How ISVs Can Benefit from Integrated Payments

21 January 2025

Written by Libby James

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

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Maximising Business Potential: A Guide to Integrated Payments for ISVs

Independent Software Vendors (ISVs) have revolutionised industries by providing specialised software solutions. However, in today’s competitive landscape, adding integrated payments to these platforms is no longer just an option—it’s a strategic necessity. Integrated payments not only enhance software functionality but also open up new revenue streams, create opportunities for partnerships with acquiring banks and gateways, and even increase the overall valuation of the business.

In this guide, we’ll explore how ISVs can successfully integrate payments into their software, the benefits this brings, and strategies such as partnering with banks and white-labelling payment solutions to maximise profitability. Whether you’re looking to boost customer satisfaction, streamline workflows, or future-proof your offering, this article provides the insights you need to thrive.

What Are Integrated Payments?

Integrated payments are payment processing capabilities seamlessly embedded into business software. They allow users to manage payments alongside other operational functions such as accounting, inventory management, and customer relationship management (CRM). This integration transforms software into a one-stop shop for operational efficiency and customer satisfaction.

How Do ISVs Use Integrated Payments?

ISVs leverage integrated payments to enhance functionality and create a more user-friendly experience for industries such as retail, healthcare, and hospitality. Here's how:

Streamlined Workflows: Payment capabilities are embedded directly into software, allowing businesses to complete transactions and operational tasks without switching systems.
Automated Data Management: Sales data syncs automatically with accounting and inventory systems, reducing errors and saving time.
Custom Solutions: Tailored payment integrations cater to industry-specific needs, such as healthcare billing or hospitality reservations.
Enhanced Security: Built-in features like tokenisation, encryption, and fraud detection ensure compliance and protect customer data.
Improved Customer Experience: Offering multiple payment options such as digital wallets and QR codes caters to diverse customer preferences.

The Financial Advantage: Acquiring Bank Partnerships

ISVs have the opportunity to partner with acquiring banks and payment gateways, opening up a significant revenue stream. By facilitating transactions, ISVs can negotiate a share of the transaction fees processed through their platforms. This approach not only diversifies income but also increases the overall valuation of the ISV’s business.

Revenue Share Models: By partnering with acquirers, ISVs can earn a percentage of each transaction processed through their integrated systems. The higher the transaction volume, the greater the revenue potential.
Customised Deals: ISVs can negotiate exclusive rates and features with banks, creating a competitive edge for their software.
Valuation Boost: Consistent recurring revenue from payment processing partnerships can significantly enhance business valuation, making the ISV more attractive to investors or potential buyers.

White-Label Solutions for ISVs

White-label payment solutions provide another avenue for ISVs to expand their offerings and revenue. This approach allows ISVs to brand and sell a payment gateway as their own, enhancing their portfolio without developing the technology from scratch.

Brand Ownership: A white-labelled payment solution positions the ISV as a comprehensive service provider, reinforcing brand trust and loyalty.
Customisation: ISVs can tailor the white-label solution to meet the unique needs of their clients, ensuring seamless integration with existing software.
Revenue Expansion: Beyond licensing fees, ISVs can earn from transaction fees and premium features tied to their branded payment solutions.

Benefits of ISV Integrated Payments

Integrating payments offers ISVs several advantages:

Enhanced Software Value: Payment integration makes software indispensable to clients by streamlining operations.
Increased Revenue Streams: ISVs can earn through transaction fees, premium features, and partnerships.
Stronger Customer Retention: Integrated solutions improve user experience, reducing the likelihood of customers switching providers.
Operational Efficiency: Consolidating systems eliminates the need for multiple software platforms, saving time and resources.
Competitive Differentiation: Offering integrated payments can set an ISV apart in a crowded market.

Challenges and Solutions for ISVs

While integrating payments offers immense potential, ISVs may face challenges such as:

Technical Complexity: Partnering with a provider offering robust APIs and SDKs simplifies integration.
Security Concerns: Choose PCI Level 1-compliant providers and implement strong encryption and fraud detection systems.
Scaling Issues: Work with payment providers experienced in handling high transaction volumes.
User Experience: Prioritise intuitive design, mobile compatibility, and a variety of payment options.

Best Practices for ISVs

Select the Right Partner: Choose payment providers that align with your business goals and have a proven track record with ISVs.
Focus on Security: Regularly audit systems and partner with providers offering advanced security measures.
Optimise User Experience: Ensure the payment process integrates seamlessly with your software.
Support Diverse Payment Options: Include credit cards, digital wallets, and other popular methods to cater to a wide audience.
Leverage Analytics: Use transaction data to provide insights that add value for clients and inform business decisions.

Wrapping It Up

For ISVs, integrating payments is more than just adding functionality; it’s a strategic move that can transform their business model, enhance customer satisfaction, and unlock new revenue streams. By exploring partnerships with acquiring banks, offering white-label solutions, and following best practices, ISVs can position themselves as indispensable players in their clients' ecosystems. Embracing integrated payments not only strengthens the software offering but also drives long-term growth and profitability.

FAQs

What are integrated payments, and how do they benefit ISVs?

Integrated payments are payment processing features built directly into software platforms. For ISVs, they improve customer experience, create additional revenue streams, and increase the value of their software offerings.

How can ISVs partner with acquiring banks or payment gateways?

ISVs can approach acquiring banks and payment gateways to negotiate revenue-sharing agreements or exclusive deals. These partnerships allow ISVs to earn a percentage of the transaction fees processed through their software.

What is a white-label payment solution, and why should ISVs consider it?

A white-label payment solution allows ISVs to rebrand and offer a payment gateway under their own name. It enhances their portfolio, increases brand trust, and opens up new income streams from transaction fees and premium features.

What industries benefit most from ISV integrated payments?

Industries such as retail, healthcare, hospitality, and e-commerce see significant advantages. Integrated payments simplify complex workflows, enhance security, and improve customer satisfaction in these sectors.

What are the security requirements for integrating payments into ISV software?

ISVs must comply with PCI DSS standards and implement features such as tokenisation, encryption, and fraud detection. Choosing a PCI Level 1-compliant payment partner ensures high security and compliance.

How can ISVs ensure a smooth integration process?

To streamline integration, ISVs should partner with payment providers offering developer-friendly APIs, comprehensive SDKs, and responsive technical support. Rigorous testing and user feedback are also essential.

Can ISVs earn recurring revenue from integrated payments?

Yes, ISVs can earn recurring revenue by sharing in transaction fees processed through their platforms. They can also charge for premium features like advanced reporting or loyalty program management.

How do integrated payments increase the valuation of ISV businesses?

Integrated payments provide consistent revenue streams through partnerships and white-label solutions. This recurring income, combined with enhanced software stickiness, makes ISVs more attractive to investors and potential buyers.