PSE’s 2026 UK small business embedded finance research, drawn from interviews with around 400 firms in early 2026, shows offers of embedded payments from software platforms doubling, from 22% in 2024 to 46% in 2026, with overall penetration growing from 11% to 23%. SaaS platforms in Europe are getting better at understanding their customers’ payment needs and selling to them. Small merchants increasingly understand the benefits of a SaaS-led payments service, and 78% said they would accept an embedded payments offer in the future. For UK acquirers that focus on servicing the SMB sector, this represents an existential crisis: adapt to this new customer need by partnering with SaaS platforms or offering compelling bundles themselves.

The signal hiding in the data

The instinctive reading of embedded payments penetration doubling in two years is a surge in merchant demand. The research says otherwise. Among small businesses offered embedded payments by a software platform, the proportion accepting barely moved, sitting at 51% in 2024 and 50% in 2026. What has changed is offer visibility. 46% of UK small businesses in 2026 said they had received an embedded finance offer from one of their software platforms, against 22% two years before. Doubled distribution, applied to a steady acceptance rate, produces doubled penetration.

Future appetite tells the same story. Asked whether they would take an embedded payments offer in future, 61% of small businesses said yes in 2024, rising to 78% in 2026. The willingness was present long before the offers arrived. The constraint was never whether small businesses wanted payments inside their software. The constraint was whether anyone competent was asking, and how well. The same research shows why the pitch lands: small businesses increasingly choose a payments provider on quality and software integration rather than on price alone, which plays to exactly what a platform can offer.

The United States shows where this leads

The United States is the leading indicator for this shift, and PSE’s own 2024 research already captured it. In that study, a third of US small businesses had taken embedded payments from a software platform, and 82% said they would take such an offer in future. Two years ago the US had reached a level of adoption and intent the rest of the surveyed markets, the UK included, were nowhere near.

The UK has now travelled most of that distance. UK penetration stood at 23% in 2026, against the US figure of 33% in 2024, and UK future intent reached 78%, against the US 82%. On intent, the gap has all but closed. The UK in 2026 looks strikingly like the US did in 2024, which is precisely why the US experience is the most reliable guide to what comes next here. The enabling mechanics are already in place: turnkey payment facilitator infrastructure that lets a platform onboard a merchant in hours, set its own pricing and own the checkout, without building a payments business from the ground up. Vertical software providers such as Toast in hospitality, alongside broader players such as Square and SumUp, have shown how fully a platform can absorb the merchant payments relationship once that tooling exists.

The routes back to relevance

The position is far from hopeless, and the same US market that illustrates the threat also illustrates the response. Acquirers can supply the rails the platforms run on. The turnkey payment facilitator infrastructure behind embedded payments has to come from somewhere, and whoever provides it earns on every transaction the platform processes. An acquirer that becomes the embedded engine behind many platforms grows with the channel rather than being displaced by it.

The alternative is to seamlessly bundle payments together with software. We have seen players like SumUp and Square deliver these propositions with significant levels of success. While this is a more challenging approach as it requires the acquirer to deliver best-in-class software, as well as payments, it does allow the acquirer to capture the full transaction economics. The common thread across both responses is simple: stop selling SMB acquiring as a standalone product to a small business no longer buying it that way.

So what should UK acquirers do now?

The data has removed the comfortable interpretation. The doubling of penetration was not a demand event that might fade; it was a distribution event, driven by SaaS platforms that have learnt to understand and sell to small businesses, and distribution shifts rarely reverse. The US shows a market in which the software platform is the default route to the small business, and the UK is travelling there at speed. An acquirer treating this as a marketing problem, to be answered with a sharper direct sales pitch, has misread the board.

PSE’s view is that UK acquirers now face a binary choice, and the time to make it is short. The first option is to become a bundled software and acquiring provider in their own right, owning the platform the small business opens every morning, as Square and SumUp have done. The second is to become the embedded payments infrastructure behind the platforms, supplying the acquiring engine in the way Stripe, Mollie and Adyen serve software businesses today. Both routes are viable, and both keep the acquirer in the game. Standing still, selling acquiring as a standalone product into a channel that is closing, is not viable. The acquirers that choose, and choose soon, will still hold a small business franchise in five years.