What Are Integrated and Embedded Payments?  

From shopping online to paying for a rideshare service, integrated and embedded payments have revolutionized the way businesses and consumers transact by making payment processing a more seamless part of everyday experiences. These capabilities have even made their way to the disbursements space, with more businesses striving to replace the traditional check in the mail with convenient digital payout options. 

If you’re new to how integrated and embedded payments work, start here. We’ll answer common questions about the embedded payments landscape and make a case for why payments should be a more harmonious component of the customer experiences you provide. 

What are embedded payments? 

Embedded payments are payment processing capabilities built directly within a digital platform or application. Making a payment is a seamless part of the customer experience, eliminating the need to navigate to an external payment gateway or third-party websites to complete transactions. Instead, users can make payments without leaving the platform they are already using, whether it's a mobile app, website, or software platform. 

What is an example of an embedded payment? 

Embedded payments are part of many familiar platforms and experiences. One example is paying for a rideshare service—payments are embedded into the ride-hailing app, and the customer's stored payment method is charged automatically. Both drivers and customers enjoy convenience and time savings because they don’t have to handle cash or swipe a credit card.  

Another example is paying for a subscription. Many subscription-based businesses, such as entertainment streaming services, use embedded payments to handle recurring billing. Users' payment information is stored securely, and payments are processed automatically—no need to remember to pay the bill every month.  

Embedded vs. integrated payments 

Embedded payments and integrated payments are often used interchangeably, but they are not the same. Embedded payment capabilities are natively built within a platform or application, while integrated payment solutions typically involve the use of APIs (Application Programming Interfaces), SDKs (Software Development Kits), or other technologies to enable communication and data exchange between the solution and your system.  

One benefit of integrated payments may be that you can get up and running quickly, with a smaller investment. Instead of building payment capabilities directly within your existing software platform or app, you'll seamlessly connect with a third-party solution to enable transactions. Ideally, the user journey is smooth either way, and your customers may not even realize the payment experience is not technically “embedded.” However, not every integrated payment solution provides the same level of seamlessness. Getting redirected to a third-party solution can create inconvenience or deter your customer from completing the transaction.  When partnering with a third-party payment provider, look for flexible integration options and ask about customizations to fit your brand and the customer experience you want to create.   

How big is the embedded financial solutions market? 

The global embedded finance market was valued at more than $82 billion in 2023. This market encompasses not only embedded payments but other types of embedded financial solutions, such as lending, investing and banking services.

For instance, point-of-sale financing solutions have skyrocketed in popularity. With these embedded financial services, consumers can opt to spread the cost of their purchase over multiple installment payments. Embedded insurance is another example—insurance products and services are built directly into non-insurance platforms or applications, permitting consumers to purchase insurance on, say, a vacation package booked via a travel site or an electronic device ordered from a technology retailer. 

As the embedded financial services ecosystem continues to grow, more new and innovative applications for embedded payments will arise as the result of partnerships among financial organizations, fintechs, retailers, and other businesses. These innovations have the potential to democratize access to financial services by putting new tools and choices directly at consumers’ fingertips.

What are the benefits of embedded payments? 

Embedded payments streamline the purchasing process, enable seamless transactions, and enhance the overall user journey. Businesses have more control over the customer experience, since users aren’t redirected to a third-party checkout solution. Streamlining the payment experience can help reduce cart abandonment, which occurs for more than 70% of customers. Leaving without making a purchase often comes down to the checkout experience: the consumer finds the payment process too complicated, is distrustful of the site, or does not have enough payment options to choose from. An embedded payment system can help to reduce some of these issues while providing valuable insights into customer behavior and transaction data. Embedded payment systems also help with streamlining operations and creating a more frictionless payment process, allowing businesses to focus more on their core activities. That's why it's no surprise that 69% of SMBs would change their payment processor if the solution were more integrated into their business process.

For consumers, the benefits of embedded payments include greater convenience, speed and security. With payment processing seamlessly integrated into their digital interactions, shoppers can complete transactions quickly and seamlessly, without the need to switch between different platforms or interfaces. Embedded payments also often leverage advanced security measures, such as real-time data validation, to protect sensitive payment information. The result is a payment experience that consumers are more likely to trust, contributing to increased user satisfaction, customer retention and brand loyalty. In fact, 42% of consumers would prefer more of their day-to-day payment experiences to be embedded within digital services, according to Onbe and NRG’s 2024 Payouts Landscape.  

For independent software providers (ISPs) and marketing software platforms (MSPs), adding embedded payments can help diversify existing offerings and create new revenue streams. Offering comprehensive solutions that meet evolving needs may be a great way to deepen relationships with clients and expand into new industries. By continuously improving their offerings and moving toward providing more embedded payment services that meet growing demand for smoother transactional experiences, providers can increase their competitiveness in the market. 

What is the future of embedded payments? 

The embedded finance market is projected to grow at a compound annual growth rate (CAGR) of 32.4% between 2024 and 2032, surpassing over $1 trillion. This rapid growth will likely stem from factors including the increased digitization of payments across various industries and consumers’ demand for speed and convenience. As more businesses and service providers build payment capabilities directly into their platforms, consumers will increasingly expect frictionless payment options whenever they transact.  

Advancements in technology, such as APIs, blockchain, artificial intelligence, and machine learning, will also drive payments innovation and growth. As new and maturing technologies enable advances including real-time processing, enhanced security features, and personalization options, embedded payments are likely to become even more convenient and effortless—and in greater demand as a result. This evolution will be possible in part due to collaboration among fintech companies, traditional financial institutions, technology providers, and companies across non-finance industries to create comprehensive solutions that combine payments with other products and services, providing added value to businesses and their customers. 

‍What are the compliance considerations for embedded payment solutions? 

Regulatory adherence, data security, and consumer protection are key concerns when implementing embedded payment solutions. Some considerations include: 

•  Payment Card Industry Data Security Standard (PCI DSS) Compliance. Ensure that the embedded payments solution complies with PCI DSS requirements for securely processing, storing, and transmitting payment card data. Implement necessary security measures such as encryption, access controls, and regular security assessments to protect cardholder data. 
• Data Privacy Regulations. Embedded payments solutions must adhere to data privacy regulations such as the General Data Protection Regulation (GDPR) in the European Union or the California Consumer Privacy Act (CCPA) in the United States. Obtain appropriate consent from users for collecting and processing their personal data, including payment information, and ensure transparency in data handling practices. 
• Anti-Money Laundering (AML) and Know Your Customer (KYC) Compliance. Implement AML and KYC procedures to verify the identity of users and detect and prevent money laundering, fraud, and other illicit activities.  
• Regulatory Licensing and Compliance. Determine if the embedded payments solution provider or any involved parties require regulatory licenses or approvals to operate in specific jurisdictions. Ensure compliance with applicable financial regulations, such as the Payment Services Directive (PSD2) in the European Union or the Dodd-Frank Act in the United States. 
• Consumer Protection Laws. Embedded payments solutions must comply with consumer protection laws and regulations governing payment transactions, including disclosure requirements, dispute resolution procedures, and fair treatment of customers. Provide clear and transparent terms of service, pricing, and refund policies to users, and address any complaints or disputes in a timely and fair manner. 
• Cross-Border Transactions and Currency Regulations. As with any payment solution, embedded payments must comply with international regulations governing currency exchange, foreign exchange controls, and international money transfers. Ensure that the embedded payments solution supports compliance with sanctions programs and restrictions on transactions involving sanctioned countries or individuals. 

Addressing these and other compliance considerations is crucial to mitigating the legal and regulatory risks associated with embedded payments. Organizations that wish to implement embedded payments solutions should work closely with legal counsel and compliance experts at every step. 

Are there embedded or integrated disbursement solutions? 

Seamless payment solutions aren’t just for accepting payments from consumers. Payment capabilities can also be integrated into disbursement platforms or systems, making it simple to pay out anything from incentives, rewards and earnings to refunds and settlement payouts. An advantage of embedded or integrated disbursements is that recipients enjoy a more modern and convenient payout that is consistent with the customer journey. With Onbe’s solution, recipients can select their preferred payment choice and gain access to popular options such as adding their funds to a mobile wallet or payment app for easy spending.  

Integrated payout solutions are also more convenient for businesses, enabling accounts payable teams to automate time-consuming disbursement processes—reducing human error and ensuring timely, accurate payments. Onbe’s solutions work seamlessly with your existing systems and processes, and we offer flexible integration options to ensure a smooth transition.  

How to choose an integrated or embedded payments partner 

Whether you work with vendors to build an embedded payments solution in-house or integrate third-party solutions such as a payment gateway with your existing platform or system, choosing the right payment processor is critical. Here are steps to consider when evaluating embedded payment providers: 

 1. Assess Your Requirements. Identify your business goals, payment processing needs, and the customer experience you want to create. Consider factors such as what payment methods to support, available integration options, and your scalability needs. 

2. Evaluate Providers. Vet embedded payment technology providers based on their experience, reputation in the industry, and track record of success. Look for providers that specialize in integrated or embedded payments and have a comprehensive understanding of your industry and target market. 

3. Evaluate Features, Capabilities and Support. Is the provider able to meet the requirements you identified in step one? Now is the time to discover what’s possible—ask about their payment processing APIs, developer tools, customization options, security measures, fraud prevention tools, and support for your compliance requirements. Explore solution demos and review case studies to learn how your prospective provider has supported organizations with goals similar to yours. 

4. Understand Pricing and Fees. Understand the pricing structure, payment processing fees, and other costs. Consider factors such as transaction fees, processing fees, monthly subscription fees, setup fees, and any additional charges for value-added services or support. In many cases, implementing embedded payments solutions can lead to long-term cost savings or new revenue streams for businesses, so also consider factors such as revenue-sharing opportunities and other ways to drive ROI.   

5. Review Customer Support and Service Level Agreements (SLAs). 

The customer experience is likely your top concern when considering an embedded payments solution. To ensure ongoing customer satisfaction, take the time to evaluate the level of support and service your embedded payments provider, including the availability of white-label customer service solutions, response times, resolution rates and the support staff’s expertise. Review SLAs for uptime guarantees, resolution of issues, and ongoing maintenance and support. 

6. Plan for Future Growth. Consider the scalability and flexibility of the embedded payments provider's solutions to accommodate your business growth and evolving needs. Ensure that the provider can support increasing transaction volumes, new features, and expansion into new markets or regions. 

Embedded and integrated solutions are fast becoming the norm when businesses make and accept payments—and these innovations are continually redefining customer experiences and expectations. As businesses adapt to meet these evolving preferences, they'll unlock new levels of efficiency, security, convenience, cost savings and customer loyalty. Learn more about Onbe’s integrated disbursement solutions.