Benefits of a payment hub vs embedded payments in a digital banking platform

In an evolving world of digital payments, the lines between convenience, control and compliance are constantly being blurred. From ISO 20022 adoption to real-time payments and CBDC readiness, banks are under increasing pressure to modernize their payment infrastructure while delivering seamless customer experiences.

Embedded payments - where transactions are woven directly into digital platforms - offer frictionless convenience. But as payment ecosystems become more complex, centralized payment processing hubs are becoming indispensable for financial institutions (FIs) seeking long-term scalability, operational efficiency and regulatory resilience.

What are embedded payments?

Embedded payments are transactions that take place within a platform or software environment - without the need to redirect a user to a third-party payment portal. Think of a ride-hailing app where payment happens automatically at the end of the journey, or a CRM tool where invoice settlement happens within the same interface.

With the need for a robust user experience (UX) and design flexibility, embedded payment solutions have emerged from innovative software companies and fintechs, rather than directly from financial institutions like banks.

Part of the broader embedded finance trend, these solutions prioritize UX and streamline interactions. For banks, embedded payments present a powerful opportunity to stay present in the digital journey; however, there are some limitations:

• Narrow use cases: Usually built for specific verticals or platforms.
• Limited adaptability: It’s more difficult to scale across regions or payment types.
• Regulatory constraints: Embedded models may struggle to keep pace with evolving compliance demands.

What is a payment hub?

A payment hub is a centralized platform that consolidates, routes and processes payments across multiple types, channels and locations. Unlike embedded payments, which live at the edge of digital interactions, a payment hub operates at the core of a financial institution’s infrastructure.

Key integrated payment hub benefits include:

• Real-time orchestration across multiple payment types (ACH, RTP, SWIFT, etc.).
• Consolidated data views to improve reporting and decision-making.
• Built-in compliance, fraud detection, and risk management capabilities.
• Adaptability to evolving standards like ISO 20022 and new regulatory requirements.

There are some noteworthy differences between embedded payments and integrated payment hubs.

Embedded payments vs payment hubs: A strategic comparison

Embedded payments can help financial institutions stay relevant in platform-based economies, but a payments hub offers the depth, flexibility and performance needed to transform payments into a strategic advantage.

In fact, according to Omdia’s IT Enterprise Insights 2025 survey, 59% of banks will increase their spending on payment hub solutions in 2024, with total IT spending on these solutions expected to grow to over $3.4 billion by 2028.

Take an in-depth look at the evolving role of payment hubs in this State of Play article. Alternatively, give our Embracing Revenue-Generating Opportunities with a Modern Payment Hub report a read.

Embedded payments, payment gateways and facilitators: How they differ from a payments hub

It’s common to conflate payment-related solutions. Here's how they differ:

• Payment gateway: Manages transaction initiation and authentication.
• Payment facilitator: Enables third parties (e.g., merchants) to process payments under a shared license.
• Payment hub: Acts as a central engine, orchestrating and processing all payment types, integrating gateways and facilitators.

A modern payment hub unifies all these touchpoints, offering a centralized platform for payment management. This is especially important as financial institutions adapt to ever-changing market conditions.

Why payment hubs deliver more long-term value to banks

Still relying on custom builds or core provider plugins? Here's why a payment hub may be smarter in the long term:

• “We have an in-house solution.” → Is it cloud-native? Ready for ISO 20022?
• “Our core handles payments.” → Does it increase STP rates, reduce fraud or offer data insights?
• “We don’t have the necessary IT resources.” → Modern hubs are cloud-deployed and easy to configure at a lower cost with low/no code changes.
• “It’s too risky to switch.” → Pre-tested delivery models mitigate transition risks.
• “There’s no business case” → Think beyond cost and consider risk: monetize data, enable VAS while staying compliant.

Looking for the right payment hub provider? We believe prioritizing the following will help you to decide:

• Pre-integration with core banking platforms
• Cloud-first delivery for speed and scalability
• Standards and clearing scheme coverage (ISO 20022, instant payments, high value, ACH, and cross-border)
• Strong partner ecosystem (AML, ERP, compliance, fraud, and analytics)
• Proven payment workflows and business-rules configurability to reduce IT dependency

Explore how our modern payment solutions can support your transformation journey.

Final thoughts: Building a future-proof payments strategy

Embedded payments offer a compelling user journey, but in order to lead in digital banking, financial institutions need more than a great UX - they need resilience, scalability, security and insights. A modern payments hub delivers these capabilities. It acts as a strategic enabler - integrating new rails, maintaining compliance and unlocking data-driven value.

Want to learn more? Watch how banks are unleashing new opportunities with a modernized Payment Hubs solution.