The Rise of Embedded Payments: Where Merchants Lose Leverage with Guest Jordan Thaeler
Wrestling Payments Podcast: Season 3 - Episode 25
Episode Summary
In this episode of Wrestling Payments, host Joe Casali sits down with Jordan Thaeler to explore how embedded payments lock merchants into costly, inflexible systems. Jordan explains why many software providers bundle payment services with their core products, leaving merchants with few choices and rising costs. He shares how this model drives up payment fees over time while reducing merchant leverage and support.
Jordan describes the risks of a market where software and payments are tied together. He uses examples like Toast and Shopify to show how merchants often pay much more than the market average, with little transparency or recourse. As more processing volume moves to embedded payments, Jordan argues that choice and competition are critical for a healthier payments ecosystem.
The conversation turns to dual pricing models and the global push for bank-to-bank payments. Jordan makes the case for more options and education, so merchants are no longer “hostages” to their software providers.
Guest-at-a-glance
💡 Name: Jordan Thaeler
💡 What he does: Co-Founder
💡 Company: POS+
💡 Noteworthy: Known for exposing hidden payment practices and building tools that give merchants more choice in payment processing.
💡 Where to find him: https://www.linkedin.com/in/jjthaeler/
💡 Guest Company Website: https://www.posplus.org/
Key Insights
Embedded Payments Can Trap Merchants in High-Cost Systems
When software providers bundle their own payment services into their platforms, merchants lose the ability to shop for better rates or support. Over time, these bundled arrangements drive up payment costs while locking businesses into a single provider, making it tough to switch even when fees rise or service drops. This lack of competition leads to higher margins for software companies, but often leaves merchants paying far above the market average. The friction of changing systems, along with limited transparency, means that many businesses end up stuck with unfavorable terms. The core insight is clear: without real choice and portability in payment workflows, merchants risk becoming hostages to their own software—paying more for less flexibility.
Choice and Transparency Lower Merchant Payment Costs
Giving merchants freedom to choose among payment providers can restore balance in the payments ecosystem. Integrating open payment workflows into popular software platforms allows businesses to negotiate better deals and demand improved service. When payment options are unbundled, outside experts and local providers can step in to educate merchants, offer support, and keep costs in check. This shift not only reduces the risk of inflated fees but also promotes honest pricing from software vendors, who must stand behind the true cost of their core products. In a landscape where margins are tight, especially for small businesses, having more transparency and options directly supports their bottom line.
Dual Pricing Models Make Payment Costs Clear
A dual pricing model, where merchants post different prices for cash and card payments, puts the true cost of payment choice in front of customers. This approach helps ensure that those who choose more expensive payment methods, like credit cards with reward programs, bear the extra cost themselves. Merchants no longer need to subsidize these perks for every customer, which creates a fairer system. As more countries and large retailers explore direct, bank-to-bank payment rails, dual pricing can help speed the transition away from high-fee card networks. For merchants, this model can protect slim profit margins and make payment economics more transparent for everyone in the value chain.
Episode Highlights
The Real Cost of Bundled Payments
Timestamp: ~ 00:06:18
Bundled payments have become common as software companies integrate payment processing into their platforms. While this offers convenience, it often leads to higher fees for merchants and fewer choices. As software providers run out of new customers, they boost margins by increasing payment rates, sometimes beyond the value delivered. This practice can turn payment processing into a hidden cost center for businesses, draining profits over time and leaving merchants with little leverage to negotiate or switch providers.
“You take that crank and you keep turning it and turning and turning it. So that merchant who was paying, I'll make a number up, a hundred dollars a month for software, was paying $50 a month in margin for payments, and it grows from $50 to $75 to $112 to $157. And this is how the software companies continue to make their margins.”
Unlocking Merchant Choice with Open Integrations
Timestamp: ~ 00:08:50
Open integration in payment processing removes the monopoly grip of software providers. By allowing any payment provider to connect with a business’s existing software, especially those previously locked out, merchants regain the freedom to choose services that fit their needs. This flexibility brings real competition back to the payment space, enabling lower costs and better service. Now, merchants can integrate payment workflows across both cloud and desktop software, breaking down barriers that once forced them into single-provider arrangements.
“We have ways to fully integrate payment workflows into all of these software, whether they run in the cloud or whether they're an older software that even runs on a desktop. All of this can now change, and it gives the merchant choice.”
Unpacking the Toast Payments Dilemma
Timestamp: ~ 00:09:52
The case of Toast, a leading restaurant software provider, shines a light on the pitfalls of forced payment bundling. Restaurants using Toast must process payments through the company, often paying far above the market rate. While this model drives profits for the provider, it traps merchants in costly, inflexible agreements. The discussion highlights how new solutions can split the payment load from the software, allowing restaurants to choose their payment partners without disrupting accounting or operations.
“If you use Toast, you have to use their payments, and the average Toast merchant, call it 1.2, 1.5 million a year of processing volume...Toast is making three times that amount on payments, and they're charging that merchant a thousand dollars a month, maybe more, for the software. So there's a lot of margin in that restaurant, and that restaurant is stuck.”
The Education Gap and Merchant Support
Timestamp: ~ 00:13:30
Many small merchants lack the time, resources, or knowledge to understand the payment options available to them. As a result, they often accept the default provider tied to their software without question. By unbundling payment processing, more third-party experts can re-enter the market to educate business owners, offer better support, and help them save on processing costs. Local experts and independent agents become valuable guides, ensuring merchants make informed choices rather than settling for what’s easy or familiar.
“As the SMB, I believe that the channel for education is going to come from the local expert. It will come from third parties that are not Toast, that recognize the opportunity to serve your son and say, there's still plenty of money for me to serve your son. I don't have to charge 60 basis points. I can go back to the historical average of 20. And your son's like, oh my gosh, 40 basis points to EBITDA. That's a lot of money.”
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