Expanding Vertical SaaS Value Through Embedded Financial Capabilities

Embedded finance is experiencing unprecedented growth, with Google Trends data showing a dramatic upward trajectory since February 2022. This "up and to the right" growth pattern isn't just a temporary spike – it represents a fundamental shift in how financial services are being integrated into vertical SaaS platforms.

The scale of this opportunity is staggering. According to Adyen and Boston Consulting Group's comprehensive report, the total addressable market for embedded finance stands at $185 billion, with current market size at just $32 billion. This leaves an astounding $153 billion in untapped potential, suggesting we're still in the early stages of the embedded finance revolution.

Understanding Vertical SaaS and Embedded Finance

Vertical SaaS platforms are specialized software solutions designed for specific industries, offering targeted features and workflows. When combined with embedded finance, these platforms transform from operational tools into comprehensive business solutions.

The benefits for vertical SaaS platforms are compelling and multifaceted. First, platforms see significant increases in average revenue per user (ARPU) through additional revenue streams from financial services and higher-value subscription tiers. Customer retention also improves dramatically as users become more deeply integrated into the platform's ecosystem. Perhaps most importantly, product stickiness increases as customers can manage both their operational and financial needs through a single, streamlined interface.

Examples of Embedded Finance in Vertical SaaS

1. Toast Capital

Toast's embedded capital solution demonstrates the power of industry-specific financial services. Their platform offers loans from $5,000 to $300,000 with next-day funding and no personal guarantees required. What sets Toast Capital apart is their understanding of restaurant operations – repayment flexes with daily sales, ensuring restaurants can manage their cash flow effectively while accessing the capital they need for growth or operations.

The impact on restaurants has been transformative. Rather than waiting weeks or months for traditional bank approval, restaurant owners can access capital quickly through a simplified application process that considers industry-specific factors. This rapid access to working capital has become a crucial lifeline for many small and medium-sized restaurants, particularly during uncertain times.

Some Examples of Embedded Capital Providers: ‍

‍Pipe, OatFi, CapitalOS

2. Mangomint Payroll Processing

Launched in 2024, Mangomint's Payroll Processing addresses the unique challenges faced by salons and spas. Their system processes multiple compensation types while handling tax calculations and compliance automatically. The platform provides digital pay stubs and integrated reporting, all while supporting the complex contractor relationships common in the beauty industry.

For salon owners, this integration has eliminated hours of manual work per pay period. The system's ability to handle commission structures, tip distribution, and contractor relationships within a single platform has transformed what was once a complex administrative burden into a streamlined process.

Some examples of embedded payroll providers: 

Check, Gusto Embedded, Salsa, Zeal

3. ChiroSpring Payments

ChiroSpring Pay exemplifies how embedded payments can address unique industry needs in healthcare. Their HIPAA-compliant payment processing system allows practices to offer flexible payment plans and recurring payment setups while maintaining regulatory compliance. The platform seamlessly integrates invoicing and payment processing within the practice management workflow.

This integration has proven particularly valuable for chiropractic practices, where patient payment plans and recurring treatments are common. The ability to manage payments within their existing practice management system while maintaining compliance has simplified operations and improved cash flow for many practices.

Some examples of embedded payments providers: 

Stripe, Adyen, Finix, Rainforest, Payabli

The Next Frontier: Embedded Accounting

While embedded payments, lending, and payroll have gained traction, embedded accounting represents the next major opportunity in the vertical SaaS space. Currently, most platforms rely on third-party integrations through disconnected systems or leave users to manage accounting manually on spreadsheets. This fragmentation creates friction and reduces the value of otherwise comprehensive platforms.

While platforms traditionally chose between building in-house, buying an external provider, or integrating accounting features through a 3rd party partnership, modern embedded solutions offer a fourth path that combines the best aspects of each approach. The future of embedded accounting lies in native integration with real-time financial data, industry-specific features, and creating a truly unified experience. Vertical-specific implementations will include specialized tax handling, reconciliation, custom expense tracking, and regulatory compliance features tailored to each industry's needs.

Future Outlook

The convergence of vertical SaaS and embedded finance is creating unprecedented opportunities for both platforms and their customers. As the market matures, we're seeing increased specialization with more industry-specific financial products and deeper vertical integration. 

The embedded finance revolution in vertical SaaS is just beginning. With $153 billion in untapped market potential, we're likely to see continued innovation and expansion across all segments. Platforms that successfully integrate financial services will not only capture more value but also provide their customers with the comprehensive solutions they need to succeed.

For vertical SaaS providers, the question is no longer whether to embed financial services, but rather which services to embed first and how to implement them effectively. As the market matures and new providers emerge, the opportunities for creating value through embedded finance will only continue to grow.