Merchants are consolidating their payment infrastructure faster than most in the industry expected. According to McKinsey's January 2026 research on independent software vendor (ISV) maturity, European ISV revenues are expected to reach about $3 billion in 2025, accounting for 30% of all available small and medium-sized enterprise (SME) acquiring payments revenue, with the integrated software channel growing three times faster than traditional acquiring channels. UK hospitality and retail businesses are already leading this shift.The hidden cost of fragmentationThe key driver for this is cost. More specifically, the hidden cost of keeping things fragmented. A platform using four separate payment vendors is juggling four contracts, four sets of compliance requirements, and four different support teams. When something goes wrong, each vendor blames the others. Finance teams waste time reconciling transactions across systems that don't talk to each other. Developers spend their time maintaining integrations instead of building new features. None of this shows up as a single line on a budget, which is why it often goes unaddressed for too long.Part of the reason it persists is that it rarely arrives all at once. A business starts with one payment provider, adds a fraud tool after a bad month, negotiates better foreign exchange rates with another supplier, then needs a local provider for a new market. Each decision makes sense at the time. Together, they create a system nobody planned, nobody truly owns, and that gets more expensive to run every time a new market or payment method is added.What this looks like in practiceThe compliance burden is where this becomes most tangible. Take a UK hospitality platform expanding into Germany. It now needs to support Wero alongside existing card acceptance. On a fragmented stack, that means another vendor relationship, another integration to build, another compliance obligation to track independently. On a properly integrated model, it's a configuration the payment partner handles. The internal resource difference between those two scenarios isn't marginal, it compounds across every subsequent market or payment method the platform wants to support, and it comes directly out of the development capacity the platform would rather spend elsewhere.Why hospitality makes the problem visibleHospitality is a useful sector to examine here because the payment complexity is unusually visible. A hotel or restaurant group manages deposits, gratuities, currency conversion for international guests and consolidated settlement across venues. Generic payment infrastructure hits its limits quickly and practically in that environment. A guest whose card fails at checkout, or a finance team spending Monday morning reconciling weekend transactions across disconnected systems, are real world problems that show up in guest reviews and staff hours. McKinsey's finding that UK hospitality SMEs are among the early movers toward integrated software-led payments isn't surprising. The sector has an unusually clear view of what fragmentation costs day to day.The same logic applies across sectorsHospitality is a useful lens, but the underlying dynamic isn't unique to it. Businesses in wellness, B2B services, or any platform with international customers all have complex payment needs. Things like deposit-based payments, membership billing, settlements split across multiple parties, and currency conversion are everyday requirements. A payment provider that doesn't genuinely understand how those sectors work won't be able to support them properly. The platforms who have successfully managed to navigate these complexities have made one clear decision: find a specialist partner who owns compliance, security and regulatory complexity, and focus their own resources on user experience and sector expertise. Payments handled this way stop being a cost centre to manage and start functioning as part of the product. That's what the McKinsey data captures at a market level. Merchants aren't consolidating onto integrated models because they prefer cleaner invoices. They're doing it because, once the full cost of the alternative is visible, staying fragmented becomes unjustifiable.A shrinking stack, underpinned by embedded payment solutions, isn’t just about driving efficiency – rather, it allows for a more connected system that drives better customer experiences and supports sustainable growth for merchants.No#PaymentsStack #BusinessGrowthEva Paredes MontejoHead of SMB, UK and IrelandElavon 04 Jun, 2026