How to Monetize Embedded PaymentsVertical SaaS

How to Monetize Embedded Payments

Last Updated on March 22, 2024

In today’s competitive business landscape, software companies are constantly seeking new ways to generate new lines of revenue and increase company value. One such opportunity that has gained traction in recent years is the integration of embedded payment services within software applications.

By offering seamless, integrated or embedded payment processing capabilities, software companies can not only enhance the user experience but also establish a lucrative revenue stream. In this article, we’ll explore the economics of embedded payments, the potential revenue, and the key players involved in the revenue split.

The Economics of Embedded Payments

Embedded payments involve incorporating payment processing capabilities directly within a software application, thereby providing end-users with a seamless, secure, and efficient payment experience. By offering integrated payment services, software companies can generate revenue from transaction fees, which are typically charged as a percentage of the transaction amount.

This revenue is shared among various players in the payment processing ecosystem, including the software company, payment gateway provider, payment processor, and the card networks.

The revenue potential for a software company depends on several factors, including the following:

  • Transaction volume
  • Average transaction value
  • Revenue share with their payment partner

Typically, a merchant is charged a fee of around 2-4% of the transaction amount. However, this fee may vary depending on the specific card type, payment acceptance method, the size of the transaction, and the industry in which the software company operates.

For example, let’s assume a software company integrates a payment service into its application and negotiates a 50% revenue share with the payment provider. On a $100 transaction, the payment provider charges a 2.5% fee, generating a total fee of $2.50. With a 50% revenue share, the software company would receive $1.25 from this transaction. The payment partner, sponsor banks, and card networks share the remaining 50%.

Maximizing Revenue Potential with a Strong Go-to-Market Strategy

To maximize the revenue potential from embedded payments, software companies need to implement a robust go-to-market strategy that focuses on promoting the value proposition of integrated payment services to their customers. Key elements of a successful go-to-market strategy include:

  • Market segmentation — Identify the target customer segments that are most likely to benefit from embedded payment services. This could include businesses with high transaction volumes, those that require streamlined payment processing, or those operating in specific industries with unique payment processing needs.
  • Value proposition — Develop a compelling value proposition that highlights the benefits of integrated payments for your target customers. This could include the convenience of a seamless payment experience, enhanced security features, improved cash flow management, or the ability to offer customers more flexible payment options.
  • Pricing strategy — Establish a competitive pricing structure that aligns with the value delivered to customers. This may include a tiered pricing model based on transaction volume, a flat fee for access to the payment services, or a combination of both.
  • Sales and marketing — Invest in sales and marketing efforts to promote the embedded payment services to potential customers. This could involve targeted marketing campaigns, sales enablement materials, and customer success stories to showcase the benefits of integrated payments.

Negotiating with Embedded Payment Partners

To further maximize the revenue potential from embedded payments, software companies should engage in hard negotiating with their payment partners to secure the best possible terms. Key areas to focus on during negotiations include the following.

Revenue Share

Aim to secure the highest possible revenue share from the payment provider, while ensuring that the pricing structure remains competitive for your customers. Leverage your customer base, transaction volume, and industry expertise as bargaining chips during negotiations.

Ensure your focus is not only on arbitrary percentages but more so on the actual margins. Focus the discussion on conversion rates, adoption, and pricing structures that drive profitable margins


Negotiate for flexibility in the partnership agreement, such as the ability to work with multiple payment providers or the option to renegotiate terms at a later date. This will allow your software company to adapt to changing market conditions and explore new opportunities as they arise.

Technical Support

Ensure that the payment provider offers robust technical support and integration assistance to help your software company seamlessly incorporate the payment services into your application. This will not only minimize potential disruptions to your existing user experience but also enhance customer satisfaction.


Discuss the possibility of customizing the payment solution to better align with your software company’s brand and user experience. This could include white-labeling the payment interface or tailoring specific features to meet the unique needs of your customer base.

Long-Term Partnership

Establish a long-term partnership with the payment provider that allows both parties to collaborate on continuous improvement and innovation, ensuring that your software company remains at the forefront of the embedded payments market.

Final Thoughts

Integrating embedded payments into your software application can provide a significant new revenue stream for your company while also delivering value to your customers. To maximize the revenue potential from embedded payments, focus on developing a strong go-to-market strategy and negotiate favorable terms with your integrated payment partner. By doing so, your software company can not only create additional enterprise value but also position itself as a leader in the rapidly evolving payments landscape.

As the world becomes increasingly digital and payment processing continues to evolve, embracing embedded payments can give your software company a competitive edge and a sustainable revenue stream for years to come.

About Nexio

As a payment partner and consultant for SaaS companies, Nexio offers the expertise and solutions you need to seamlessly incorporate payments into your software applications. Our team provides comprehensive services — including integration, testing, maintenance, and support — tailored to meet your unique requirements.

We stay up-to-date with the latest payment technologies and regulations to ensure that all client transactions remain compliant and secure. Let Nexio be your go-to partner for payment solutions. Contact us today to find out how we can help your business succeed.

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