TL;DR
- Software-integrated payments are becoming central to vertical SaaS growth, helping businesses manage payments directly inside the specialized platforms they already use.
- Embedding payments into industry-specific workflows can improve the user experience by reducing friction across tasks like booking, order management, recordkeeping, scheduling, and checkout.
- Integrated payments help businesses operate more efficiently by bringing payment acceptance, reporting, and day-to-day operations into one connected system.
- Payments are becoming a major revenue opportunity for software companies, especially as more platforms take ownership of payment activity instead of treating it as a separate function.
- Integrated payments can strengthen customer loyalty and retention because critical business functions become harder to replace once they live inside one platform.
- The right payment partner matters, especially when software providers need automated onboarding, omnichannel capabilities, embedded finance options, developer support, transparent pricing, and clear communication.
- Software providers that invest in payments strategically can unlock new growth opportunities while delivering more value to merchants and their end customers.
Vertically focused integrated payments take commerce experiences to the next level by embedding them directly into the specialized platforms businesses rely on in various industries. Whether it’s healthcare, retail, hospitality, or automotive services, these tailored platforms cater to their clients’ unique needs and workflows. By seamlessly incorporating payment functionalities, they streamline operations and enhance the end-user experience.
For example, a healthcare management system might allow patients to book appointments, manage records, and pay for services within the same platform. A restaurant point-of-sale system may integrate payment processing with table management, order tracking, and staff scheduling.
This is compelling for these reasons and more:
- Seamless user experience: Payment features are embedded into everyday operational tasks, reducing user friction.
- Industry-specific tools: The software addresses the unique needs of a particular vertical, enhancing usability.
- Improved efficiency: Businesses save time and resources by managing payments alongside other operations in a single platform.
- Increased revenue: Software companies unlock a new path to significant revenue, and their merchant acquiring partners get quick access to the merchants these software companies support, bolstering their revenue as well. TSG knows software companies making 10x more revenue from payments than software license fees alone.
Going Deeper
The rise of integrated payments is reshaping the traditional software model. Software companies increasingly view payments as critical to their business. They are entering the payments space by partnering with payment processors and taking more ownership of this activity. Examples include Shopify integrating payments into its e-commerce platform with its own payment gateway and offering a proprietary point-of-sale product for in-store use, or Toast offering restaurant-specific software with built-in payment solutions.
Integrated payments increase customer loyalty because it places critical functions in one system and makes it smoother to operate. This also makes it difficult to switch tools. For example, a retail store using an inventory management system with built-in payments will hesitate to swap tools due to potential disruption.
TSG’s AIM analytics platform shows that ‘merchants’ (the clients/users of software companies) connected to software companies are typically 20% larger than non-integrated merchants, a testament to satisfied end-users.
The importance of partnership
Payment processing providers and software companies are joining forces and expanding into underserved niches and new regions, delivering the cutting-edge, API-driven solutions the market is now expecting.
In one of TSG’s software company surveys, respondents that were unsatisfied with their payment processing partners cited a lack of innovation, difficult implementation, and ambiguous pricing. To thrive in today’s landscape, software companies should ensure their partner can help with areas such as:
- Automation: Payment workflows should provide automated onboarding and efficient dashboards for tracking their payments activities.
- Omnichannel capabilities: Integrated solutions should unify in-store, online, and mobile payments and offer the ability to add new features when needed.
- Embedded finance: Beyond payments, software companies can integrate additional financial services such as lending, insurance, and payroll. In one TSG survey, 91% of software companies with an embedded banking solution said it was very or extremely important to their business.
- True partnership: modern software companies need payment processing partners that focus on developer experiences, offer guidance on building high-performance payment channels, and have clear, transparent communication and contract terms.
Zooming Out
With nine out of 10 software companies surveyed by TSG feeling that payments are either ‘very’ or ‘extremely’ important to their core business model, software companies need to ensure they are giving this part of their business significant attention and investment.
With the right mix of planning and partnership, software companies can unlock new growth opportunities and position themselves at the forefront of modern payments, and enhance value for themselves and their customers.
Frequently Asked Questions
What are software-integrated payments?
Software-integrated payments are payment processing capabilities built directly into a software platform. Instead of requiring businesses to use a separate payment terminal, portal, or provider, integrated payments allow users to accept, manage, and track payments within the same system they use for daily operations.
Why are integrated payments important for vertical software companies?
Integrated payments are important for vertical software companies because they help make payments part of the industry-specific workflows their customers already use. This can reduce friction, improve efficiency, strengthen customer loyalty, and create new revenue opportunities for software providers.
How do integrated payments improve the user experience?
Integrated payments improve the user experience by allowing payment activity to happen inside the software instead of through a disconnected system. This can make it easier for users to complete transactions, manage customer records, track orders, reconcile payments, and keep important business workflows in one place.
How can software companies generate revenue from integrated payments?
Software companies can generate revenue from integrated payments by earning a share of payment processing activity, increasing payment adoption, offering value-added services, or expanding into embedded finance. When payments are built into the platform, software providers can create revenue beyond traditional software license or subscription fees.
What should software companies look for in an integrated payments partner?
Software companies should look for an integrated payments partner that offers API-driven technology, automated onboarding, clear dashboards, omnichannel payment capabilities, transparent pricing, developer support, and guidance on payment strategy. The right partner should support both the technical integration and the long-term growth of the payments program.
What is the role of embedded finance in software-integrated payments?
Embedded finance allows software companies to expand beyond payment acceptance into additional financial services such as lending, insurance, banking, or payroll. Once payments are integrated into the platform experience, software providers can use financial services to create more value for customers and strengthen their business model.
How are integrated payments changing the software business model?
Integrated payments are changing the software business model by making payments a core part of product strategy, customer experience, and revenue growth. Instead of treating payments as a separate operational function, software companies are using integrated payments to improve retention, deepen customer relationships, and build more scalable revenue streams.
by The Strawhecker Group
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First published: April 11 2025
Written by: Xplor Pay