms and marketplaces with a large number of customers or for businesses that similarly require a more robust payment system.

  • Premium features
    For an additional fee, platforms can offer more functionality, such as recurring payments, invoicing, and the ability to accept multiple forms of payment. Again, there’s no universally advantageous strategy. The premium features you offer will depend on your customers’ unique needs.

  • Interchange fees
    Platforms can also monetize embedded payments by charging interchange fees. These are fees that businesses pay to issuing banks for accepting credit and debit card payments. The interchange fee is a percentage of the total transaction amount and varies based on the type of card used for the transaction, the type of business, and the type of card acceptance (card present vs. card not present).

  • Data and analytics
    Embedded payments give platforms access to highly valuable data about payment trends and customer behavior. Not only can this data be leveraged by the platform itself to inform everything from product development to marketing strategy, but the insights around customer behavior can be made available to businesses for an additional fee. This can include insights on customer purchasing patterns, fraud detection, and sales and seasonality.

Stripe’s embedded payments solution

With embedded payments, Stripe helps platforms grow with an emphasis on efficiency, cost savings, ease of upstart integration, and high degrees of both customization and scalability. Connect, Stripe’s core payments software, is an easy and flexible way for platforms to quickly enable their users in 35+ countries to accept payments within their platform and receive payouts in minutes.

Natively building and managing the infrastructure required to bring embedded payments in-house can come with a significant amount of risk and cost. Connect, often used in conjunction with other Stripe embedded finance solutions, is a way for platforms to benefit from embedded payments, without the workload and liabilities of building everything in-house. Connect solves the critical problems around embedded payments, including ensuring that platforms and their users automatically stay up-to-date as local payments verification requirements evolve, collecting bank information, and verifying IDs to meet KYC requirements.

Learn more about how Stripe can help differentiate your platform and accelerate revenue growth, or get in touch with our team to get started.