Embedded Finance and Payments APIs: The Future Backbone of Fintech
Why Payments Is Becoming Invisible and Why That’s Both an Opportunity and a Threat
Ask any payments company what their growth strategy is, and you’ll hear the same buzzwords over and over again.
Embedded finance. Payments APIs. Infrastructure.
Everyone is talking about it, but few seem to explain what it really means or why it actually matters.
The problem is that most of these conversations make embedded finance seem like just another feature to add to a roadmap. But that’s not what’s happening.
This is a fundamental shift in how financial services work. The question isn’t whether companies should "adopt" embedded finance; it’s whether they’ll still have a place in the industry if they don’t.
In this newsletter, I explain Embedded Finance, expand on Embedded Payments, APIs, and the rise of Ecosystem Payments, and discuss the opportunities and threats that Payments companies need to be aware of.
Let me explain…
What Is Embedded Finance, Really?
At its core, embedded finance involves integrating financial services into non-financial platforms. This is why software companies can now offer banking and lending products without becoming banks, merchants don’t need to go through a third party to accept payments, payroll companies are embedding earned wage access, and marketplaces are building their own financial ecosystems.
This improvement is slowly leading to the restructuring of the entire financial services industry. Instead of being separate, payments, lending, and banking are increasingly becoming part of the core digital experience where transactions happen. The platforms embedding them aren’t just offering new services; they’re rewriting the rules of who controls the flow of money.
Embedded Payments: The First Domino to Fall
Embedded finance, like Artificial Intelligence, covers a broad spectrum, including lending, insurance, and banking. However, the most interesting part to me is Embedded Payments, as that is where the shift of power is the most obvious.
For decades, payments were always treated as a separate layer in commerce, with merchants selecting acquirers, PSPs, and gateways to handle transactions. That’s no longer the case.
Today, payments are becoming infrastructure, running in the background of software platforms. Instead of merchants choosing a PSP, the software they already use, whether it’s an e-commerce platform, a marketplace, or a SaaS tool, is bundling payments into the experience.
This changes everything.
This means software companies, not traditional PSPs, own the payments relationship.
This also means that payment processing is no longer a standalone business but a feature within a broader ecosystem. If this trend continues, payments will become increasingly invisible over time, turning from a competitive advantage into a utility.
For payments companies, the implications are massive. The platforms embedding payments are becoming the real payment providers, while traditional PSPs risk being relegated to backend infrastructure with little differentiation.
APIs and the Rise of Ecosystem Payments
For this shift to happen, the technology had to evolve.
Payments have always been a complex business, filled with regulatory hurdles, legacy systems, and fragmented networks. What changed was the rise of APIs that allowed platforms to integrate payments, banking, and financial services without becoming financial institutions themselves.
Independent Software Vendors (ISVs), SaaS companies, and marketplaces are the biggest beneficiaries of this change.
ISVs used to rely on third-party payment providers. Now, they embed payments directly into their platforms, making transactions a native part of their software.
SaaS companies are building financial ecosystems, adding payments, invoicing, and financial services into their core products.
Marketplaces are no longer just connecting buyers and sellers; they are becoming financial intermediaries, handling transactions, financing, and money movement within their ecosystems.
This is why partnerships between SaaS platforms and API-driven payments companies are exploding. Instead of standalone services, payments are now embedded, API-first layers within digital platforms.
The Early Adopters Who Reshaped the Market
Some companies saw this shift early and built their strategies around it. Those that did have redefined their industries.
Shopify recognized that payments were critical to its platform’s success. Rather than relying on traditional payment providers, it partnered with Stripe to create an embedded experience that kept merchants within its ecosystem. The result? Shopify Payments now processes billions in transactions, and Shopify itself has grown into an e-commerce giant that also controls the financial layer of its merchants’ businesses.
Alibaba built an entire payments ecosystem with Alipay, taking what was once an e-commerce marketplace and turning it into one of the most powerful financial networks in the world.
B2B SaaS platforms like HubSpot, Xero, and Mews have integrated payments into their core workflows, eliminating the need for external payment processors and making payments a seamless part of their product offering.
These companies didn’t just add payments as a feature, they used embedded payments to strengthen their platform, increase customer retention, and drive new revenue streams.
The takeaway?
The platforms that embed payments win.
The companies that enable them win.
The payment providers that don’t evolve? They get left behind.
The Opportunity
For companies that understand this shift, embedded finance is the most significant growth opportunity in payments today.
Platforms that embed payments see higher revenue and retention. Customers no longer leave their ecosystem to complete transactions. Payments become a seamless, integrated part of their product.
Payment companies that power embedded finance become indispensable infrastructure. The PSPs that position themselves as API-driven enablers rather than standalone providers will own the backend of the future payments landscape.
Banks and financial institutions that provide embedded solutions can unlock entirely new distribution channels. Instead of competing for direct customers, they can distribute their services through software companies that already have customer relationships.
This is why embedded finance isn’t just about payments; it’s about who controls the financial experience.
The Threat
But there’s another side to this.
If payments become just another invisible function running in the background, what will happen to the companies that have built their entire business on being the middleman?
If software platforms own the payments relationship, traditional PSPs and acquirers risk being disintermediated.
If payments become so deeply embedded that no one thinks about them anymore, differentiation disappears. Payments become infrastructure, and margins shrink. The players who used to compete on service, optimization, and innovation are reduced to backend providers.
Some will adapt. Others won’t.
The Next Payments Battleground
The truth is, payments is evolving, but at the same time the power dynamics are changing as well.
Platforms that own the financial experience will own the customer relationship.
Payments companies that become embedded finance enablers will control the infrastructure.
Traditional acquirers, PSPs, and banks that fail to adapt will become irrelevant.
For us payments professionals, the question is no longer whether embedded finance is happening; it’s how to make it part of our strategy.
By asking ourselves the following questions:
As a payments provider, are we enabling embedded payments, or we you waiting to be replaced?
Are we actively working with software companies to help them embedding payments into your platform, or are we leaving revenue on the table?
Are we building the infrastructure that platforms need, or are we competing in a shrinking market?
The companies that move first will define the next era of payments. The ones that hesitate will be playing catch-up in a world where the real power has already shifted.
This is the future of payments.
The only question is: Who will own it?
Thank you for reading.
If you found this valuable, share your thoughts, comment, or forward it to your team. And if your company is exploring AI in payments, let’s connect.
If you’d like to work with me in a speaking, advisory, or consulting capacity, feel free to reach out.
P.S. In the upcoming weeks, I will be at several events including
If you are attending, and would like to catch up, feel free to reach out to me as well.