Are you in the market for software to help manage your business operations? HANG ON!!
Have you seen a demo with a slick new user interface or a mobile app that you think is cool and might be something useful for your business? HOLD YOUR HORSES!!
Have you run an AI search, compared reviews, and identified the latest and greatest software that your competitors are pushing frantically to sign up for? TIME OUT!!
And do your top options for operational software promise a seamless, integrated, payment experience? TAKE A PAUSE!!
Do yourself a favor. Ask your potential software provider point blank if you will have the flexibility to choose a payments partner. If the answer is “no,” stop and consider what you're signing up for.
A decade of the same marketing message
For over a decade in payments, the constant refrain across the industry has been the value attached to “embedded payments.” Gigantic and exploding fintechs (you know the names) have shouted from every conference stage and inside every marketing campaign that burying payment processing into business management software would bring frictionless and effortless experiences. No technical lift required. Everything will be “off-the-shelf.”
And predictably, the steady beat of that marketing message sank in and convinced CIOs and developers across every sector of the software industry that embedding payments was priority number one. The numbers back up just how effective the marketing narrative has been. Embedded finance is on pace to carry more than $7 trillion in U.S. transactions by the end of 2026, up from $2.6 trillion in 2021 and representing nearly a quarter of all U.S. digital transactions. McKinsey's research shows roughly half of small businesses now use an integrated software vendor as their payment processor.
But what is rarely said aloud in industry forums is the reality that just because a company can design software, doesn't mean they know anything about payments or receivables or cash management.
The closed loop nobody mentioned in the demo
What organizations across every industry are learning is that unbeknownst to them, while they thought they were solving an operational need with a new software, they were simultaneously locking themselves into a closed-loop ecosystem on the financial side of their business.
Next thing you know, a massive number of industry segments have been captured; trapped and left with no choice but to eat the high cost of flat-rate pricing from a third party they weren't even aware of when they contracted for their shiny new software. Merchants everywhere are confined into doing business with an API farm, not a payments partner. Instead of a consultative provider that will help them understand options and think about how to be more efficient, manage costs and fight fraud, they're stuck with a faceless tech company they couldn't have a conversation with if they tried.
And it's not isolated to specific industries either. Healthcare and Retail and Country Clubs and Field Services and Daycare and Government and Education and Restaurants and Theme Parks/Zoos and Insurance and Property Management on and on. Revenue share agreements between front-end software companies and giant fintech API providers have handcuffed huge swaths of the economy.
Undoubtedly, those that have the most to gain will argue that embedding payments a layer or two down in the contract doesn't really matter and if anything, the outcome makes everything easier. But to no surprise for those of us in the payments industry who have seen trend after trend pitched in similar ways, the outcome isn't less friction. It's just less transparency.
Even the software companies want out
If you want assurance about the wisdom of thinking twice before deciding to contract with a closed-loop ecosystem, look no further than a recent industry study which found that 98% of software companies say they'd switch payment providers if they could. But the hassle is too great once payments are woven in.
Changing the payments piece means rewriting integrations, re-certifying compliance, and unwinding contracts the API provider has drawn up to ensure exclusivity. If software companies themselves are stuck in that trap, imagine how much less leverage the merchant sitting on the other end of the contract has.
If you really think about it, the acquiring business has always been unusual, because so much of the underlying cost of doing business is non-negotiable. Merchants have never had the ability to negotiate interchange or card network fees. And now there is a whole other layer where merchants are left with “no choice.” If they make a decision to install a software package because they believe it will help them operate better or do a more efficient job of bookkeeping or whatever the value proposition is, at some point down the line, they'll realize, once again, they can't negotiate anything. Either rip it out and start over or live with having no say in the matter.
And it's showing up in the numbers. J.D. Power's most recent U.S. Merchant Services Satisfaction Study points to rising tension between business owners feeling pressure to offer more payment options and their need to manage the cost of accepting them. Merchant satisfaction with payment processing declined overall, with small businesses, in particular, seeing the steepest declines, as a result of fees and technology glitches. None of that sounds like the frictionless experience that's been pitched in every embedded payments demo.
Before you sign
So heads-up to all of you business decision makers out there — before you sign up with a software vendor who is touting a turnkey solution, inclusive of electronic payments, STOP! Think twice. Think a third time. And seek a software provider who specializes in the business of designing and building software. And one that gives you the choice of who you partner with to manage the all-important payments and cash management components.
And make no mistake, not all software companies are desperately attempting to monetize payment processing. Do yourself a favor and find the ones that allow you flexibility and choice.
Sources: EY, “Embedded payments shift from utility to growth engine”; McKinsey & Company, “As ISVs disrupt payments, can merchant acquirers stay relevant?” and “Decoding ISV maturity: A global playbook for payments growth”; J.D. Power, 2026 U.S. Merchant Services Satisfaction Study; Electronic Payments International, “The payments lock-in problem.”