Embedded Payments vs Integrated Payments
Definition
Embedded payments means payment processing is built natively into the software platform — the ISV owns the payment experience, onboards merchants, and earns per-transaction revenue. Integrated payments is broader, describing any software connected to payment processing, regardless of whether the ISV monetizes transactions or controls the merchant experience.
How It Works
Integrated payments connects software to a payment provider through an API — invoicing via Stripe, a POS connected to a card reader, etc. Embedded payments goes deeper: the ISV controls merchant onboarding, transaction processing, settlement, and reporting as a native part of the software experience. The payment capability is embedded so deeply that it feels native, not bolted on.
Why ISVs Care
The difference is strategic. Integrated payments is a feature (accept payments). Embedded payments is a revenue model (earn from every transaction). Moving from integrated to embedded means higher per-merchant switching costs, a new revenue line (20-100+ bps per transaction), and a competitive moat. Most ISVs evaluating this distinction are considering whether to upgrade from simple payment integration to full payment monetization via PayFac-as-a-Service.
These two terms are used interchangeably across the payment industry — but they carry subtly different connotations that matter for ISVs evaluating their payment strategy.
The Practical Distinction
Integrated payments is the older, broader term. It means payment processing is connected to your software in some way. A SaaS app that sends invoices via Stripe is using integrated payments. A POS system connected to a card reader is using integrated payments.
Embedded payments emerged as ISVs started monetizing transactions. It implies a deeper integration: the ISV owns the payment experience, onboards merchants, and earns revenue on every transaction. The payment capability is embedded so deeply that it feels native to the software.
Why the Distinction Matters
For ISVs, the difference is strategic:
| Aspect | Integrated Payments | Embedded Payments |
|---|---|---|
| Revenue | ISV may or may not earn payment revenue | ISV earns per-transaction revenue |
| Ownership | Processor often visible to merchants | ISV brand only — processor invisible |
| Switching cost | Low — merchants can use any processor | High — payments are part of the software |
| Integration depth | Gateway API connection | Full merchant lifecycle (onboard, process, settle, report) |
For ISVs Evaluating Payment Strategy
If you’re reading this comparison, you’re likely considering whether to go deeper on payments — from simple integration to full monetization. The embedded model requires more investment (PFaaS or PayFac) but generates significantly more revenue and competitive advantage.
Most industry analysts now use “embedded payments” when discussing ISV payment monetization and “integrated payments” for general payment-software connections. Both are correct; embedded is more specific.