Learn about Embedded Payments for your SaaS platform. Embedding payments is essential for maximizing revenue and enhancing user experience. Discover the steps, benefits, and key considerations for integrating seamless payment solutions directly into your software.
In today’s digital-first economy, embedding payments into a SaaS platform is no longer a luxury; it’s a necessity. If you’re developing a web app, mobile app, or maintaining an online platform, you’re bound to encounter this term. Your board is going to push for it (along with AI, because it’s the buzzword of the moment). Why? Because you need to capitalize on the payment volumes flowing through your software, streamline the checkout process to make it as seamless as possible, meet evolving customer expectations, and enhance the overall customer experience. Embedding payments and other fintech offerings directly within your software is the key to achieving this.
At Swipesum, we often hear from platforms eager to bring payments in-house to monetize their payment processing, but many haven’t fully considered the work required to maintain their own payments offering. That’s where we come in. Swipesum helps you find the best solutions for your platform, negotiate agreements, and provide the support needed—whether it’s our St. Louis-based engineers assisting or completing integrations, or handling customer service.
This article will guide you through the comprehensive process of integrating payments into your SaaS product, offering valuable insights that can enhance your user experience, boost revenue, and streamline operations—whether you’re a startup or an established SaaS provider.
Embedded payments are a method of integrating payment processing directly into a software application or platform, allowing users to complete transactions without leaving the software. They are sometimes referred to as integrated payments, in-app payments, or Embedded PayFac.
They enable users to make payments without leaving or disrupting their primary digital activity, providing a seamless and efficient user experience. Embedded payments are a key component of the broader concept of embedded finance. This approach allows companies to embed financial services into non-financial domains, enhancing customer experience and creating significant market opportunities.
Payment Gateway: Facilitates the transfer of payment information between the merchant, the bank, and the payment networks.
Application Programming Interfaces (APIs): Enable the seamless integration of payment functionalities within an app or platform.
User Interface (UI) Design: Provides an intuitive and user-friendly experience by incorporating payment functions in a natural and consistent way.
Security Protocols: Ensure the security of transactions by employing technologies like tokenization and Point-to-Point Encryption (P2PE).
Integrating these components enhances the user experience by enabling financial transactions without the need to switch applications.
Enhanced User Experience
We’ve talked to countless platforms where payments reporting is handled in a separate system, forcing users to leave the main platform to access it. Customers receive unbranded emails, and sub-merchants have to navigate away from the software just to manage anything payments-related. It’s a disjointed experience, and frankly, it’s frustrating. In today’s world, where seamless integration is expected in any enterprise software, embedding payments into your SaaS platform can make a world of difference.
By providing a smooth, uninterrupted payment process within your platform, you reduce friction, build trust, and significantly improve customer satisfaction. A seamless checkout experience doesn’t just make users happier; it directly impacts your bottom line by increasing conversion rates and reducing cart abandonment. Additionally, the integration of embedded financial services can further enhance the user experience by offering a more comprehensive and user-friendly financial ecosystem directly within the applications they already use.
Increased Conversion Rates
A streamlined payment process, free from annoying redirects to external sites, is key to reducing cart abandonment and boosting conversion rates. With embedded payments integrated directly into your software, those higher conversion rates translate into more revenue for you. Users love the convenience of completing transactions within the same environment they’re already engaging with, and that seamless experience keeps them coming back.
Stronger Customer Retention
By offering an efficient and personalized shopping experience through embedded payments, businesses can foster customer loyalty. A seamless payment process contributes to positive user experiences, encouraging repeat business and stronger customer relationships.
Revenue Streams and Monetization
Embedded payments open up new revenue streams. You can monetize your platform by charging transaction fees above your costs from a payment processor, offering premium payment services, or even leveraging a Payment Facilitator (PayFac) platform. This approach not only boosts your revenue but also strengthens your platform’s value proposition.
Improved Operational Efficiency
With embedded payments, you gain more control over the payment process, which can improve your operational efficiency. You can automate billing, manage subscriptions, handle refunds, and more—all within your platform. This level of integration reduces manual work and errors, saving time and resources.
Embedded finance is the integration of financial services apps within software platforms, enabling users to perform financial services in-app without needing to switch to a different application. By integrating these services into customer interfaces of apps and websites, users can access and execute payments, lending options, and insurance without leaving their primary environment. This creates a more intuitive and less fragmented customer experience.
Companies can leverage embedded finance solutions to unlock significant market opportunities and drive revenue growth by embedding financial services directly within their platforms, thereby eliminating the need for customers to navigate away from the service they are using.
What we’re witnessing right now in the world of embedded finance is nothing short of revolutionary. This isn’t just an evolution of financial services; it’s a complete transformation. The market, which was valued at $58 billion just a couple of years ago in 2022, is now on a fast track to hit $230 billion by 2025. This growth is part of the broader embedded finance revolution, where financial providers and non-financial brands form strategic partnerships to introduce financial services seamlessly.
Embedded payments are at the forefront, making transactions seamless and frictionless for consumers. Imagine being able to complete a purchase without ever leaving the app or platform you’re using—that’s no longer just a nice-to-have; it’s an expectation. About half of all merchants are already using these embedded payment solutions, and that number is climbing fast as more businesses recognize that integrating payments directly into their software isn’t just convenient—it’s a significant revenue driver.
But the story doesn’t end with payments. Embedded finance is a broad umbrella that also includes embedded lending, embedded insurance, and even embedded investments. We’re seeing companies integrate these services directly into their products and platforms, making it easier than ever for consumers to access everything they need in one place. For example, embedded insurance is quickly becoming a standard feature in e-commerce, allowing customers to purchase coverage at the point of sale with a single click. This kind of integration doesn’t just enhance the customer experience; it opens up entirely new revenue streams for businesses.
By 2032, the entire embedded finance market is expected to explode to a staggering $730.5 billion. That’s a compound annual growth rate of over 29%—and it’s driven by the increasing digitization of our economy. We’re talking about everything from high-yield savings accounts embedded into fintech platforms to just-in-time funded debit cards for gig economy workers. This isn’t some far-off future; it’s happening right now, and it’s changing the way we think about financial services.
What’s also fascinating is the level of consolidation we’re seeing in the market. Larger players, recognizing the massive potential here, are snapping up smaller fintech firms left and right. Whether it’s a major bank stepping into the embedded lending space or a tech giant like Apple expanding its financial offerings, we’re going to see more and more of these moves in the coming years.
So, where does that leave us? If you’re a business, it’s time to think seriously about how embedded finance can be a part of your growth strategy. Whether you’re looking to enhance customer experience, unlock new revenue streams, or simply stay ahead of the competition, the opportunities in this space are too significant to ignore.
Embedded finance is not just the future—it’s the present. And it’s transforming the global economy before our very eyes.
For financial institutions, embedded finance represents a significant shift in how financial services are delivered and experienced. By identifying their capabilities, banks can unlock new revenue streams through transaction fees and interest income, while also empowering “unbanked” groups and fostering economic growth.
Traditional financial institutions serve as partners for nonfinancial companies to provide embedded financial services, offering white-labeled financial products and showcasing the shift from conventional banking practices towards more integrated financial solutions through technology partnerships.
Payment processing is heavily regulated, and compliance is non-negotiable. Depending on your location and target market, you must adhere to PCI DSS (Payment Card Industry Data Security Standard), GDPR (General Data Protection Regulation), and other local regulations. Ensure your payment solution complies with these standards to avoid legal issues and protect user data. Unlike traditional banks, fintech platforms often offer streamlined processes to meet these regulatory requirements.
Security is paramount when handling payments. Implement strong encryption, tokenization, and fraud detection systems. Consider partnering with a payment gateway that offers advanced security features like 3D Secure, CVV verification, and machine learning-based fraud detection.
The design and flow of your payment process can make or break the user experience. Ensure the payment interface is intuitive, mobile-friendly, and accessible. Offer multiple payment options and currencies to cater to a global audience. Test the user experience thoroughly to minimize friction and confusion.
Understanding Payment Gateway Options
Payment gateways, fintech platforms, and PayFac APIs act as intermediaries between your SaaS platform and the financial institutions that process payments. Popular options include ProPay, Stripe, Finix, NMI, Authorize.net, and literally thousands more. Each has its strengths, so it’s essential to consult a payments consult while choosing one that aligns with your platform’s needs. Additionally, many non-financial companies now offer embedded finance solutions to simplify the process, reduce costs, and accelerate the deployment of financial products and services.
Factors to Consider When Choosing an Embedded Payments Provider
Before diving into the technical details, it’s crucial to gather insights from those who’ve been there before. Business leaders can accelerate their decision-making process by learning from the experiences of others who have successfully embedded payments into their platforms. Engage with payments consultants who have a broad perspective across various platforms and industries, as well as other business leaders who have tackled similar challenges. Don’t rely solely on engineers for advice on revenue-sharing models or customer support strategies—they might not have the full picture. Instead, have multiple conversations with a diverse group of experts to ensure you’re making well-informed decisions. Additionally, consider the concept of embedding financial services to seamlessly integrate financial products into your platform, creating new revenue streams and enhancing user experiences.
Design a payment flow that is simple and straightforward. Typically, this includes:
Before going live, thoroughly test the payment integration in a sandbox environment. Test different scenarios, including successful payments, failed payments, and edge cases. Ensure your system can handle various transaction volumes and payment methods.
Leverage embedded payments to monetize the payment volume flowing through your software. Your SaaS platform acts as a master merchant account provider or white-labeled payment processor, allowing sub-merchants to process payments under your umbrella. This setup simplifies the payment process for sub-merchants by eliminating the need for them to obtain their own merchant accounts. Instead, they operate under your ISV or PayFac model, benefiting from streamlined onboarding and lower costs.
By offering embedded payment services to sub-merchants, you can charge fees for payment processing that are above the buy-rates that will be offered to you by payments companies, either as a percentage of each transaction or through monthly subscription fees. Additionally, you can monetize value-added services like fraud protection, recurring billing, and financial reporting.
By integrating embedded payments, you gain more control over the payment ecosystem within your platform. You can customize the payment experience, offer tailored pricing models, and implement features that meet the specific needs of your sub-merchants. This level of control can enhance the overall user experience and strengthen your platform's value proposition.
Providing embedded payments for sub-merchants can set your SaaS platform apart from competitors. By offering a one-stop solution that includes both software and payment processing, you can attract more sub-merchants to your platform, increasing user retention and loyalty.
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Michael Seaman
Michael Seaman is the co-founder and CEO of Swipesum. A veteran of the payments industry and former employee at one of the largest payments companies, Michael, along with his brother Stephen, has led Swipesum since its inception in 2016. Swipesum is committed to providing innovative payment solutions and exceptional service to its diverse clientele. In his free time, Michael enjoys traveling with his wife Kelsey and their three children, pole vaulting, and engaging in typical Midwestern dad activities.
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