Embedded Payments as a New Revenue Stream for Small Businesses

For small business owners, finding new revenue does not always mean launching another product or adding more hours to the workday. Sometimes, the opportunity is already sitting inside a process the business uses every day. Payments are a good example. Instead of treating payment collection as a basic back-office task, some businesses and software platforms are using embedded payments to make the payment experience more convenient while also creating an additional source of revenue. Embedded payments simply mean that payment functionality is built directly into a platform, app, or piece of business software, allowing customers to pay without being redirected to another system or switching between separate tools.

Payments Can Be More Than an Expense

Most business owners think about payment processing as a cost. Every transaction usually comes with fees, and payment software is often treated as another necessary operating expense. Embedded payments can change that relationship. When a business operates a software platform, marketplace, or membership-based service, it may be able to earn a margin on the transactions processed through its system. Instead of sending customers to an external payment provider and receiving nothing from the transaction, the platform can incorporate payments into its own service and potentially generate revenue from the payment flow.

This model is particularly relevant for businesses that already process a meaningful number of transactions. A small fee or margin on each transaction may not appear significant on its own, but repeated across hundreds or thousands of payments, it can become a recurring income stream. That does not mean every small business should immediately become a payments company, but for software companies, marketplaces and platforms that facilitate payments for their customers, the economics can be very different.

Small Businesses Are Already Building Around Transactions

Consider the number of businesses that sit between a customer and a service provider. A booking platform connects clients with studios, a property management system collects payments on behalf of landlords, a field service app helps tradespeople send invoices and collect money, and a membership platform manages recurring fees. In all of these examples, the business already sits in the payment journey.

If customers are leaving the platform to complete a transaction elsewhere, that creates friction and may also mean the platform is giving away part of its potential value. With embedded payments, the transaction can take place inside the same software environment. According to Pinch, this model can allow software platforms to set their own fee structures and create transaction margin while also keeping the payment experience inside the product. For a small business owner building a scalable service, this can be especially attractive because it creates income that grows alongside transaction volume.

Recurring Revenue Can Be More Valuable Than One-Off Sales

One of the biggest challenges of running a small business is that revenue can be unpredictable. Freelancers, consultants and service businesses may experience busy months followed by slower periods, while product businesses can face similar fluctuations. Recurring revenue helps smooth out some of that uncertainty, which is why subscription and membership models are so appealing.

Embedded payments can support recurring billing models such as subscriptions, retainers and scheduled payments. Rather than manually chasing every invoice, payment collection can be built into the customer’s normal experience. For software businesses, recurring payments can also create two layers of revenue: the subscription fee charged for access to the software and the transaction income generated when customers use the platform to collect payments. This type of model can make a business less dependent on continuously finding new customers because existing users can generate ongoing value through both subscriptions and payment activity.

A Better Payment Experience Can Protect Existing Revenue

New revenue is useful, but preventing lost revenue matters too. Every extra step in the checkout or payment process creates another opportunity for a customer to abandon the transaction. Redirecting users to another website, requiring a separate login or forcing them to manually transfer payment information can create unnecessary friction.

Embedding the payment process inside the platform reduces some of these interruptions. This is particularly relevant for small online businesses where convenience is often part of the product itself. Customers who can book, pay and receive confirmation in one workflow may be more likely to complete the transaction than customers who need to jump between several tools. The benefit is not limited to consumer-facing businesses either, because B2B companies can also use embedded payment systems to streamline recurring invoices, direct debit arrangements and account reconciliation.

Automation Can Reduce the Cost of Getting Paid

There is another side to payment profitability that is easy to overlook: time. A business can technically collect every dollar it is owed and still waste significant resources doing it. Manual invoice reminders, reconciliation, payment follow-ups, and data entry all consume staff time, and for a solo operator or small team, those tasks can be especially expensive because they take attention away from revenue-producing work.

Payment systems that connect directly with invoicing or accounting tools can reduce some of that workload. Pinch, for example, describes embedded B2B payments that can connect with accounting platforms such as Xero, MYOB and QuickBooks, helping automate payment status and reconciliation. The financial benefit here does not necessarily appear as a new line of revenue, but it may come from fewer administrative hours, faster reconciliation and fewer missed follow-ups. For a small business, reducing the cost of collecting money can improve profitability even if sales remain the same.

Embedded Payments Can Make a Product Harder to Replace

For software businesses, another potential advantage is customer retention. A customer may find it relatively easy to leave a basic software tool that performs one isolated function, but it can be much harder to replace a platform that handles bookings, billing, customer records, recurring payments and financial workflows in one place. When payments become part of the core workflow, the platform can become more valuable to the customer because it solves a larger portion of the business problem.

Pinch notes that embedded payment systems can increase product stickiness and reduce churn because customers no longer need to solve their payment needs through a separate provider. For a small SaaS company, reducing churn can have a major financial impact because acquiring a new customer usually takes more effort than keeping an existing one. Improving retention can therefore support growth without requiring the business to constantly increase its marketing spend.

This Model Is Not Just for Large Companies

Embedded payments may sound like something reserved for major technology companies, but smaller platforms are already using the model. The key question is not necessarily the size of the business. It is whether the business controls a payment flow.

A niche SaaS platform serving fitness studios, for example, may process thousands of recurring membership payments even if the software company itself has a relatively small team. A booking system for tradespeople could do the same with invoices, while a marketplace may process payments for hundreds of independent sellers. These businesses may have more payment volume than their headcount suggests, which means embedded payments can still make commercial sense.

One example highlighted by Pinch involves PassM8, an Australian SaaS platform serving dance studios, yoga studios, martial arts gyms and fitness centres. The platform used embedded payment infrastructure to manage recurring billing and card payments while onboarding more than 100 studios. The broader lesson is that transaction volume, rather than company size alone, can determine whether embedded payments are worth exploring.

Start With the Customer Experience

A business should not add embedded payments simply because there is a chance to earn fees. The first question should be whether the change actually improves the customer experience. If customers already move naturally through a platform to book, manage services or receive invoices, adding payment functionality may make sense. If payments are infrequent or unrelated to the core product, however, embedding them may add complexity without creating much value.

Small businesses should also consider development requirements, compliance responsibilities, payment methods, pricing flexibility, and integration with existing accounting systems. The strongest use cases are usually those where the payment process already sits close to the main product and where adding payment functionality makes the overall customer journey simpler.

Turning an Existing Process Into a Revenue Opportunity

Small business growth is often presented as a constant search for the next idea, whether that means launching another service, finding another side hustle, or adding another product. But sustainable growth can also come from improving the economics of what the business is already doing, and payments are one area where that opportunity may be overlooked.

For the right type of business, embedding payment functionality can create transaction revenue, support recurring billing, reduce administrative work, and make the core product more valuable to customers. The opportunity is especially relevant for SaaS businesses, marketplaces and platforms that already help other businesses get paid. Instead of treating transactions as something that happens after the product has done its job, small business owners can begin looking at payments as part of the product itself. In some cases, that shift can turn an ordinary operational process into a new and scalable revenue stream.