Toast, the restaurant management software company, generates approximately 80% of its revenue from financial services. Not from its point-of-sale software. Not from its kitchen display systems. Not from its online ordering platform. From payment processing, lending, and payroll services embedded into the restaurant management platform that 112,000 restaurants use to run their operations. Toast charges restaurants a software subscription fee of roughly $70 per month. It earns vastly more from the 2.5% to 3.5% it charges on every credit card transaction those restaurants process through its platform. Toast is classified as a technology company, but its revenue model is that of a financial services company.
Toast’s transformation illustrates a broader shift. Embedded finance is changing how businesses generate revenue, retain customers, and compete. According to Grand View Research, the global embedded finance market was valued at $83.32 billion in 2023 and is projected to reach $588.49 billion by 2030 at a 32.8% CAGR. That seven-fold expansion reflects the number of non-financial companies discovering that financial services, delivered through their existing platform, can become their largest revenue stream.
The Old Model vs. The New Model
Traditional business models in technology separate software and financial services into distinct industries. A restaurant buys management software from one company, payment processing from another, lending from a bank, and payroll services from yet another provider. Each provider has a separate contract, separate integration, and separate customer relationship.
The Boston Consulting Group projects fintech revenues will reach $1.5 trillion by 2030, with embedded finance and digital lending accounting for the largest share of projected growth.
According to CB Insights’ 2024 fintech report, global fintech funding declined 40 percent between 2022 and 2024, pushing the sector toward consolidation and a sharper focus on profitability over growth at all costs.
The embedded finance model collapses these relationships. The platform that manages the business’s core operations also handles its financial services. The software and the financial products share the same data, the same interface, and the same customer relationship. This integration changes the economics for both the platform and the customer.
For the platform, the change is dramatic. A pure SaaS company selling restaurant management software at $70 per month generates $840 per restaurant per year. The same company processing $500,000 in annual card transactions at a 3% take rate generates $15,000 per restaurant per year from payments alone. Add lending revenue and payroll processing, and the embedded finance revenue dwarfs the software subscription. This is why Toast’s financial services revenue is four times its software revenue. The financial products have higher per-customer value than the software they are embedded in.
For the customer, the change is simplicity. Instead of managing four vendor relationships (software, payments, lending, payroll), the restaurant manages one. The data flows seamlessly between systems because they are the same system. When the restaurant applies for a loan, the platform already has the sales data needed to assess creditworthiness. No financial statements required. No multi-week bank application process. The loan offer appears inside the dashboard the restaurant owner already checks every morning.
Five Business Model Transformations
Embedded finance is creating five distinct business model shifts across the economy.
From software subscription to financial platform. Vertical SaaS companies (software built for a specific industry) are evolving into financial platforms. Toast did this in restaurants. ServiceTitan did it in home services. Procore is doing it in construction. Mindbody is doing it in fitness. Each started by selling industry-specific software and then embedded payment processing, lending, insurance, and payroll. The software becomes the distribution channel. Financial services become the primary revenue engine. Grand View Research’s data shows that embedded payments held 28.14% of the market in 2023, the largest segment, because payments are typically the first financial product a platform embeds.
From marketplace to financial intermediary. Marketplaces that connect buyers and sellers are embedding financial services for both sides. Shopify offers merchants payment processing, business banking, and capital. Amazon provides marketplace sellers with lending and payment processing. Uber offers drivers instant pay, debit cards, and vehicle financing. Airbnb provides hosts with instant payouts and insurance. In each case, the marketplace’s position between buyer and seller gives it the data and the customer relationship to offer financial products that banks cannot match in relevance or convenience.
From employer to financial services provider. Companies are embedding financial services into their employee experience. Gusto, originally a payroll company, now offers employee health insurance, retirement savings, and financial wellness tools. Earned wage access platforms like DailyPay and Payactiv allow employees to access earned wages before payday, a financial product embedded directly into the employer-employee relationship. The employer platform has data that no external financial provider has: salary information, employment duration, and payroll timing. That data enables financial products tailored to the employee’s specific situation.
From logistics platform to supply chain finance provider. Companies that manage physical supply chains are embedding financial services into the flow of goods. Flexport, the digital freight forwarder, offers trade finance products to importers and exporters. Convoy provided factoring services to trucking companies. Amazon’s supply chain lending finances inventory purchases for sellers. The logistics platform knows when goods ship, when they arrive, and when payment is due. That visibility into the physical supply chain enables financial products (trade finance, factoring, inventory lending) that are tightly integrated with the movement of goods.
From health platform to healthcare finance provider. Healthcare technology companies are embedding financial services into patient care. CareCredit has offered medical financing for years, but the model is expanding. Platforms like Cedar handle patient billing and embed payment plan options directly into the billing flow. Walnut and PayZen offer medical debt financing through healthcare provider platforms. The healthcare platform knows the patient’s insurance coverage, out-of-pocket responsibility, and billing history, data that enables financing offers tailored to each patient’s financial situation.
The Infrastructure That Makes It Possible
Embedded finance at scale requires infrastructure that handles the technical, regulatory, and financial complexity that non-financial companies cannot manage themselves.
Stripe provides the most comprehensive embedded finance infrastructure. Stripe Connect handles multi-party payments for marketplaces. Stripe Capital provides lending infrastructure. Stripe Treasury provides deposit accounts and card issuing. Stripe Identity handles KYC verification. A platform using the full Stripe suite can offer its customers payment processing, banking, lending, and identity verification through a single integration.
Marqeta provides card issuing infrastructure used by companies embedding card products. DoorDash’s Dasher debit card, Block’s Cash Card, and Affirm’s debit card all run on Marqeta’s platform. Marqeta processed $204 billion in total volume in 2023.
Unit and Treasury Prime provide banking-as-a-service platforms that allow companies to offer deposit accounts and debit cards branded as their own product. The banking licence, regulatory compliance, and settlement infrastructure are handled by the BaaS provider and its partner banks.
These infrastructure providers are important because they solve the regulatory problem. Financial services are among the most heavily regulated activities in any economy. A software company that wants to offer lending must navigate state licensing requirements, consumer protection regulations, fair lending laws, and ongoing compliance obligations. Embedded finance infrastructure providers handle these requirements, allowing the platform to focus on the customer experience while the infrastructure provider manages regulatory compliance.
The Revenue Impact
The financial impact of embedded finance on business models is measurable across public companies.
Shopify generated $2.36 billion in merchant solutions revenue (primarily payments and financial services) in Q3 2024, compared to $594 million in subscription revenue. Financial services revenue was four times software revenue. Block (formerly Square) generated $5.9 billion in gross profit in 2023, with the majority coming from payment processing and Cash App financial services rather than its hardware products.
The pattern holds for private companies as well. Toast’s S-1 filing revealed that payment processing accounted for the majority of its revenue. Mindbody generates significant revenue from payment processing embedded in its fitness studio management software. ServiceTitan earns revenue from payment processing, financing, and insurance products sold to home services contractors through its platform.
For investors, the embedded finance model changes how platform companies are valued. A company generating $100 million in SaaS revenue is valued differently than a company generating $100 million in SaaS revenue plus $400 million in financial services revenue. The financial services revenue has different margins, different growth dynamics, and different competitive moats. It also tends to be stickier because customers who use a platform’s financial products face higher switching costs than those who only use the software.
What This Means for Banks
Embedded finance represents a structural challenge for traditional banks. When a restaurant gets its loan from Toast instead of a bank, the bank loses a lending customer. When a gig worker uses the Uber debit card instead of a bank account, the bank loses a deposit customer. When a small business uses Shopify Balance instead of a business bank account, the bank loses a commercial customer.
The embedded finance model does not replace banks entirely. Most embedded finance products still rely on bank partners for the underlying banking licence, settlement infrastructure, and deposit insurance. But the customer-facing relationship shifts to the platform. The bank becomes invisible infrastructure rather than a customer-facing brand.
Some banks are responding by becoming embedded finance providers themselves. Goldman Sachs’ partnership with Apple (Apple Card, Apple Savings) put Goldman Sachs behind an Apple-branded financial product. Cross River Bank provides the banking infrastructure behind many embedded lending products. These banks have accepted that the customer relationship belongs to the platform and have positioned themselves as the infrastructure that powers embedded financial products rather than competing for the end customer.
The $588.49 billion embedded finance market projected for 2030 represents revenue that will flow to platform companies rather than to banks directly serving those customers. For platform companies, embedded finance is the most significant business model opportunity since SaaS. For banks, it is a redistribution of the customer relationship that will reshape competitive dynamics for the next decade.
