Greg Cohen is the chief executive officer of Fortis, a leading integrated commerce platform.
Independent software vendors (ISVs) develop and sell software to businesses in almost every industry. Solutions range from office management software for doctors and clinics, hotel management software to streamline operations, e-commerce software to manage inventory and fulfill online orders and many others. Typically, ISV offerings also include a payments function so the client can easily receive and process payments from their customers.
Providing simplified payments and commerce processes is becoming increasingly important as customer expectations shift due to the widespread adoption of embedded payments in consumer products and services like Uber or Lyft. Embedded payments can remove friction from the buying and reconciliation processes, increase client sales and streamline back-office functions.
Embedded payments can also be a revenue source for ISVs who end up taking a profit cut from transaction fees. A recent study found that revenue opportunities will more than double by 2026, and embedded finance will account for 10% of all financial transactions in the United States. As this opportunity continues to expand, there will be many providers to choose from, but no two ISVs have the same payments journey. Each has nuances to consider, so finding the right payments partner for your organization’s unique needs and evolution is paramount.
Here are three questions to ask prospective payments partners.
How will this payments partner make my experience better?
For ISVs, the first priority should be to find a payments partner that improves the experience inside the software and satisfies your clients and their customers’ needs. Remember that every payments journey is unique, so look for a partner who can help you deliver the experience and capabilities that align with your brand and roadmap.
The payments experience includes more than processing transactions, and all facets should be considered when looking for a partner, from onboarding processes to chargeback management procedures to reporting and reconciliation. The end goal is to select a solution that makes life better for you, your clients and their customers.
How will I make money from this partnership?
Everyone wants to find new ways to produce revenue, including monetizing payments, and while revenue is important, the cost to get that revenue must be considered as well. Building an infrastructure that supports all components of the payments experience needs to be a top priority. When considering an embedded payments solution, you’ll need details on the proposed economic relationship and an understanding of the payments infrastructure needed to drive success—underwriting, risk, compliance, sales engagement, deployment, service, etc. These arrangements can vary considerably across the sector, so it’s critical to ask beforehand.
How will the payments partner help me get this solution out to all my clients?
“Field of Dreams” was a movie. If you build it, will they come?
The final and maybe most critical question to ask yourself before you lay out what a great experience and economic model is to your investors is: How will this payments partner help me drive adoption across my customer base? You’ll need details about how the partner will handle enrollment, how the product team will make customers aware and whether there will be support from the marketing or sales team to implement the solution.
You’ll also need to understand how activation works. For example, you will need details on whether the solution drives awareness, whether activation is all digital, or if there are also analog options for signup. While the 100% digital/clickwrap agreement model works for some super small clients, it isn’t ideal for many segments or clients. You will also need details on how the payments partner provides support and how lead and application workflows function. Experience and adoption work hand-in-hand, and if you don’t have adoption, the revenue model you built around monetization of payments won’t play out.
The option that is right for you will depend entirely on your needs, objectives and the goals of your software’s users. But remember that the ability to handle nuances varies across payments solutions. For example, some providers offer fully automated onboarding, whereas others offer the automation component plus follow-up support on incomplete enrollments.
The decision comes down to your unique payments needs. Many providers handle one type of journey only, and if it happens to be a good fit for you, maybe that’s your best choice. But know that some providers have broader capabilities, so finding the right match is worth the time. Keep in mind that ISV payments needs can evolve, so flexibility is important, too. You may start out wanting to handle more of the services and experiences yourself but end up needing the payments partner to step in down the line to provide or hand over certain elements.
In times like these, it’s imperative to thoroughly analyze your payments partners’ options to ensure that your objectives align with the partner’s capabilities and that the partner adds value to your business. Can your partner truly be your guide for today and tomorrow? Asking these three questions can equip you to find the right partner for your bottom line and help you create and enhance your unique payments journey.
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