How embedded payments work
A software platform integrates a payment provider's APIs and presents onboarding, checkout, payouts and reporting under its own brand. A restaurant using a booking system, for example, signs up for card acceptance inside that system and sees its settlements there.
Behind the screen, a regulated firm does the regulated work. The platform acts as a referral partner, as a payment facilitator under an acquirer, or as an agent of a payment or e-money institution, and each model gives the platform more revenue and more responsibility than the one before.
Why software companies embed payments
- Revenue: a share of the fee on every payment its customers take
- Retention: a customer whose money flows through the product rarely switches
- Data: payments reconcile with orders and invoices automatically
- Onboarding: one sign-up for the software and for card acceptance
What embedded payments require
Someone has to check each business that signs up, monitor its payments, handle disputes and pay it out on time. A platform that takes those tasks on runs onboarding, risk and ledger functions of its own, under the licence or the sponsor that matches its place in the flow of funds.
Embedded payments or embedded banking?
- Embedded banking
- Accounts, IBANs and cards offered inside another product. Embedded payments cover taking and making payments, and embedded banking adds holding money.
- Embedded checkout
- A payment form placed inside a merchant's page. The phrase describes one screen, not a business model.
- Banking as a service
- The licensed infrastructure a platform rents in order to offer financial products. Embedded payments are what the platform's customers see.
Where Embedded payments shows up in a platform
Modules that do the work
- Merchant onboardingBusiness sign-up, verification and underwriting, from application to first payment.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
Platforms that need it
Guides that go deeper
- How to become a PSP or a payment facilitatorGateway, acquirer, payment facilitator or payment institution: where the licence line falls, how the card schemes register payment facilitators, what merchant KYB demands, and the UK and UAE rules.
- White-label vs custom fintech platform: build, rent or buyCustom build, SaaS licence or white-label with the source code: how the three routes compare on time, cost, ownership and lock-in, and the outsourcing rules regulators apply to each.