Embedded Payments: The New Revenue Frontier

Why software platforms are becoming payment companies — and how to think about the opportunity.

18 min read

What’s actually changing

The question for software executives is no longer whether embedded payments create value. The data is settled, replicated across multiple analyst houses, and reflected in public market valuations. The question is what share of that value your platform will capture, and on what timeline.

Three independent sources frame the shift.

1. Software-led acquiring is gaining share at the expense of traditional channels

UBS Global Research’s “The Question 6.0” framework (May 4, 2026) projects software (ISV) acquiring revenue increasing from approximately 35% of total US merchant acquiring revenue in 2025 to ~45% by 2030. In simple words, it means small businesses are now getting payment acceptance capabilities from the core software they use, not from their banks or traditional payment processors. The Q6.0 also discloses a new figure that did not exist in earlier UBS versions: software platforms’ share of US SMB acquiring REVENUE is projected to grow from ~47% in 2025 to ~60% in 2030 (volume share is higher still — ~70% in 2025 to ~84% in 2030). Today, the shift concentrates in the SMB segment: UBS estimates more than 70% of US merchant acquiring revenues comes from SMBs, and the vast majority will eventually run through a software platform. We expect mid-sized businesses to follow this trend.

2. SME ISV adoption hit 90% in 2025 — up from 50% in 2022

McKinsey’s 2025 Merchant Acquiring Survey (published in “Decoding ISV Maturity: A Global Playbook for Payments Growth,” January 8, 2026) surveyed over 1,500 US SMEs (defined as <$10M annual revenue). The headline finding: 90% of US SMEs now use an ISV as their primary POS or payments and business-management solution, up from approximately 50% in 2022. McKinsey’s broader work implies a ~$27B US payments revenue opportunity from SMEs in 2025, of which ~60% flows through ISVs. Separately, BCG and Adyen’s September 2025 research, “Moving Embedded Finance from Promise to Practice,” puts the SaaS share of SME acquiring revenues at 36% in 2024, projected to expand to 45% by 2028 — closely aligned with UBS Q6.0.

3. The C2B card pie is no longer expanding faster than consumer spending

Card-network US volume growth has slowed materially relative to consumer spending. After adjusting for new flows (B2B card volume, Visa Direct, Mastercard Move) and excluding limited-card-addressability personal consumption expenditure (PCE) categories like housing, healthcare, and financial services, UBS estimates Visa and Mastercard’s adjusted US C2B volumes have grown roughly in line with addressable PCE for the past four years. The implication: the growth that platforms compete for is concentrated in the share-shift to software-led distribution.

Charge Forward Insight

Today, software companies embedding payments are effectively taking volume from incumbent acquirers and ISOs. That has direct implications for timing: this is a finite repositioning, not an open-ended growth opportunity. It is easier to replace SME’s traditional payments providers with a payment solution embedded into your platform, than replace another software vendor your customers already use to run their business and process payments. The platforms that capture share early lock in merchant relationships that will be hard to win later. UBS Q6.0 notably DECELERATED the pace of expected share gains vs. Q5.0 — concluding there is “still enough revenue to go around” — but the directional thesis is unchanged. The window is open. It is also not infinite.

What embedded payments actually is — and isn’t

Embedded payments means your software platform enables your customers to accept payments from their own end-customers. The platform sits in the middle of that transaction, captures a share of the processing economics, and enriches its product with the resulting payment data.

The journey is familiar. A field-services platform begins by helping contractors schedule jobs. It adds invoicing. It enables in-app payment links. It processes those payments natively, captures 50 basis points on every dollar that flows through, and at scale builds a nine-figure revenue stream on top of an existing customer relationship — with near-zero incremental customer acquisition cost.

This is fundamentally different from a SaaS company adopting Stripe to collect its own subscription fees. The distinction is the direction of value: in embedded payments, your customers are the merchants, and their customers are the payers. Your platform facilitates that exchange and earns from it.

Charge Forward Insight

The most common misconception we encounter is conflating subscription Stripe with embedded payments. They share infrastructure but not business model. A platform processing its own SaaS billing on Stripe is paying interchange and processing margin out the door — payments is a cost center. A platform processing its customers’ payments is acting as a payment facilitator (in the operational sense, regardless of the formal model selected) — payments is a revenue line. The economics, organizational design, regulatory exposure, and product implications are entirely different. Knowing which side of that line your platform is on is the foundational decision this guide helps you make.

The revenue opportunity in numbers

The table below presents payment economics for vertical SaaS public companies, drawn from the most recent 10-K and 10-Q filings, and earnings call transcripts. These are the numbers investors use to evaluate embedded payments maturity. The full benchmark dataset, with quarterly updates, lives in Chapter 11.

What the spread tells us

Toast and Bill.com sit at the top because payments and fintech revenue have effectively become their core businesses. Toast generates ~85% of total revenue from FinTech Solutions. Bill.com reported $1.5B in FY2025 revenue (up from $1.3B in FY2024) on $329.8B in TPV, with transaction fees alone growing 19% YoY to approximately $1.03B — roughly 69% of total revenue from transaction fees, before float. Lightspeed has converted approximately 70% of its revenue to transaction-based at a materially higher take rate (~75 bps), reflecting its enterprise mix.

ServiceTitan’s most recent year is the clearest illustration in public markets of what scaling embedded payments looks like. FY2026 revenue grew 24% to $961M; GTV grew 20% to $82.1B; FinTech usage revenue grew ~23% to approximately $240M, lifting the implied take rate from ~22 bps in FY2025 to ~29 bps in FY2026. The full-attach opportunity remains at 55+ bps on the same volume, implying $210M+ in incremental annual revenue still on the table before any further GMV growth. AppFolio’s value-added services revenue (the largest component being payments) grew approximately 33% year-over-year.

Two horizontal-SaaS comparators are worth noting. Wix has a Wix Payments business that the company has not broken out separately; Wix can be classified as a software-led payments platform, and the new Base44 AI app builder — acquired in 2025 and now at ~$100M ARR within nine months — launched with Base44 Payments integrated from day one. Shopify announced a 60-bps US pricing increase on premium cards (American Express and corporate) for Standard merchants in March 2026, expected to add 50–100 bps to GAAP gross profit growth and 100–250 bps to adjusted EBIT growth in 2026 alone (UBS, March 10 2026). The Shopify pricing change illustrates how scale converts to durable pricing power.

What separates leaders from laggards

The headline benchmark stats above describe outcomes. The mechanics behind those outcomes are increasingly well-documented. Two recent independent data sources — UBS “The Question 6.0” (May 2026) and the Rainforest 2026 Vertical SaaS Embedded Payments Benchmarking Study (the first independent industry survey of vertical SaaS payments performance, also released May 2026) — surface findings that map cleanly to operator decisions.

Payments leadership matters — measurably

Platforms with a C-suite-level payments leader (CRO, CPO, GM-Payments, or equivalent) achieve a median take rate of 98 bps. Platforms with a dedicated payments leader below the C-suite achieve a median 83 bps. Platforms with no dedicated payments leader achieve a median 53 bps. The spread between top and bottom is 45 bps — on $200M of annual GMV, that is a ~$900K annual revenue difference attributable to organizational design alone. Reinforcing finding: 100% of Optimized platforms have a dedicated payments leader; 63% of those leaders are in the C-suite.

Vertical matters, but less than scale assumptions suggest

Rainforest reports median take rates of approximately 90 bps+ for consumer/community platforms, 80 bps for services/healthcare, and 70 bps for B2B/institutional. The B2B/institutional discount reflects ACH-heavy payment mix and lower average ticket sizes; the consumer/community premium reflects higher card mix and higher interchange categories. Critically, the Rainforest study also found that vertical is NOT the strongest predictor of overall performance — maturity stage is. Two platforms in the same vertical at the same ARR can have categorically different performance because of how their payments programs are run. Benchmark against your vertical, but don’t use it as an excuse.

Payments maturity compounds

The Rainforest study segments platforms into three maturity tiers — Emerging, Scaling, and Optimized. The median Optimized platform posts attach rate of 93% (vs. 33% Emerging); adoption rate of 78% (vs. 33% Emerging); and take rate of 98 bps (vs. 53 bps Emerging). 78% of all platforms surveyed target an adoption rate of 71% or higher; only 25% have reached it. The Scaling-to-Optimized gap — not the Emerging-to-Scaling gap — is where most of the unrealized opportunity in vertical SaaS embedded payments sits today.

Charge Forward Insight

At Charge Forward we use a five-stage Maturity Framework to assess where a platform sits and what the next set of investments should look like — Capability, PFaaS Transition, Margin Expansion, Orchestration, and Fintech. The Rainforest three-stage classification (Emerging / Scaling / Optimized) is complementary: roughly, CF Stage 1 maps to Rainforest Emerging; CF Stages 2–3 map to Scaling; CF Stages 4–5 map to Optimized. Use the Rainforest stages for benchmarking your performance against peers, and the Charge Forward stages for sequencing operational moves. Both validate the same underlying truth: the gap between Emerging and Optimized is not gradual. It compounds. Platforms that delay appointing a payments leader, instrumenting attach and utilization metrics, and treating payments as a strategic product often find themselves needing to compress 18 months of organizational learning into a single quarter when a board mandate finally lands. The Maturity Framework is available as a standalone download in the library.

Three platforms, three paths

Three case studies — Toast, Mindbody, and ServiceTitan — represent the three archetypal embedded payments journeys: payments-first, crawl-walk-run, and undermonetization remediation.

Toast — payments as the core business model

Starting point: Toast launched in 2013 with payments embedded from day one. Restaurants were onboarded to Toast Payments in a single flow with no separate processor application. Payment processing exceeded 80% of revenue by 2021.

The model: Toast operates as a vertically integrated payments business. The company holds merchant accounts, underwrites restaurant sub-merchants, processes all transactions, and earns a take rate on every dollar processed. Hardware (card readers, terminals) is subsidized; payment volume economics fund the business.

Results: $159.1B GPV in FY2024; approximately $4.25B FinTech Solutions revenue (~85% of total company revenue); approximately 50 bps core payments net take rate (UBS December 2025 framework analysis), with Q4 2025 actuals at ~48 bps. Toast achieved its first GAAP-profitable year in 2024 and announced FY 2026 guidance of 20–22% recurring gross profit growth and EBITDA margin near the high end of its medium-term 30–35% target. Toast Capital, the company’s lending arm, contributes approximately 10 bps of GPV in additional gross profit. Recent moves include a partnership with Instacart and the enterprise win of Papa Murphy’s (~1,000 US locations).

Key lesson: making payments the default — not an opt-in — is the most powerful driver of attach rate. Toast achieved near-100% attach by making its payment processing the standard offering (with a fee for opting out). This model only works if product-market fit is strong and the customer experience is seamless.

Mindbody — the crawl-walk-run playbook

Starting point: 2012–2015 referral model. Mindbody resold third-party merchant services, earning a revenue share. By the mid-2010s, payments already exceeded one-third of total revenue.

The evolution: progressive deepening from referral → white-label partnerships → full PFaaS using Stripe Connect and Terminal. Later added lending: first as a LendingClub referral, then proprietary cash advances underwritten against future payment receivables.

Results: a typical Mindbody subscriber pays approximately $150/month for software and $100/month in payment fees — approximately a 66% LTV uplift from the payments overlay. Embedded payments contributed materially to the company’s take-private valuation.

Key lesson: you do not have to be at full PayFac on day one. The crawl-walk-run model — referral, to white-label, to fully embedded — generates revenue while building internal capability. Mindbody also demonstrated the pull-through into adjacent fintech: once you own the payment relationship, lending becomes the natural next product.

ServiceTitan — the undermonetization opportunity

Starting point: 2015 ISO referral model. Customers were onboarded with a third-party processor. Onboarding took 2–3 months; adoption was 10–20% of customers; margin was thin.

The pivot: evaluated 30+ payment partners, selected a PFaaS vendor. Launched ServiceTitan Payments in 2017 — fully branded, embedded in the workflow, with in-app merchant onboarding.

Results (FY2026, year ended January 31, 2026): adoption moved from <20% to a majority of customers within three years. FinTech usage revenue is now approximately $240M (~25% of total revenue), with $82.1B in GTV — both up materially from the prior year ($151M usage and $68.5B GTV in FY2025). Take rate has climbed from ~22 bps to ~29 bps in a single year. Management commentary and Flagship Advisory’s IPO analysis suggest the company is still penetrating only roughly 50% of its take-rate opportunity. The implied fully-attached rate is 55+ basis points on the same $82.1B GTV — representing $210M+ in incremental annual revenue still on the table before any further GMV growth.

Key lesson: owning the onboarding experience is the single most important factor in attach rate. A seamless in-app signup converts; a redirect to a third party does not. ServiceTitan’s history is also the clearest illustration in public markets of the cost of delay — the platform left meaningful revenue on the table during the ISO years.

eCommerce: Shopify and Wix

Shopify (FY2024 GMV: ~$292B; cross-border GMV: ~15%) is the horizontal SaaS eCommerce provider. Shopify Payments penetration is high in served markets, and Shopify’s March 2026 pricing increase on premium cards (60 bps for Standard US merchants) illustrates how scale converts to durable pricing power. UBS rates Shopify Neutral on the equity but identifies the pricing change as a clear positive on payments economics, projecting 50–100 bps gross profit growth contribution in 2026 alone.

Wix is the AI-native competitor: Wix Payments is integrated into both the legacy Wix product and the new Base44 AI app builder (which crossed $100M ARR within nine months of acquisition). Wix has not broken out payments take rate publicly, but the company demonstrates that embedded payments and AI-native product surfaces are not separate motions — Base44 launched with Base44 Payments integrated from day one.

Charge Forward Insight

Three patterns emerge across these case studies that anchor Chapter 2’s model selection framework. First, the platforms that won captured the onboarding experience first; the formal model selection followed from that, not the other way around. Second, crawl-walk-run is a viable path; “we’ll do referral first while we figure it out” delays revenue but does not preclude eventual evolution. Third, default-on attach (Toast) requires strong product-market fit and seamless UX; opt-in attach (ServiceTitan early years) requires patience and instrumentation. The right choice depends less on the abstract model spectrum than on what your product can credibly deliver to merchants.

The valuation premium is real and quantifiable

Investors price embedded payment revenue differently from subscription revenue, and the premium is now visible in public market data.

William Blair’s September 2025 analysis, “How Embedded Finance Drives Enterprise Value and Increases Multiples for SaaS Platforms,” found that SaaS platforms with embedded finance offerings trade at a 23% revenue-multiple premium and a 19% EBITDA-multiple premium versus peers without. The premium holds across financial profile (Rule of 40 controls) and end-market (horizontal vs. vertical). William Blair characterizes the embedded finance opportunity as “still in early innings.”

Windsor Drake’s Q1 2026 Vertical SaaS Valuation Report frames the absolute multiple range. The public median EV/Revenue for vertical SaaS sits at 6.7x. Category leaders trade at 8–12x with outliers reaching 14x. The fintech-attributable valuation lift Windsor Drake identifies is 25–45%, and the firm reports that mature platforms now generate 25–40% of revenue from payments and lending — consistent with the public benchmark table earlier in this chapter. Subsector multiples are bifurcated: Healthcare IT and Financial Services trade at 9–12x; Construction Tech at 7.5–10x; Retail/Hospitality has compressed to 5.5–7.5x.

For context on private markets and the broader payments TAM: Stripe processed $1.9 trillion in volume in 2025, up 34% year-over-year, with 57% of new 2025-cohort customers based outside the US (UBS, February 2026). Stripe Capital funding volume grew 45% in 2025. Adyen processed approximately $1.6 trillion ex-Cash App, growing 20%. The infrastructure layer enabling embedded payments is itself in hyper-growth, and the platform-led volume on it is concentrated in software platforms with sophisticated embedded payments operations.

Charge Forward Insight

Investor sophistication around embedded payments has shifted measurably in the past 24 months. Three years ago, growth-equity sponsors asked SaaS management teams “have you considered embedding payments?” Today they ask “what is your current attach rate, what is your take rate by cohort, and what is your path to 55 bps?” The newest layer of diligence is also “where do you sit on the Rainforest maturity stages — Emerging, Scaling, or Optimized — and what is the path to the next stage?” If your board or prospective investors haven’t asked these questions yet, they will be — likely within the next funding round or transaction process. We routinely see platforms get caught flat-footed by these questions when they could have built the supporting analysis in advance.

What this guide covers

This is a 12-chapter guide structured to take a software executive from the strategic decision (does embedded payments make sense for our platform?) to the operational details (how do we drive attach? optimize take rate? graduate from one model to another?) to the forward-looking strategy (where does this go next?).

Chapter 2 breaks down the four implementation models — Referral/ISO, PFaaS, Managed PayFac, Full PayFac — and provides the decision framework for selecting between them, anchored on the Charge Forward Payment Model Fit Navigator. Chapter 3 conducts the vendor deep dive, drawing on Charge Forward’s experience and our Vendor Database. Chapter 4 covers Stripe specifically (Connect, Issuing, Treasury, Terminal, Capital) given its outsized role in the platform-payments landscape. Chapter 5 unpacks payment economics from interchange to net take rate. Chapter 6 is the most technically advance one, presenting an optimization playbook — authorization rate improvement, network tokenization, surcharging, hidden processor fees. Chapter 7 covers payment adoption drivers. Chapter 8 examines payments data as a competitive moat and foundation for other financial products. Chapter 9 is the most operationally-focused as it covers vendor and model migrations. Chapter 10 looks beyond payments into the embedded finance roadmap. Chapter 11 is the Benchmarks chapter — the canonical numbers source, updated quarterly. Chapter 12 covers AI and agentic payments.

What’s Next

Chapter 2 — “Choosing Your Embedded Payments Model” — provides the decision framework and vendor economics needed to make an informed architecture choice. It illustrates revenue, control, and risk trade-offs across the model spectrum, with specific economics from Rainforest, Finix, Tilled, Payabli, Stripe Connect, and Adyen for Platforms.

APPENDIX

Key Terminology

These terms appear throughout the Charge Forward knowledge hub. Bookmark this page — every chapter assumes familiarity with this vocabulary.

SOURCES & REFERENCES

SEC EDGAR 10-K and 10-Q filings (Toast FY2024 and Q1–Q4 2025; ServiceTitan FY2026 10-K filed March 12, 2026; Bill.com FY2025 10-K filed August 2025; Lightspeed FY2025; AppFolio FY2024; Weave FY2024; Xero FY2025; Shopify FY2024; Wix FY2025).

UBS Global Research, Tim Chiodo: “The Question 6.0” (May 4, 2026 — canonical; replaces Q5.0); “Toast: FinTech Net Take Rate Analysis & Core Payments Framework” (Dec 17, 2025); “Toast Q4 2025 Earnings Recap” (Feb 13, 2026); “Visa & Mastercard: Adjusted US Volumes vs. Addressable US PCE Analysis” (Apr 8, 2026); “Stripe Annual Letter Fast Take” (Feb 24, 2026); “Wix.com Q4 2025 Earnings Recap” (Mar 6, 2026); “Shopify Payments Pricing Changes in the US & Australia” (Mar 10, 2026).

Rainforest, “2026 Vertical SaaS Embedded Payments Benchmarking Study” (Q1 2026 fielded; May 2026 release — first independent industry survey of vertical SaaS payments performance).

McKinsey & Company, “Global Payments in 2024: Simpler interfaces, complex reality” (October 2024); “Decoding ISV Maturity: A Global Playbook for Payments Growth” (January 8, 2026; N=1,500+ US SMEs).

William Blair, “How Embedded Finance Drives Enterprise Value and Increases Multiples for SaaS Platforms” (September 2025); Windsor Drake, “Vertical SaaS Valuation Report — Q1 2026” (January 2026).

BCG / Adyen, “Moving Embedded Finance from Promise to Practice” (September 2025); Bain & Company / Stripe, “Riding the New Wave of Integrated Payments” (most recent edition).

Public Charge Forward tools referenced in this chapter: Embedded Payments Maturity Framework, Embedded Payments Fit Assessment, Payment Model Fit Navigator, Payments Revenue Calculator, Vendor Database. All available at chargeforward.io/tools.

By Jane Podbelskaya · Updated June 20, 2026