Embedded Payments Emerge as a FinTech M&A Target

FinTech buyers looking for growth in a tough funding and software market are finding something valuable inside real estate closings, municipal bills, healthcare practices and commercial banking.

The payment is already attached to the work.

A series of summer transactions is putting money behind that model.

Fifth Third said Aug. 19 that it led a strategic investment in Payload, an embedded payments company whose reach includes residential real estate, legal services, property management, homebuilding and franchises. Payload said it processed nearly $500 million in May and has been embedding its technology into third-party software.

Priority Commerce followed Wednesday (Aug. 26) with an agreement to acquire IntelliPay, extending its enterprise payments business into state and local government and utilities.

CSI’s July acquisition of Qolo added another variation July 14. Qolo brought CSI a real-time account ledger, multi-rail payment orchestration, and card issuing and processing capabilities. CSI plans to integrate the technology into its core banking, digital banking and API products, giving community banks infrastructure they can use to become more deeply involved in their commercial customers’ operations.

Rather than chase undifferentiated processing volume, the capital is going toward payment providers with established positions inside particular industries and software environments.

Taken together, the deals suggest that established targeting of various verticals is becoming part of the M&A value proposition in payments, particularly when the technology is already integrated into customers’ operating software.

A payment provider embedded in property software, healthcare software or a bank’s commercial platform doesn’t have to win every transaction independently. The payment originates from software already being used to run the business.

The PYMNTS Intelligence report “FinTechs Tap Embedded Payments to Deepen Customer Relationships” helps explain why that position has value. The report, published in February, found that of the 30 FinTechs surveyed, 90% of them offered embedded payments, making payments the most common embedded finance capability.

The motivations extend beyond payment revenue. The report revealed that 60% of FinTechs said they were adding or improving embedded finance to gain better customer data and insights, 60% cited competitive differentiation, and 53% cited reaching new customers.

For an acquirer, buying a company already embedded in a vertical can deliver transaction flows, customer relationships and the data generated by those transactions. It can also provide a channel through which treasury, lending, payouts or other financial products could eventually be sold.

The opportunity also extends into B2B payments, according to the PYMNTS Intelligence report “The Cross-Border Opportunity: How Payments Innovation Can Help SMBs Go Global.” It found in May that among small- to medium-sized businesses (SMBs) in the United States sourcing internationally, use of accounting platforms with payment capabilities is projected to rise from 26% in 2025 to 29% in 2026. FinTech and payment-provider use is projected to rise from 30% to 36%.

The numbers point toward payments’ move deeper into the systems where invoices, accounting and other business processes already reside.

What Buyers Still Have to Buy

Compliance, risk, integration and operational capacity become part of the acquisition equation. PYMNTS Intelligence found that 80% of surveyed FinTechs viewed strong regulatory compliance as important to embedded finance success. The same report showed that 53% cited both risk management capabilities and core technology that supports integration.

Scale can create another problem. Among FinTechs offering four or more embedded finance capabilities, 54% reported difficulty with cross-functional collaboration and 46% said too many internal resources were being devoted to supporting those capabilities.

WEX made a similar point to PYMNTS in August. Processing additional transactions isn’t necessarily the hard part; managing the complexity surrounding them can be.

That gives the current M&A activity an observable trend. Banks can buy technology that puts them closer to commercial payment flows. Processors can buy their way into verticals where they lack scale. Software companies can monetize more of the economic activity already running through their platforms.

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