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Integrated Payments and Embedded Payments: a Trillion-dollar Opportunity

Ten years ago, it was novel to have a SaaS, CRM or EHR platform that offered core business and operational functions while also allowing customers to pay for services within the platform itself. 

Shoot to 2023 when payments integrated or embedded within software systems are not only the new normal but are expected by consumers – regardless of industry. You prepay for an appointment with your doctor through their EHR system, you order an Uber or Lyft and pay within their mobile application, you visit your salon and tap to pay through their CRM. 

According to Bain & Company, Independent Software Vendors (ISVs) have the potential to address $35 trillion in payments, or 15% of the worldwide total, by integrating payments into their platforms. Not only do integrated payments meet consumer demand but they also offer ISVs and SaaS platforms a lucrative revenue stream while creating stickiness with clients.

But navigating the world of payments can be a challenge for software companies. Let’s look at exactly what integrated payments are, the benefits of integrated payment systems and considerations when choosing an integrated payments partner.

What are integrated payments?

Integrated payments - also called embedded payments - is payment acceptance built directly into the software systems that businesses use to conduct commerce. Virtually every company now uses one or more software platforms as part of their day-to-day operations. Many are consumer-facing, where individuals are directly interacting with the SaaS platform, whether in healthcare, higher education, retail or government. For consumers, paying within the platform is convenient, efficient and can enhance brand loyalty.

The terms “integrated payments” or “embedded payments” also encompass any kind of payment method – and there are many to choose from, including:

  1. Credit & debit cards

  2. Automated Clearing House (ACH) transfers

  3. Electronic checks

  4. Mobile wallets (Google Pay, Apple Pay, Samsung Pay)

  5. Buy Now, Pay Later (BNPL)

While accepting credit cards is standard for almost all ISVs, what additional payment methods are offered will depend on the size of your company, your vertical or industry, your customer profile and a host of other factors. A knowledgeable integrated payments partner will help you determine which options are best for your business. 

The benefits of integrated payments

While integrated payment and embedded payment solutions significantly benefit consumers, the benefits to ISVs and SaaS providers are numerous.

  • Additional source of revenue: The software platform will gain a portion of processing revenue with their integrated payments partner. Revenue share will vary by company size, payment processing model and transactional volume, but can reach millions of dollars per year for larger ISVs. 
  • Elimination of manual reconciliation: Integrated payments eliminates the process of manually entering and reconciling transaction data into the software system. Not only is manual accounting time consuming, but it is also prone to errors and is not scalable with your business.
  • Cost savings: Many small to medium-sized software platforms don’t have dedicated accounts receivable departments to review payment information. Integrated payments create operational efficiencies, leading to decreased overhead and cost savings.
  • Client stickiness: Let’s be honest – there is fierce competition in today’s ISV market. It can be difficult to win business but once won, keeping it is crucial. When clients enable integrated payments through your software, there is less likelihood of attrition.

Choosing an integrated payments partner

There are many factors to consider when choosing an integrated payments partner, which will vary by what you want out of the relationship. Questions to ask yourself can include:

  • What is my desired revenue share from a partnership?
  • What kind of payment methods do I want to accept?
  • What level of payment security compliance do I want from my partner?
  • What kind of customer relationship management and support will I, and my merchants, receive from my partner?
  • How involved do I want to be in the sales process?
  • How quickly do I want to board merchants for payment processing? 
Starting with these questions will help you determine the best integrated payments partner for your business – whether that is a traditional payment processor or a payment facilitator, also called a Payfac.

The Payfactory difference

Formed by payments industry veterans, Payfactory enables ISVs and SaaS vendors to effortlessly integrate or embed payment acceptance into their platform. A true Payfac-as-a-Service, Payfactory provides immediate onboarding, digital payment acceptance and is gateway-agnostic, meaning that you can quickly enable Payfactory on your current payment platform, or partner with Payfactory’s preferred payment gateway, Bluefin.

We believe that merchant processing for ISVs can be simplified without sacrificing support. Partnering with Payfactory means white-glove, human-centered service for our partners and their merchants. That’s the Payfactory difference. Learn more about our platform.