Private equity value creation has entered a more disciplined phase. With higher financing costs, longer holding periods, and tougher exits, sponsors can no longer rely on leverage or multiple expansion alone. Increasingly, returns come from repeatable operational levers, and one of the most underutilized is payments.
In a new whitepaper, TSG (The Strawhecker Group) and Adyen examine how embedded payments has become one of the most scalable levers in software and platform investments, and why the gap between modeled upside and realized returns almost always comes down to execution.
The short version: When payments is embedded into core software workflows and broadly adopted, it can expand revenue per customer 3–5x, but only sponsors who treat it as an operating capability actually capture that upside.
Why payments is moving from cost center to value-creation lever
A decade ago, payments in software platforms was a procurement conversation: negotiate interchange, cut processing fees, move on. That framing has fundamentally shifted. Payments embedded directly into the software workflow becomes a high-frequency, transaction-linked revenue stream that scales with customer usage.
The proof is now in the public numbers:
- Toast (2025): financial solutions revenue roughly 5.4x its software subscription revenue
- Shopify (2025): merchant solutions at 76% of total revenue
- Lightspeed (FY2025): transaction-based revenue outpacing subscription revenue
- Across ISVs, integrated payments drive 44% of total revenue on average
The proven three-phase payments monetization playbook
- Phase 1: Consolidation & workflow integration: Make embedded payments the default path, targeting ~90% adoption for new customers and 80%+ across the installed base over time.
- Phase 2: Value-added capabilities: Layer in instant payouts, better authorization rates, faster settlement, and unified reconciliation to improve merchant outcomes.
- Phase 3: Embedded financial services: Expand revenue per user through capital, accounts, and card issuing, but only after trust and adoption are established.
Where payments diligence quietly misses execution risk
Recognition isn’t execution. The most common failure modes TSG sees:
- Treating payments as a commodity cost rather than a strategic capability
- Modeling upside without validating workflow fit: if merchants can route around the platform, adoption never hits the modeled 80–90%
- No dedicated ownership: payments left as infrastructure instead of an owned, accountable mandate
The bottom line for value-creation teams
Payments has moved from an overlooked operational function to a core value-creation lever. The economics are validated and the playbook is proven. What separates outcomes is execution: designing payments deliberately, embedding it into workflows, and owning it with accountable leadership.
TSG and Adyen help you embed payments into core workflows, turning transaction flow into durable, portfolio-level value.
TSG (The Strawhecker Group) is a globally recognized analytics and consulting firm that supports the entire payments ecosystem, serving over 1,000 clients from Fortune 500 leaders to more than a dozen of the world's most valuable brands. Trusted by industry leaders, TSG's strategic services, market intelligence, and analytics merge to empower clients with actionable and accessible information. Please visit www.tsgpayments.com.
