Traditional payments send a merchant to an external PSP for a separate contract, integration and checkout. Embedded payments let a software platform, ISV or marketplace offer payment acceptance natively inside its product, under its own brand. For ISVs, the difference is ownership of the merchant relationship, the checkout experience and a new share of payment revenue.
For a software company, the question is not only how its merchants' customers pay, but who provides the payment service behind it. This article, updated in October 2026, compares traditional and embedded payments from the platform's point of view: how each model works, why redirections cost conversions, what ISVs gain, how adoption is evolving and how to launch embedded payments without becoming a PSP.
What are traditional payments from a software platform's point of view?
In the traditional model, the software and the payments are separate businesses. The platform refers its merchants to a third-party processor; each merchant signs its own contract, goes through its own onboarding and connects the processor to the software, often through a plugin or a redirection to a hosted payment page.
The platform may receive a referral fee, but it does not control the onboarding, the checkout, the data or the pricing. Support questions about payments land on the software vendor anyway, and every merchant's setup is slightly different.
What are embedded payments and how do they work?
In the embedded model, payments are part of the product. The merchant activates payments from inside the software, completes a branded onboarding, and its customers pay in a checkout that belongs to the platform's experience. The platform sets the pricing, sees the transactions and supports its merchants directly.
Behind the scenes, a payment infrastructure handles provider connections, onboarding and KYB, routing, tokenization, reconciliation and compliance. The embedded payments article details the model for ISVs, including payouts.
Why do customers abandon checkouts that redirect them?
Every extra step and unfamiliar page costs conversions. In Baymard Institute's cart abandonment research (updated September 2025), 17 percent of shoppers who abandoned during checkout said the process was too long or complicated, and 19 percent did not trust the site with their card details.
A redirection to an external page adds both problems: another step, and a page the customer does not recognize. An embedded checkout keeps the customer in the merchant's environment, with the platform's look and saved payment methods. The checkout best practices article covers the details.
What do ISVs gain from embedding payments: revenue, retention, control?
- Revenue: a margin on every transaction, growing with each merchant's volume, as described on the payment revenue page.
- Retention: merchants who run payments inside the software have one more reason to stay.
- Control: onboarding, checkout, pricing and support follow the platform's standards, not a third party's.
- Data: transaction data the platform can turn into reporting, product features or financing offers.
How is embedded payment adoption evolving?
Quickly, and across industries. According to Juniper Research (September 2026), global embedded finance revenue will rise from 162.6 billion dollars in 2026 to 617 billion dollars by 2031, with B2B software platforms growing fastest.
Regulation supports the trend: open banking under PSD2, the EU instant payments rules and the coming Payment Services Regulation all widen what platforms can offer inside their products, while keeping licensed providers responsible for the regulated parts.
How can an ISV launch embedded payments without becoming a PSP?
By running on white-label payment infrastructure that holds the provider relationships and regulated responsibilities, while the ISV owns the brand, the merchants and the pricing. On NORBr, the ISV offers payments without carrying the PSP status, as described in payments without the PSP burden.
Merchants are onboarded through a branded onboarding workflow, pay through Smart Checkout embedded in the software, and see their payments in a console under the ISV's brand. The build or buy article compares this route with building in-house.
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