For Independent Software Vendors (ISVs) looking to add payments to their product, choosing the right payment partner is a complex decision.
Payment Partnership Models
Before entering into a partnership with a payment provider, ISVs should understand which model is right for their business. Many payment providers only offer one model, so those that have designed their business to work with multiple are the ones that stand apart.
The four primary payment partnership models include:
1. Connected Only
2. Referral
3. ISO or Agent
4. Payment Facilitator
The Payment Facilitator integrates with the payment partner for processing, but handles all other services and responsibilities themselves. This includes hefty obligations, such as taking on the risk and liability involved in merchant underwriting, and maintaining the cash reserves required to pay annual cardbrand fees and be financially accountable for their merchants’ activities.
The following questions can help ISVs determine which partner model is right for them:
- Does the ISV want the ability to integrate payments and nothing more?
- Does it want to integrate payments as well as merchant onboarding?
- Does it want to scale up and become an ISO or Payment Facilitator?
Depending on the model chosen, ISVs can benefit from the following assets offered by the payment partner.
Available Payment Methods and Integrations
Benefits of Integrated Payment Solutions for ISVs
Support Services
“Support” shouldn’t just include merchant assistance — payment partners should also provide expert customer service that’s tailored to ISVs’ unique needs. This might mean quarterly business reviews, for example, in which the partners discuss the ISV’s goals for the year, expected growth, and how the payment partner can assist in those goals.
When an ISV comes to their payment partner with a problem, an experienced team will be prepared to get to the bottom of the issue, and they’ll have the resources to quickly implement a solution.
More importantly, though, support can mean a convenient space where an ISV can go to discuss the difficult integration and certification processes that come with adding payments to a software product or POS system. Having one portal — one place to go — for communication is ideal for ongoing support.
Fees
Fees are unavoidable in the payment industry, but this is where a payment partner’s transparency and trustworthiness become highly valued assets. A good payment partner should talk through the ISV’s needs and ask the right (experienced) questions:
- How are your merchants priced today?
- What are they complaining about?
- Are there things they’re asking for?
- Do they feel like they’re getting a bad deal now? What does that look like?
This enables the payment provider to design a creative pricing solution that works for the ISV’s specific business model. Fees and pricing are completely transparent, so the ISV knows exactly what they’re paying for.
Security
Merchant Onboarding
Some ISVs just want to be able to board merchants quickly with a simple pricing structure, so they start leaning toward adopting a Payment Facilitator model. However, the amount of liability and funds required for this model are often underestimated, so a good payment partner would walk the ISV through that model and dig into what exactly the ISV is after.
If the key goal is to integrate payments with a frictionless boarding process, for example, there are other options that may be better-suited for the software business. Some payment providers offer merchant boarding APIs that allow ISVs to easily integrate an automated boarding process for an optimal user experience, without requiring a change to their existing business model. This automation can also bring additional revenue streams by creating an appealing enrollment experience for merchants.
Scalability
A strong payment partner is flexible. When beginning a new partnership with an ISV, the payment provider should discuss the trajectory that the ISV wants for their business going forward. For example, if an ISV comes into a partnership boarding 20 merchants per month, but their goal is to grow that number up to 100 per month, that information will help the payment partner better support the ISV’s payment solution needs as they change over time. To learn more about payment partners that specialize in supporting ISVs, contact us.