Is your payment stack holding you back from scaling your platform?

From global vacation rentals to hyper-specialized services like dog grooming, fitness coaching, or kite surfing schools; platforms are no longer just digital marketplaces. Platforms transform industries because they are the operating system for their users: managing storefronts, streamlining operations, and running the financial engine behind the scenes.

Payment service providers were initially designed for a much simpler use case. In this blog we will show how their foundations cause problems that seem minor at first but quickly become a threat to your business. It is part one of a series on Embedded Payments in which we will show you how to leverage payments to scale your platform.

Embedded Payments

Many SaaS platforms now offer a business-in-a-box: listings, bookings, marketing, payroll, business intelligence. A recent study by vcita found that 90% of platform users prefer all these tools under one roof. A broad offering is what makes platforms retain users and grow customer lifetime value.

Payments are a natural extension of this. Embedding them increases stickiness and creates an additional revenue stream. Platforms relieve their users of the burden of finding and integrating with payment providers, often a painful process marked by operational hassle, rejections and red tape. At the same time they are in control of how they monetize their payments.

The Promise

In the last 15 years, embedded payments have come a long way, from clunky custom checkouts to sleek APIs and plug-and-play UI kits. But while buyers are well-served, sellers, the true end users of many platforms, are left behind.

Embedded Payments promised platforms monetization tools that extend much beyond the checkout. With tools to onboard sellers, splitting payments across accounts, charging fees, and sending payouts. All of this packaged as a service of the platform. 

The Pains: Unveiling the Hidden Limitations

Most existing payment solutions are older than the first iPhone. As platforms rose, they added embedded functionality. They were not initially designed for multi-party payments, nor to distribute funds to multiple entities, nor intended to power entire ecosystems. This seems fine at first. Until daily operations become painful. Until monetization turns into money leakage.

I worked with many platforms running into the same problems. Whether it be the $1B SaaS platform serving SMBs in the beauty space, or the fast-growing hospitality platform. Let’s pull back the curtain to see the most common issues, and how the history of these systems causes them.

• Business as usual requires opaque balance transfers. PSPs designed fund routing for 1-to-1 transactions. This means inflexible account structures and splits, and that you can’t adapt flows post-transaction. PSPs typically solve this by introducing balance transfers to move the funds to the appropriate accounts. However, this places the burden of tracking the state on the platform. This is a big technical challenge.
  
  

• There is no dedicated API for basic platform operations. When creating a payment, it should be easy to indicate when the funds should be released to a seller, or to specify which account to fund a refund from. But payment operations were not designed with platform users in mind. They are too tightly coupled to traditional payment operations, and do not take multiple parties into account. This prevents your platform from scaling.
  
  

• Fees require hacks. Charging fees is instrumental in monetizing your platform, yet it requires workarounds. Before embedded payments, only the PSP charged a fee, the system is not built for you to also charge a fee. This means fee structures don’t align with platform requirements.
  
  

• You and your sellers can’t close the books. This is where all the pains come together. There are several systems running in the backend and you have tons of lines that do not link to a transaction. Data is scattered, reports don’t match. It becomes impossible to accurately close the books, with significant money leakage as a result. 

All of these problems compound. I personally experienced this. When helping platforms streamline their payments, it became clear that payment operations and reconciliation have become a jigsaw puzzle, of which the last pieces were always missing. After combining different types of reports, manually linking transactions, and adding fee data from the monthly invoice to reconcile on behalf of the platform, I often finally had to give up. It became clear to me: the issues weren’t surface-level bugs or configuration errors. They were structural.

That’s why we built Rootline, payments built for platforms.

Up Next: Solutions in Detail

In the next blog posts, we dive deeper into the topics mentioned, and also show how we try to solve them:

• Flexible fund allocation: Support any business model with nested splits and dynamic accounts.

• Rethinking payment operations: Real control for platforms at scale.

• Fixing reconciliation: Why it breaks, and how to eliminate the pain.

• Understanding fees: Make fees flexible, fair, transparent and built-in, not bolted on.

Stay tuned. Or if you're already fed up with duct-taped payments, reach out to see how we can help.