Embedded Payments
What Is Embedded Payments and Why European SaaS Companies Are Racing to Implement It
Alejandro Serrat
Nov 26, 2025
European vertical SaaS platforms are burning 40+ hours weekly on manual bank transfer reconciliation while leaving millions in payment revenue on the table. While American platforms like Shopify and Toast have long monetised payments as a core revenue stream, European vertical SaaS companies are now discovering that embedded payments aren't just a feature, they're a competitive necessity.
Understanding Embedded Payments: Beyond Basic Payment Processing
Embedded payments represent the integration of payment infrastructure directly into your software platform, allowing your customers to accept payments without leaving your application or redirecting to third-party processors. Unlike traditional payment gateway integrations, embedded payments give platforms complete control over the transaction experience, data, and economics.
For European SaaS platforms, this means more than just processing cards. The European payment landscape demands:
Domestic IBAN infrastructure for bank transfer reconciliation
Multi-currency support
Balance account architecture for complex fund flows
Automated settlement between multiple parties
The difference between basic payment processing and true embedded payments infrastructure is analogous to the difference between renting office space and owning the building. One gives you access; the other gives you control, customisation, and the ability to capture value.
While Stripe and Adyen focus on merchant acquiring, Embed provides Balance Accounts (programmable sub-ledgers) and virtual IBANs so platforms can automate reconciliation, program complex splits, and monetise payments without becoming a bank
The European Embedded Payments Market: Why Now?
Three convergent forces are driving the embedded payments race in Europe:
1. Revenue Diversification Pressure
SaaS multiples have compressed dramatically. Platforms trading at 8-10x ARR in 2021 now struggle to command 4-5x. Payment revenue, with its recurring, high-margin characteristics, has become essential for maintaining growth rates and defending valuations. A property management platform processing €50M annually at 1.5% effective take rate generates €750K in payment revenue with 60-70% gross margins.
2. Bank Transfer Dominance in Europe
While cards dominate in the US (representing 70%+ of B2B payment volume), European markets remain heavily bank-transfer-centric. SEPA credit transfers, standing orders, and direct debits represent over 50% of recurring B2B payment volume across core European markets. Any embedded payments strategy that ignores bank transfer infrastructure is fundamentally incomplete for European SaaS.
3. Operational Complexity Without Platform Control
European vertical SaaS platforms managing payments outside their core product experience operational chaos:
Manual reconciliation of bank transfers across dozens of merchant IBANs
No programmatic control over fund holds, splits, or settlement timing
The Balance Account Paradigm: Europe's Answer to Treasury Infrastructure
American platforms leverage Stripe Treasury and similar products for embedded financial services. European platforms require a different architectural approach centered on Balance Accounts—programmable sub-ledgers that enable complex payment operations.
What Balance Accounts Enable
Embed's Balance Accounts are unlimited programmable sub-ledgers—one per merchant, site, project, or fund. Unlike Stripe Connect's merchant accounts or traditional PSP infrastructure, Embed's architecture enables:
Programmable: Internal transfers execute based on rules (revenue shares, fee sweeps, reserve holds)
Instant: Funds move between accounts in milliseconds without external banking rails
Auditable: Every transaction carries metadata for reconciliation and compliance
Virtual IBANs: The Reconciliation Solution European SaaS Needs
Virtual IBANs (vIBANs) solve the most persistent operational pain point in European B2B payments: bank transfer reconciliation.
How Virtual IBANs Work
Each payer receives a unique IBAN for their payments. When funds arrive, the platform knows instantly:
Which customer paid
Which invoice/contract it relates to
Where to route the funds internally
Beneficiary name format: "Your Platform Name via Embed.co"
This naming convention serves two critical functions:
Passes Verification of Payee (VOP)
Maintains platform brand visibility while ensuring regulatory compliance
Deutsche Bank-Issued Infrastructure Advantage
European SMBs evaluate payment methods through a trust lens. Virtual IBANs issued by Deutsche Bank carry significantly higher trust signals than fintech-issued alternatives, reducing payment friction and failed transfers due to corporate banking policies that whitelist Tier 1 bank infrastructure.
Implementation Considerations: What European SaaS Platforms Should Evaluate
Technical Architecture Questions
Do you need to hold funds on behalf of customers? (escrow, reserves, float)
How many parties receive funds per transaction? (splits, revenue shares)
What percentage of payment volume is bank transfers vs cards?
Do you operate across multiple European markets? (currency requirements)
What reconciliation complexity do you currently manage?
Business Model Considerations
Payment revenue potential: Calculate your addressable payment volume × realistic take rate (0.5-2% depending on vertical and payment mix)
Operational savings: Quantify current costs of manual reconciliation, customer support for payment issues, banking relationship management
Strategic control: Value of owning customer payment data, transaction timing, and settlement logic
FAQ: Embedded Payments for European SaaS
What is the difference between embedded payments and payment gateway integration?
Payment gateway integration allows you to accept payments through your platform but the infrastructure, data, and economics remain with the payment provider. Embedded payments give you a white-labeled payment experience, direct access to transaction data, control over fund flows, and the ability to monetise payments as a revenue stream. For European platforms, embedded payments also include Balance Account infrastructure for complex fund management that basic gateways cannot support.
Why are Balance Accounts important for European SaaS platforms?
Balance Accounts solve operational challenges unique to European B2B payments: reconciling bank transfers across multiple entities, managing escrow and reserves with interest accrual, automating revenue splits between multiple parties, and maintaining audit trails for compliance. They act as programmable sub-ledgers that enable complex payment operations without external banking complexity.
How do virtual IBANs improve payment reconciliation?
Virtual IBANs assign a unique bank account number to each payer or payment context. When funds arrive, the platform knows instantly which customer paid and for which invoice—eliminating manual reconciliation.
What is the typical payment revenue for a European SaaS platform?
Payment revenue depends on transaction volume and effective take rate. A property management platform processing €50M annually at 1.5% generates €750K in payment revenue with 60-70% gross margins. Marketplace platforms often achieve 0.5-1% on GMV. B2B SaaS platforms processing larger transactions typically capture 0.3-0.8% due to payment mix (bank transfers have lower fees than cards).
Do I need a payment license to offer embedded payments?
No. When you work with a licensed payment infrastructure provider (like Embed) you operate under their regulatory umbrella. Your platform does not need independent licensing.
What is the cost structure for embedded payments in Europe?
Pricing typically includes: (1) Payment processing fees (percentage + fixed per transaction, varying by payment method), (2) Platform fees (monthly volume), (3) Optional services (currency conversion, faster payouts, premium support). European bank transfers (SEPA) typically cost €0.10-0.25 per transaction. Card payments range from 1.2-2.5% depending on card type and volume. Balance Account operations (internal transfers, escrow) are typically included.
Can embedded payments work with existing merchant relationships?
Yes, but this depends on your model. If merchants already have their own payment processing, you can layer Balance Account infrastructure on top for fund management, splits, and payouts while they continue using existing acquiring relationships. Alternatively, you can offer embedded payments as a complete replacement, giving merchants a unified experience through your platform.
How do I handle disputes and chargebacks with embedded payments?
Embedded payments platforms typically provide dispute management infrastructure: automated reserve holds when disputes occur, balance account architecture to segregate disputed funds, programmatic release rules when disputes resolve, and reporting and documentation for compliance. Your platform manages customer communication; the payments provider handles banking and card network protocols.
European vertical SaaS platforms are burning 40+ hours weekly on manual bank transfer reconciliation while leaving millions in payment revenue on the table. While American platforms like Shopify and Toast have long monetised payments as a core revenue stream, European vertical SaaS companies are now discovering that embedded payments aren't just a feature, they're a competitive necessity.
Understanding Embedded Payments: Beyond Basic Payment Processing
Embedded payments represent the integration of payment infrastructure directly into your software platform, allowing your customers to accept payments without leaving your application or redirecting to third-party processors. Unlike traditional payment gateway integrations, embedded payments give platforms complete control over the transaction experience, data, and economics.
For European SaaS platforms, this means more than just processing cards. The European payment landscape demands:
Domestic IBAN infrastructure for bank transfer reconciliation
Multi-currency support
Balance account architecture for complex fund flows
Automated settlement between multiple parties
The difference between basic payment processing and true embedded payments infrastructure is analogous to the difference between renting office space and owning the building. One gives you access; the other gives you control, customisation, and the ability to capture value.
While Stripe and Adyen focus on merchant acquiring, Embed provides Balance Accounts (programmable sub-ledgers) and virtual IBANs so platforms can automate reconciliation, program complex splits, and monetise payments without becoming a bank
The European Embedded Payments Market: Why Now?
Three convergent forces are driving the embedded payments race in Europe:
1. Revenue Diversification Pressure
SaaS multiples have compressed dramatically. Platforms trading at 8-10x ARR in 2021 now struggle to command 4-5x. Payment revenue, with its recurring, high-margin characteristics, has become essential for maintaining growth rates and defending valuations. A property management platform processing €50M annually at 1.5% effective take rate generates €750K in payment revenue with 60-70% gross margins.
2. Bank Transfer Dominance in Europe
While cards dominate in the US (representing 70%+ of B2B payment volume), European markets remain heavily bank-transfer-centric. SEPA credit transfers, standing orders, and direct debits represent over 50% of recurring B2B payment volume across core European markets. Any embedded payments strategy that ignores bank transfer infrastructure is fundamentally incomplete for European SaaS.
3. Operational Complexity Without Platform Control
European vertical SaaS platforms managing payments outside their core product experience operational chaos:
Manual reconciliation of bank transfers across dozens of merchant IBANs
No programmatic control over fund holds, splits, or settlement timing
The Balance Account Paradigm: Europe's Answer to Treasury Infrastructure
American platforms leverage Stripe Treasury and similar products for embedded financial services. European platforms require a different architectural approach centered on Balance Accounts—programmable sub-ledgers that enable complex payment operations.
What Balance Accounts Enable
Embed's Balance Accounts are unlimited programmable sub-ledgers—one per merchant, site, project, or fund. Unlike Stripe Connect's merchant accounts or traditional PSP infrastructure, Embed's architecture enables:
Programmable: Internal transfers execute based on rules (revenue shares, fee sweeps, reserve holds)
Instant: Funds move between accounts in milliseconds without external banking rails
Auditable: Every transaction carries metadata for reconciliation and compliance
Virtual IBANs: The Reconciliation Solution European SaaS Needs
Virtual IBANs (vIBANs) solve the most persistent operational pain point in European B2B payments: bank transfer reconciliation.
How Virtual IBANs Work
Each payer receives a unique IBAN for their payments. When funds arrive, the platform knows instantly:
Which customer paid
Which invoice/contract it relates to
Where to route the funds internally
Beneficiary name format: "Your Platform Name via Embed.co"
This naming convention serves two critical functions:
Passes Verification of Payee (VOP)
Maintains platform brand visibility while ensuring regulatory compliance
Deutsche Bank-Issued Infrastructure Advantage
European SMBs evaluate payment methods through a trust lens. Virtual IBANs issued by Deutsche Bank carry significantly higher trust signals than fintech-issued alternatives, reducing payment friction and failed transfers due to corporate banking policies that whitelist Tier 1 bank infrastructure.
Implementation Considerations: What European SaaS Platforms Should Evaluate
Technical Architecture Questions
Do you need to hold funds on behalf of customers? (escrow, reserves, float)
How many parties receive funds per transaction? (splits, revenue shares)
What percentage of payment volume is bank transfers vs cards?
Do you operate across multiple European markets? (currency requirements)
What reconciliation complexity do you currently manage?
Business Model Considerations
Payment revenue potential: Calculate your addressable payment volume × realistic take rate (0.5-2% depending on vertical and payment mix)
Operational savings: Quantify current costs of manual reconciliation, customer support for payment issues, banking relationship management
Strategic control: Value of owning customer payment data, transaction timing, and settlement logic
FAQ: Embedded Payments for European SaaS
What is the difference between embedded payments and payment gateway integration?
Payment gateway integration allows you to accept payments through your platform but the infrastructure, data, and economics remain with the payment provider. Embedded payments give you a white-labeled payment experience, direct access to transaction data, control over fund flows, and the ability to monetise payments as a revenue stream. For European platforms, embedded payments also include Balance Account infrastructure for complex fund management that basic gateways cannot support.
Why are Balance Accounts important for European SaaS platforms?
Balance Accounts solve operational challenges unique to European B2B payments: reconciling bank transfers across multiple entities, managing escrow and reserves with interest accrual, automating revenue splits between multiple parties, and maintaining audit trails for compliance. They act as programmable sub-ledgers that enable complex payment operations without external banking complexity.
How do virtual IBANs improve payment reconciliation?
Virtual IBANs assign a unique bank account number to each payer or payment context. When funds arrive, the platform knows instantly which customer paid and for which invoice—eliminating manual reconciliation.
What is the typical payment revenue for a European SaaS platform?
Payment revenue depends on transaction volume and effective take rate. A property management platform processing €50M annually at 1.5% generates €750K in payment revenue with 60-70% gross margins. Marketplace platforms often achieve 0.5-1% on GMV. B2B SaaS platforms processing larger transactions typically capture 0.3-0.8% due to payment mix (bank transfers have lower fees than cards).
Do I need a payment license to offer embedded payments?
No. When you work with a licensed payment infrastructure provider (like Embed) you operate under their regulatory umbrella. Your platform does not need independent licensing.
What is the cost structure for embedded payments in Europe?
Pricing typically includes: (1) Payment processing fees (percentage + fixed per transaction, varying by payment method), (2) Platform fees (monthly volume), (3) Optional services (currency conversion, faster payouts, premium support). European bank transfers (SEPA) typically cost €0.10-0.25 per transaction. Card payments range from 1.2-2.5% depending on card type and volume. Balance Account operations (internal transfers, escrow) are typically included.
Can embedded payments work with existing merchant relationships?
Yes, but this depends on your model. If merchants already have their own payment processing, you can layer Balance Account infrastructure on top for fund management, splits, and payouts while they continue using existing acquiring relationships. Alternatively, you can offer embedded payments as a complete replacement, giving merchants a unified experience through your platform.
How do I handle disputes and chargebacks with embedded payments?
Embedded payments platforms typically provide dispute management infrastructure: automated reserve holds when disputes occur, balance account architecture to segregate disputed funds, programmatic release rules when disputes resolve, and reporting and documentation for compliance. Your platform manages customer communication; the payments provider handles banking and card network protocols.