The rapid evolution of embedded payments is reshaping industries and unlocking new opportunities, particularly for small business sectors that have often been overlooked.
Adam Gray, Chief Transformation Officer at Stax, recently sat down with Hal Levey of PYMNTS to discuss emerging trends in payment processing and vertical integration.
By enabling more tailored solutions, streamlining operations, and addressing vital concerns like fraud and security, embedded finance is becoming a crucial driver of innovation. This shift is not only improving industry efficiency but also opening the door to new possibilities
Underserved Sectors Lead the Charge
Embedded payments have become pivotal in addressing the needs of industries that require software tailored to their specific workflows. Gray noted, “There are some historically underserved markets that we’re seeing a lot of growth in,” citing specialized healthcare (such as chiropractic and veterinary practices), legal services, accounting firms, logistics companies, and nonprofits as key beneficiaries.
These industries demand payment solutions that go beyond traditional retail or e-commerce, focusing instead on unique processes like managing trust accounts for legal services or operating multiple accounts for real estate professionals. “We’ve kind of fit them into the box of how we do split payments,” Gray explained. “But really understanding how they need to meet this [requirement]… that’s where we’re seeing interesting growth and higher adoption.”
And that growth in verticalized software solutions, according to Gray, has been striking, “There was actually a study by McKenzie that [showed] TAM expansion for this space has been over 50% in just the last couple of years.”
The Need for Vendor Consolidation
A common theme across sectors is the need for vendor consolidation, driven by increasing pressure to lower overhead costs and maximize profitability. Gray emphasized that many businesses—whether they are lawyers, doctors, or field contractors—want to focus on their core expertise rather than juggling technology and financial tools. “They are very good at what they do,” Gray said, “but they don’t want to spend time on technology or payments. They want to spend their time on what they’ve built their career around.”
Nonprofits are a prime example, where razor-thin operating budgets demand efficiency at every level. Embedded payments, according to Gray, enable nonprofit organizations to not only streamline processes but also generate additional revenue streams to offset costs.
“Embedding payments directly, creating that revenue stream… really helps them deliver the service they set out to do, whatever nonprofit segment they’re in.”
What Makes the Optimal Embedded Payment Experience?
Gray painted a vision for an ideal consumer experience in embedded payments—one that is frictionless, seamless, and integrated entirely into the transaction process. “The more seamless and embedded approach is about bringing [payments] as close to the transaction and giving that experience where [consumers] don’t realize they’re moving platforms,” Gray explained.
Whether it’s collecting payments at a fundraiser or on-site for HVAC services, embedded payments allow businesses to meet consumers directly where they want to make transactions. “It should all feel like one unified experience,” Gray emphasized, “where I don’t realize I’ve left a platform or am using a different piece of software.”
Fraud and Security: An Industry Priority
As payment processing grows increasingly interconnected, fraud and security challenges rise in complexity. Gray cited statistics from McKinsey, noting, “We’re expecting $400 billion of fraud acts in the next 10 years… it’s our job to help protect the companies, the ISVs, [and] the consumers.”
One powerful solution lies in the use of tokenization—a technology that enhances payment security while enabling high authorization rates and faster transactions. Gray highlighted its importance, especially for subscription-based businesses: “6 in 10 businesses use tokenization today… that’s mainly driven from higher [authorization] rates…but there’s a lot of security protection there.”
Gray also underscored how AI and machine learning are creating efficiencies in fraud prevention by leveraging consolidated, high-quality data across payment lifecycles.
“AI and machine learning are unlocking some amazing efficiencies. It all starts with data quality and data availability.”
Vertical Integration: The Future of Payments
Gray described vertical integration as the industry’s next frontier, where payment processes—capture, authentication, settlement, clearing—are brought into a unified ecosystem. “Vertical integration…is bringing all those [processes] together,” he said. “If one player can help you provide those services in the same place, you’re not just setting [the] dials, you’re orchestrating how they all work together.”
This integration reduces inefficiencies, eliminates redundant controls, and provides businesses with better tools to innovate within their given sectors. As Gray optimistically noted, “The ability to verticalize, bring all these tools together… is gonna lead to new ways to innovate.”
The Road Ahead
Gray looked ahead to the future, predicting that embedded payments and ISVs will continue driving groundbreaking change.
“I think 2026 is going to be a big chapter of innovation for us and for the industry… [we are] connecting more dots, getting more technology together, and tailoring it for the specific needs of these verticals.”
AI, tokenization, and vertical integration are just the beginning of what’s possible in embedded finance. As Gray enthusiastically concluded, “It’s an exciting time in the industry… I think we’re all going to live in an exciting time.”
Embedded finance is more than a technological evolution—it’s a vital strategy for empowering ISVs, enhancing consumer experiences, and solving challenges in previously underserved sectors. As the industry advances, Stax is positioned at the forefront, paving the way for a smarter, more efficient future in payment processing.
Watch the full interview with Adam Gray and PYMNTS to learn more.
