Embedded Payments
Embedded payments integrate payment acceptance directly into software platforms, enabling SaaS companies and marketplaces to process transactions without redirecting users to third-party payment pages. Instead of being a separate checkout step, the payment flow is native to the application experience. For the platform, embedded payments create a new revenue stream through payment facilitation fees while increasing user retention. For finance operations, they add complexity — platforms must reconcile their share of each transaction, manage split settlements, and track funds flowing through sub-merchant accounts.
Key Details
- Payment facilitation (PayFac) model allows platforms to onboard sub-merchants and process payments under their own merchant ID
- Split settlement divides each transaction between the platform fee and the sub-merchant payout, requiring precise reconciliation of both sides
- Platforms must reconcile gross transaction volume, platform fees retained, processor fees deducted, and net payouts to sub-merchants
- Regulatory requirements include KYC/KYB for sub-merchants, PCI DSS compliance for card data handling, and money transmission licensing in some jurisdictions
- Embedded payment revenue typically ranges from 0.2-0.5% of gross transaction volume for the platform after processor costs
- Reconciliation complexity increases with multi-currency support, refund handling, chargeback liability allocation, and reserve holdbacks
- Key infrastructure providers: Stripe Connect, Adyen for Platforms, PayPal Commerce Platform, and white-label PayFac solutions