Vertical ERPs Own Payment Allocation
Matt Brown, Co-Founder of Bonsai, on the rise of vertical ERPs
The real advantage in vertical ERP is owning the messy rules around where each dollar goes after the customer pays. In restaurants, taking a card payment is the easy part. The hard part is splitting checks, assigning tips by role, honoring each restaurant’s policy, syncing the result into payroll, and sometimes advancing those earnings fast. That is why restaurant software can monetize more deeply than a horizontal processor.
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Horizontal payment rails already support moving money between parties, but they stop short of the restaurant specific logic layer. Stripe Connect supports split payments and transfers, while Stripe Terminal supports collecting tips, yet the restaurant level workflow still has to be built above that infrastructure.
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Restaurant platforms have turned that logic into product. Square lets merchants create tip pools by transaction, day, or week, set eligibility by role, and sync pooled tips into payroll. Toast ties tip outs and pooled tips into payroll and pay cards, with approval flows before funds are available.
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This is the pattern behind vertical ERP more broadly. HoneyBook moved from proposals and invoices into checking, cards, and money management for service pros, and the broader vertical ERP framework is to start with workflow software, then absorb the cash flow that sits next to it.
The next winners will be software companies that pick industries where payments are frequent, multi step, and policy heavy, then turn those edge cases into default product behavior. As embedded finance infrastructure gets cheaper, more value will move from raw payment processing into vertical systems that control allocation, compliance, payroll, and faster access to earnings.