Payments are no longer just backend plumbing, they are a core part of the user experience, revenue strategy, and competitive differentiation. For vertical SaaS platforms, how payments are delivered shape customer loyalty and long-term growth.
The terms “integrated payments” and “embedded payments” are often used interchangeably which creates confusion. The two models are fundamentally different in architecture, ownership, monetisation, and strategic impact. For any software platform modernising their payments stack, understanding the distinction is critical.
What are integrated payments?
Integrated payments connect a software platform to a third-party payment provider, so merchants can accept payments without leaving the app. It’s convenient but the payments experience is still owned by the external provider.
Key characteristics:
- Payments interface shows the provider’s branding
- The platform refers merchants to the provider
- Compliance is managed by the provider
- Limited control over payment user experience
Example of an integrated payments scenario:
A fitness SaaS platform integrates with a payment gateway to allow gyms to collect membership fees via card or direct debit. The gym is onboarded as a merchant with the payment processor, and transactions are managed through the processor's branded interface.
What are embedded payments?
Embedded payments take things further and fully unify the payments experience so it feels like part of the platform. The SaaS platform often acts as a Payment Facilitator (PayFac) or via a PayFac-as-a-Service model.
Key characteristics:
- Payments are white-labeled in the platform’s brand and seamlessly integrated to the software’s own user experience
- A single onboarding journey for the merchants
- The platform controls the experience including payments
- Creates a new revenue stream for the software platforms
- Tighter monetisation and retention loop because of more ownership in the value chain
Example of an embedded payments scenario
An education management platform embeds payment acceptance within its own user interface (UI), handling tuition, activity fees, and refunds natively. The school never sees or interacts with the payment provider. Everything happens discreetly inside the software.
Integrated vs. embedded payments: A side-by-side comparison
| Feature | Integrated Payments | Embedded Payments |
| User Experience | Payment provider branding visible | Fully white-labeled and seamless |
| Onboarding | Redirected to a third-party | Handled within the software platform |
| Revenue Share | Residual commissions | Better revenue sharing models |
| Control Over Pricing | Limited (set by payment provider) | Full control (platform-defined rates) |
| Compliance Ownership | Payment provider responsible | Platform shares or owns the compliance responsibility |
| Time to Market | Quick to launch | Higher upfront investment |
| Strategic Value | Adds payments functionality | Adds payments functionality and enables the associated revenue layer |
Why it matters for vertical SaaS platforms
For vertical SaaS platforms payments are more than just a feature, they are a growth lever. Embedded payments boost customer lifetime value (LTV), make your product stickier, and sets your platform aside. They also open the doors to new revenue streams, and financial services that deepen merchant relationships.
Choosing the right payment model for your business
| Stage of SaaS Company | Ideal Approach | Why |
| Early stage / MVP | Integrated payments | Lower cost, faster setup, less compliance / product / customer experience responsibilities |
| Scaling with niche focus | Hybrid (with roadmap to embedded) | Offers a taste of embedded payments while the business scales; prepares for deeper control without a large transformational change. |
| Mature with 250+ merchants | Embedded payments (via PayFac or PayFac-as-a-Service) | Greater ownership, better margins & revenue potential, and stronger customer retention. Requires more investment for integration and payment journey mapping. |
The strategic imperative
Integrated payments are great for getting started. Embedded payments unlock transformation, turning payments from a utility to a growth engine.
If you’re building or scaling a vertical SaaS platform, the question is not just “How do I help my merchants accept payments?”, it’s “How do I make payments a strategic pillar of my business?”
Embedded payments are where the market is heading, and fast. Platforms that lead the charge will not only boost revenue but also gain a defensible competitive moat in their vertical.
Exploring this journey?