It’s not unusual for a SaaS company to hear from six or seven merchant service providers a day, all claiming to be adept at offering verticalized payment processing. Some may even drop a few acronyms to demonstrate their insider status without even mentioning pricing or interchange.
While industry knowledge can be an asset in a prospective partner, SaaS providers and independent software vendors (ISVs) that want embedded payments need partners with payment technology expertise.
As experts have noted, a bit of industry knowledge can go a long way, but financial fluency is equally important in a partner, because it can open adjacent opportunities beyond plain vanilla payment processing. The Strawhecker Group and ETA identified numerous options for ISVs to connect and monetize financial services and commerce within their ecosystems.“TSG has seen ISVs making ten times more revenue by monetizing the payment processing volume their systems support than they were earning on software license fees alone,” said company representatives, citing the following ways to leverage embedded finance and commerce:
● Expand customer services: ISVs can enable their merchant customers to accept downstream payments from their customers across a variety of payment methods.
● Monetize payment models: ISVs can receive commissions or a percentage of payment volumes they help to facilitate.
● Enhance operational capabilities: ISVs can benefit from a partner’s revenue sharing models as well as seamless onboarding, innovative technology and quality of support.
Singular Solution, Multiple Options
Service providers that work with different types of businesses and industries recognize that business models vary but fundamental objectives remain the same, despite a company’s size or vertical focus. Companies leverage technology to drive efficiencies at scale and attract and retain customers, which is equally true for a ticketing agency, healthcare provider or pop-up retailer. Payment facilitators (payfacs) deliver these outcomes by aligning partner principles with payments capabilities to achieve a singular solution.
For ISVs contemplating embedded finance and commerce, TSG and ETA observed a plethora of available business models, such as working with a large in-house payment processor, a localized merchant acquirer, a pure payment gateway provider, or a payfac-as-a-service provider, each offering its own unique value proposition.
“There is no shortage of options for ISVs in terms of available payment service providers they can connect to,” TSG and ETA wrote. “While true processing technology is held by a limited number of major payment processing entities, there are numerous service providers in the payments ecosystem that support ISVs in their payment and embedded finance monetization endeavors.”
Principled Software Design
Despite the nearly limitless programming languages available, universal principles apply to good software design. The process begins with building a solid foundation to support a highly flexible framework that can adapt to each stage of a company’s lifecycle. Modern software is more agile and self-reliant than earlier models that required on-premises maintenance and updates. Today’s versions can be monitored and updated remotely, making it easier than ever to incorporate new capabilities and meet ever changing security and compliance requirements.
Payfacs work within a software provider’s native environment, mapping a software’s unique characteristics and integrating accordingly, bringing a fresh focus to each project. No two payments integrations are alike. Each unique collaboration embeds a payment flow directly into the software to make payments just happen at the right moment, without fanfare. The SaaS company is in the driver’s seat, choosing the right elements to seamlessly onboard new customers and fulfill orders, creating an excellent customer experience every time.
Security and Compliance Expertise
Balancing security and customer convenience is a common challenge for businesses but a knowledgeable payfac partner can help SaaS companies and ISVs leverage available resources and technology to deliver an enjoyable customer experience without sacrificing security. Check the PCI Security Standards Council for Qualified Integrators and Resellers for assistance with installing and maintaining validated payment applications that are PCI DSS compliant.
In addition to being a PCI SSC validated provider, an ideal payfac partner can provide guidance on a range of security strategies and solutions, including point-to-point encryption (P2PE), end-to-end encryption (E2EE), and tokenization that converts sensitive data into cryptographic tokens that would be useless to a hacker, if intercepted.
Payments Industry Knowledge
Like software languages that evolved beyond JavaScript and C++, payment methods have expanded beyond plastic credit cards, creating more choice for customers across all channels. SaaS providers need to meet customers where they are, whether online, on premises, or using a mobile app, while enabling them to transact in preferred currencies and payment methods. Knowledgeable payfac partners can help SaaS providers navigate the complexities of cross-border payments and digital commerce in ways that best serve their businesses and clientele.
To succeed in today’s fast-paced global environment, B2B and B2C SaaS companies need to maximize payments optionality by supporting a variety of payment schemes, which may include, but are not limited to, digital wallets, wearables, in-app commerce, peer-to-peer (P2P) payment schemes, cryptocurrency, QR code payments, mobile commerce, in-app payments and payments that are deeply embedded into accounting, ERP, CRM and other enterprise-scale systems. Manifesting these capabilities requires strategic guidance and planning.
Build with Payfactory
A knowledgeable and experienced payfac partner can help SaaS companies and ISVs navigate the dizzying choices of digital commerce within a single point of integration. Designed exclusively for each business and co-created with trusted partners, these solutions deliver the best of all worlds: exceptional software design, best-in-class security, and deep payments industry expertise to deliver an enjoyable customer experience every time.
Payfactory, an embedded payment facilitator, provides a gateway-friendly and processor-agnostic platform that requires little to no development, allowing partners to create new recurring revenue streams with minimal integration costs. Founded by payment industry veteran Ruston Miles, a member of the PCI Security Standards Council’s Board of Advisors, Payfactory is built on solid principles of security, customer service and innovation. Contact Payfactory to learn more.
Dale S. Laszig is a payments industry journalist and guest columnist for Payfactory. Previous to her writing career, she managed business development for leading payments acquirers and POS manufacturers. Connect with her at [email protected], LinkedIn and Twitter.