Embedded Payments for Fintechs | ForteEmbedded Financing
Embedded Payments for Fintechs: Scale, Compliance, & Control
CSG Forte TeamAuthor
Key Takeaways
Embedded payments are becoming the default expectation for software-as-a-service (SaaS) and financial technology (fintech) platforms, but they also expand your responsibilities for risk and compliance.
Choosing between payment aggregator, Payment Facilitation-as-a-Service (PFaaS), and Registered Payment Facilitation models isn’t just about APIs; it’s about control, economics, and risk appetite.
High‑performing platforms design onboarding, payment and account flows that reduce friction for users while baking in fraud controls and regulatory requirements from the start.
If you are building a fintech platform, you’re under pressure from both sides.
Your customers expect to onboard, accept, and reconcile payments without ever leaving your product. At the same time, regulators, sponsor banks, and networks expect clear answers about who is moving money through your platform, how you monitor risk, and what happens when something looks wrong.
Handle this well, and embedded payments could become one of your biggest growth levers. Get it wrong, and you inherit operational headaches, compliance exposure, and unhappy customers.
This guide walks through how to implement embedded payments in a way that supports growth —while managing risk and compliance—using services like Registered Payment Facilitation and Payment Facilitation‑as‑a‑Service (PFaaS).
Why embedded payments are platform table stakes
Embedded payments weave payment capabilities directly into your platform so users can pay—or get paid—without being redirected to a third‑party checkout or portal. Instead of spinning up a separate merchant account and logging into a different gateway, your customers sign up, accept payments, and see their reporting without leaving your page.
Embedded payments are one part of “embedded finance,” where non‑financial companies offer services like payments, lending, or insurance in their own experiences without holding every underlying license themselves.
The appeal is clear :
Less friction for users : People complete financial tasks in the same digital journeys they already use, rather than jumping to bank sites or generic payment pages.
More revenue for platforms : By participating in payment economics instead of just referring merchants out, platforms can unlock new fee‑based revenue streams.
Stronger retention and stickiness : When payments, reporting, and settlement are deeply embedded, switching platforms means re‑platforming payments as well as software.
The trade‑off is that once your brand is attached to onboarding flows and payout screens, banks and regulators increasingly see your platform as part of the control environment, even when you don’t hold every license directly.
Which embedded payment type is right for you?
Before you design a single screen, you need clarity on your operating model. Most software‑led platforms end up in one of two buckets.
1. Aggregator / referral‑style models
In an aggregator model, you connect merchants to a processor or merchant‑of‑record provider, often via a referral or reseller agreement. The provider holds the merchant‑of‑record or payment‑facilitation role; you embed their onboarding and checkout experiences into your product.
Fastest path to market : You can add an “accept payments” option in your platform without building a full risk and compliance program.
Lower operational burden : The provider typically handles direct KYC/KYB, chargebacks, scheme rules and much of PCI scope.
Limited control over pricing and settlement policies
Less flexibility in underwriting rules and edge‑case handling
Most transaction margin accrues to the provider
For emerging financial technology (fintech) companies and independent software vendors (ISVs), this is often the best way to validate demand for embedded payments before taking on more responsibility.
2. Payment Facilitation and PFaaS
Platforms can approach this in two ways:
Managed PFaaS : You act like a payment facilitator in your customers’ eyes, but a specialist provider supplies the core infrastructure, bank sponsorship, and most scheme‑level compliance. You focus on UX, go‑to‑market and higher‑level risk decisions.
Registered Payment Facilitator : Taking this much control allows you to own your acquiring relationships, compliance program, and risk stack.
Why platforms pick these models:
Control over experience : You can brand payment flows, tune onboarding, configure pricing, and keep users inside your app.
Improved economics : Instead of small referral fees, you participate directly in transaction fees and can package value‑add services on top (e.g., recurring billing, account updater).
Risk and underwriting : Payment facilitators are expected to verify sub‑merchant identities and ownership, assess risk, and approve or decline applications before processing starts.
Ongoing monitoring : Networks and regulators expect monitoring for unusual activity, excessive chargebacks, or fraud patterns.
Broader compliance scope : Even with PFaaS, you share responsibility for things like sanctions screening, AML, PCI scope, and automated clearing house (ACH) risk management.
PFaaS is often the “sweet spot”: you improve your business model and customer experience while offloading much of the underlying regulatory and operational complexity to a partner.
Designing payment flows that help users succeed
Once you know your operating model and compliance boundaries, the real differentiation happens in your flows: onboarding, day‑to‑day payment UX, and account lifecycle.
Onboarding: faster, not reckless
Onboarding is where growth and risk often collide. Drag it out and merchants abandon; move too fast, and you open the door to fraud and regulatory findings.
Best‑practice patterns drawn from Registered Payment Facilitation and PFaaS programs include:
Progressive profiling : Start with a lightweight sign‑up (business name, email, basic use case), then request additional data as merchants commit to going live or hit certain volume/feature thresholds.
Tiered underwriting : Auto‑approve lower‑risk merchants; route higher‑risk verticals or large volumes to enhanced review.
Clear status and expectations : Show merchants where they are in the process (“in review,” “approved,” “more information needed”) and what’s left to do.
Done right, you reduce time‑to‑first‑payment while still collecting the data your Registered Payment Facilitation/PFaaS provider and sponsor banks need to be comfortable.
Everyday payment experiences: reduce friction, not insight
Payment experience decisions have an outsized impact on conversion and support tickets. Embedded payments let you keep users in your experience, but you still need to design for clarity and trust. Consider:
Native, branded forms using secure components : Keep users on your platform while leveraging provider‑hosted fields for sensitive data.
Context‑aware friction : Require step‑up verification or additional checks for high‑risk actions (e.g., unusually large payments, new device, unusual IP) but keep low‑risk, everyday payments straightforward.
Transparent errors and states : Distinguish between “card declined,” “account under review,” and “suspected fraud” so merchants know what to do and your support team can triage effectively.
These patterns support higher conversion and better self‑service without relaxing your risk posture.
Account flows as a fraud‑control surface
Account creation, login, password resets, and payout‑account changes are prime targets for account takeover and fraud in embedded environments. Nacha and banking guidance emphasize that financial institutions remain responsible for risks created by third‑party models and new technologies, even when fintechs are involved.
Practical safeguards include:
Stronger authentication for sensitive changes : Require multi‑factor authentication or out‑of‑band verification before users can edit payout bank accounts or issue large refunds.
Lifecycle monitoring : Track behavioral signals over time—device changes, frequent password resets, new IP geographies combined with payout updates—and route suspicious sessions through additional checks.
Coordinated controls with your provider : Align your risk rules (e.g., account flags, velocity checks) with your Payment Facilitator/PFaaS provider’s fraud tools so issues in your app map to controls on the payments side.
These measures help you reduce fraud and protect both your merchants and your own reputation.
Where an embedded payments partner fits in
An experienced payments partner can accelerate this roadmap by:
Providing PCI‑compliant infrastructure, tokenization, and risk tooling.
Handling much of the day‑to‑day underwriting, monitoring, and scheme compliance in PFaaS and Registered Payment Faccilitation models, while collaborating with you on risk policies.
Offering flexible partnership models (referral, reseller, PFaaS, Registered Payment Facilitation) that let you start where you are and grow into deeper ownership when you’re ready.
Supplying real‑time reporting and analytics so you and your merchants can see what’s happening without stitching together multiple dashboards.
The platforms that win in this next wave won’t be those that take the most risk or those that avoid it entirely, but those that treat embedded payments as a growth engine and a risk/control program—designed together from day one.
Want to see how leading platforms scale with embedded payments? Check out our customer success stories to learn what changes when payments are seamless, compliant, and built into your product. Ready to talk with an expert to learn how embedded payments could give your business an advantage? Contact us today .
FAQs
What’s the difference between embedded payments and integrated payments? Embedded payments build payment functions directly into your platform’s experience so users never leave your app to complete transactions. Integrated payments typically means you’ve connected to a gateway or processor, but users might still be redirected to third‑party pages or separate modules.
Do we have to become a Registered Payment Facilitator to offer embedded payments? No. Many platforms start with aggregator or referral models, or use PFaaS to embed payments without becoming fully Registered Payment Facilitators themselves. Moving to a Registered Payment Facilitation model makes sense when your transaction volume, economics and risk/compliance capabilities justify the investment.
Who is responsible for KYC/KYB and AML in an embedded model? In Registered Payment Facilitation and PFaaS setups, the payment facilitator and their sponsor bank usually hold primary obligations under BSA/AML and similar regulations, but platforms are expected to collect accurate data, cooperate with monitoring and align their onboarding flows so regulatory requirements can be met.
How do Nacha rules affect platforms that use ACH? If your embedded payments offering includes ACH, your role may fall under Nacha’s definitions of Third‑Party Service Provider or Third‑Party Sender, which brings specific registration, audit and agreement requirements. Recent rules also require corporate end users to have risk‑based processes to identify potential fraudulent ACH payments.
How can we speed up merchant onboarding without breaking compliance? Use automated KYC/KYB tools, progressive profiling and tiered underwriting. Align your data collection with your Payment Facilitator/PFaaS partner’s policies so that low‑risk merchants can be auto‑approved while higher‑risk ones receive enhanced review without unnecessary delays.
