Understanding why embedded payments can be a powerful business driver for startups

As a startup, you’ve put considerable thought into your core product or service offering. You’ve developed its place in the market, its unique value to your customers and why it will be a profitable investment to potential partners. 

Of course, the innovation cycle never ends. You’re continually seeking ways to elevate your offering and stay ahead of the competition. That’s where embedded finance, particularly embedded payments, comes in to play.  

For startups with payment flows or even peripheral payment needs, embedding payments into your customer experience offers a valuable solution. Working with a third-party to embed payments helps simplify the process, enabling you to focus on your core offering while at the same time unlocking new opportunities for growth.  

With that, let’s dive into seven key benefits startups may enjoy by embedding payments:  

What are embedded payments?

If your product or service involves finance flows, embedded payment solutions enable you to integrate transaction capabilities directly within your platform or app. It makes payments a seamless part of your overall user experience, so customers don’t need to switch to other tools or providers.

Embedded payments are ideal for innovators such as SaaS providers, e-commerce marketplaces, online retailers and treasury management platforms. Working with a third party like a banking partner, your startup can quickly implement value-added payment solutions (often with API integration) and more easily manage compliance.

What’s the real value for startups?  Let’s dive into the compelling benefits of embedding payments.

7 key benefits of embedded payments

1. Embedded payments can generate additional and diversified revenue

By enabling your customers to make payments directly within your platform, you can further monetize your offering with an additional revenue stream. For example, you could charge fees for transactions or faster payouts, enable new business models like ‘buy now, pay later’ (BNPL) options or subscription-based services.

Incremental revenue from these transactions can really add up. The US embedded payments market is expected to reach nearly $193 billion by 2032. If you’re not capturing this additional revenue, others will.

2. Get insights into customer payment needs and purchase behaviors

From a marketing perspective, there’s almost nothing more valuable than being able to monitor customer behavior ‘at the checkout’. When do they typically make a purchase? What offers are they responding to? Where are they making the purchase? Does offering a BNPL solution enhance cart sizes at checkout?

Many embedded payment solutions enable you to harness rich data from transactions and customer behaviors to understand what may be driving specific buying decisions. One example: Toast knows the seasonality of their restaurant customers and can surface lending offers based on this insight.

3. Opportunity to increase your valuation

Monetizing embedded payments can enhance your top-line revenue and company value. It demonstrates stronger business potential to investors and may help you command a greater valuation.

Payments is consistently the top-valued subsector in fintech, contributing about $126 billion of scaled fintech revenues in 2024.

And amidst broader market uncertainty, fintech valuations still hold a premium compared to tech overall. In fact, H1 of 2025 was busy for fintech deals with nearly 700 completed, raising $10.7 billion. It highlights the increasing value investors may place on businesses that seamlessly integrate payments.

4. Embedded payments enhance the customer experience

Embedding payments into your platform makes it easier for customers to engage with you. Spend with you. And stick with you. You can offer fast, flexible options that make the payment experience more seamless, welcoming and satisfying.

The goal is to eliminate the need to redirect customers to a third-party payment gateway, which in turn helps reduce cart abandonment rates. And offering more choices for payments and payouts helps you better meet customer demand. Along with cards and BNPL, you can also support digital wallets like PayPal, Venmo and Apple Pay. As the primary form of e-commerce payment, wallet apps could account for up to 56% of all payments in 2025.

5. Increase customer lifetime value

Prioritizing a positive customer experience helps deepen customer loyalty. Simplifying payments is a key part of that. It can make people less likely to use competitor brands, which may lead to increased customer lifetime value.

6. Offer additional embedded financial services to your customers

If you’re planning to embed financial services into your customer experience, embedding payments is a logical place to start. It provides a solid foundation to also facilitate transactions for your customers, such as offering embedded money movement with OBO (On Behalf Of) solutions or FBO (For Benefit Of) custodial accounts. It also positions your business to partner with other embedded payments solution providers, or register and operate as a payment facilitator.

Depending on the nature of your business, you can offer other embedded finance solutions as well, such as financing or insurance. These integrated capabilities can be expanded upon as you adjust your business model, enhance your offerings or decide to take on more ownership and risk by building out the functionality in house.

7. Help mitigate risk

Offering embedded payments does have the potential of adding a significant layer of regulatory risk and complexity. And it’s no secret that in recent years, the number of enforcement actions by banking regulators has grown exponentially for BaaS providers and fintech partner banks.

Not all embedded payments providers are created equal, and you’ll want a financial partner like SVB with a solid compliance track record to help prevent future roadblocks or problems. A good rule of thumb is that the more extensive, detailed and rigorous the onboarding process is, the more likely your provider is following all the necessary regulations.

Ensuring compliance is critical with embedded payments. The level of liability you take on depends on the level of control you have over the payment processing and experience.

Embedded payments can give startups many strategic advantages, so it’s not surprising that there’s a strong appetite in today’s market. What does that mean for your business? Enabling seamless payment experiences can add tremendous value – and your customers may already expect it.

Our SVB team has deep experience in working with companies from seed to Series A and beyond. Learn more about how our embedded payments solutions can help you drive growth and revenue.