What do today’s most agile and innovative software companies have in common? Many are ISV companies—independent software vendors that create tailored solutions built to scale with modern businesses. From integrating with cloud platforms to streamlining payments and operations, ISVs are reshaping how software is sold and delivered.
As digital transformation accelerates, the role of ISVs in enabling new features, business models, and customer experiences has never been more critical.
TL;DR
- Independent software vendors (ISVs) develop software that runs on cloud platforms or operating systems and is often tailored for specific industries.
- They play a critical role in today’s tech ecosystem by delivering flexible solutions, driving innovation, and enabling integrated payments.
- From choosing the right development model to partnering with payment processors and cloud providers, ISVs help businesses grow faster, serve customers better, and unlock new revenue streams.
ISV Company Defined
An ISV company aka independent software vendor is a business that builds, sells, and supports software applications that run on operating system platforms or cloud environments
Unlike hardware manufacturers, ISVs focus solely on delivering software solutions, often tailored for niche markets or specific industries. Many partner with platform providers to distribute software, tap into new markets, and streamline processes.
As such, ISVs are considered essential players in the modern software industry.
How ISV Companies Operate
How do ISVs work? That depends on the nature of their software, their business model, and the market in which they operate. Here’s a look at how independent software vendors build, deliver, and grow their offerings.
ISV development and deployment models
ISV software can take many forms, but the goal is the same: build scalable solutions that deliver value.
Built for cloud and compatibility
Most ISV companies today develop cloud-based services that run on leading operating system platforms or within modern cloud environments. These platforms offer the flexibility to launch quickly and push out new features with minimal disruption.
That said, ISVs working in more regulated or infrastructure-heavy industries may still offer on-premises or hybrid deployments to meet specific market demands.
For example, an ISV serving government agencies or healthcare providers might need to build software that runs on local servers due to strict data governance or physical infrastructure requirements.
Modular, API-first software
To stay competitive, some ISVs design modular, API-driven software products that integrate easily with a company’s tech stack. This approach supports interoperability with analytics tools, machine learning systems, and various business applications—allowing companies to build on what they already have.
Let’s say an ISV creates software for construction project management. Instead of offering a bulky, all-in-one tool, they provide APIs that plug into a client’s preferred scheduling system, accounting software, and document management tools.
Distribution strategies
To reach the right customers, ISVs rely on smart distribution strategies that align with their target market and product fit.
Partnering with platforms
Many ISVs join partner programs with major platform providers like AWS, Azure, and Salesforce. These ISV partnerships give them access to marketing support, technical resources, and exposure to broader customer bases. ISV certification can also boost brand recognition and credibility.
Marketplaces and resellers
Selling through cloud marketplaces or working with value-added resellers (VARs) helps ISVs distribute software efficiently, especially in niche markets or industries where reputation and integration matter.
Going direct or co-marketing
Some ISVs take a direct-to-customer approach, while others collaborate with partners for joint marketing efforts. These strategies work well for software companies that have a clear value proposition or want to maintain closer relationships with customers.
Monetization options
There’s no one-size-fits-all approach to pricing ISV software. Companies need to align their pricing strategy with their product, audience, and growth goals.
Subscriptions and licensing
Many ISVs use a subscription model, which offers recurring revenue and aligns well with cloud-based platforms. Others offer perpetual licenses, particularly in sectors where long-term ownership is preferred or required.
Embedded payments and new revenue streams
One increasingly popular monetization strategy is embedding payments directly into software applications. This gives ISVs a new way to deliver value while generating payment-based revenue. By partnering with a payment provider, ISVs can offer embedded payment experiences that simplify transactions and add stickiness to their platform.
Types of ISVs
Just as no two businesses are the same, ISV companies come in a variety of shapes and sizes. Independent software vendors differ based on the industries they serve, the scope of their software applications, and the technology ecosystems they operate in. Consider the following.
Horizontal ISVs
Horizontal ISVs build general-purpose software solutions that can be used across a wide range of industries. Think tools like project management platforms, accounting software, or CRMs that are designed to be broadly applicable and easily integrated with different operating system platforms or cloud environments.
These companies often sell software through partner ecosystems, digital marketplaces, or direct sales models. Because they serve a wide customer base, horizontal ISVs tend to focus on scalability, intuitive UX, and a robust feature set that fits a broad spectrum of business needs.
Vertical ISVs
Vertical ISVs specialize in tailored solutions for specific industries or niche markets. Examples might include software built for veterinary clinics, construction project managers, or restaurant point-of-sale systems. These vendors often work closely with platform providers to build software applications that address the unique workflows, regulations, and data needs of their chosen industry.
ISV Companies and Integrated Payments
Integrated and/or embedded payments are no longer a nice-to-have—they’re becoming a key revenue driver and competitive differentiator for modern ISV companies.
Why more ISVs are embedding payment capabilities into their software
ISV companies are embedding payments directly into their platforms to simplify transactions. Aside from providing a more seamless user experience, this shift gives ISVs smart way to generate recurring revenue and increase product stickiness.
Drive additional revenue
ISVs can participate in revenue share agreements or collect fees on each transaction. This transforms payments into a scalable income stream that grows with the customer base.
Create a better user experience
When payments are built into the software, users don’t need to manage third-party tools or log into separate systems. This keeps workflows simple and reduces friction at checkout, invoicing, or point of sale.
Boost retention and brand value
Embedded payments make a platform more indispensable. The deeper the integration, the harder it becomes for customers to churn, helping ISVs maintain long-term relationships and enhance brand recognition.
Common Payment Integration Models
How ISVs integrate payments depends on their goals, resources, and the level of control they want over the payment experience. Here are three of the most common models:
Payment APIs
Payment APIs are ideal for ISVs that want flexibility and control. They allow developers to embed payment functionality directly into their software using pre-built APIs from a platform provider. This option offers a great balance between customization and time to market, letting ISVs maintain their brand experience while meeting compliance requirements through their payment partner.
PayFac-as-a-Service
For ISVs that want to go to market quickly and still earn a share of payment revenue, PayFac-as-a-Service is a strong option. It enables software companies to offer payment processing under their own brand—without taking on the regulatory and operational complexities of becoming a full-fledged payment facilitator. It’s a great choice for vertical ISVs entering new markets or scaling fast.
White-label solutions
White-label payment solutions allow ISVs to offer fully branded payment processing without having to build or maintain the infrastructure themselves. These models are ideal for ISVs focused on customer experience who want to keep the entire payment journey inside their platform, while outsourcing the backend to a trusted partner.
Challenges ISV Companies Face
While the ISV market is full of opportunities, it also comes with a unique set of challenges. Here are some of the hurdles they need to overcome to stay competitive and deliver real value to their customers.
Standing out in crowded markets
The software industry is more saturated than ever, with thousands of ISV companies offering solutions across every imaginable use case. Whether you’re a horizontal ISV selling general-purpose software or a vertical ISV focused on a niche market, carving out a strong brand identity is crucial.
ISVs must clearly communicate how their software products are different—whether that’s through tailored solutions, embedded payments, or seamless compatibility with cloud computing platforms. Strong marketing strategies, brand recognition, and ISV certification can help cut through the noise and build trust with new customers.
Managing complex integrations (including payment compliance and PCI requirements)
As customers expect more connected experiences, ISVs are under pressure to integrate with an ever-growing number of platforms, tools, and services.
Maintaining interoperability with existing systems, cloud computing environments, and physical infrastructure requires not just technical resources—but a long-term commitment to monitoring and maintaining integrations. For many ISVs, this complexity can slow down go-to-market timelines or limit scalability without the right partners in place.
Partner selection and maintaining competitive pricing
ISVs rarely go it alone. They rely on partnerships with platform providers, payment processors, and other technology vendors to bring their products to life. But not all partner programs are created equal.
Choosing the wrong partner—or failing to negotiate favorable terms—can eat into margins or limit feature flexibility. ISVs need to weigh factors like onboarding experience, revenue share models, support quality, and ability to co-market or distribute software together. Successful ISV partnerships strike a balance between performance, cost-efficiency, and long-term business opportunities.
Support and scalability
As ISV companies grow, they often face increasing demands around customer support, uptime, and product scalability. Expanding into new markets or launching new features means systems must perform reliably under pressure—and that customer data must remain secure.
Partnering with ISV Companies
The right ISV partnership can unlock new business opportunities, expand your platform’s reach, and deliver more value to end users. Let’s look at the different partnerships that ISVs could get into.
Why larger enterprises and platforms collaborate with ISVs
Larger platforms and enterprises often look to ISV companies to fill functionality gaps, serve specific verticals, or bring new technologies to market faster than they could build in-house. These partnerships allow platforms to expand their offerings without reinventing the wheel. That could be through industry-specific workflows, embedded analytics, or integrated payments.
Integrating ISV software into their ecosystems lets platforms offer a more complete solution to their users, improve customer retention, and drive adoption. ISVs, in turn, gain access to broader customer bases, technical support, and co-marketing opportunities. It’s a win-win.
How payment processors, fintechs, and cloud platforms work with ISVs
Payment processors, fintechs, and cloud providers often view ISVs as strategic distribution channels. By embedding their services directly into ISV software applications, these partners gain access to engaged end users who are already embedded in a system they trust.
For payment processors, partnering with ISVs means more than just expanding transaction volume—it’s about offering integrated, value-added experiences like real-time reporting, invoicing, and mobile payments. Fintechs can embed financial services such as lending or expense management directly into ISV platforms, while cloud providers lend support through infrastructure, analytics tools, and sell software products.
These relationships thrive when they’re built on aligned incentives, like shared revenue models. It also helps to have go-to-market collaboration and a focus on delivering long-term value. The most successful ISV partnerships are those that leverage joint strengths and create solutions greater than the sum of their parts.
Wrapping Up and Key Takeaways
ISV companies are powering the next wave of digital innovation. They’re building smarter software, streamlining payments, and unlocking new revenue streams.
And if you’re an independent software vendor, integrating payments into your current offering can enhance your platform or application, all while providing real value to your customers.
This is where Stax Connect comes in.
Through the power of payments-led growth, our Stax Connect API helps ISVs go to market with their own branded payment platform. Use our payments expertise to unlock revenue potential and take your platform to the next level, all with Stax Connect.
Contact us today to learn more.
FAQs about ISV companies
Q: What is an ISV and how does it help with payment integration?
An Independent Software Vendor (ISV) is a company or app that partners with other businesses to drive their digital transformation, particularly in integrating payment solutions. ISVs like Stax Connect can help reduce billing errors, empower data-driven decisions, and enhance overall business efficiency by providing streamlined payment integration platforms.
Q: What should I look for when choosing an ISV for payment integration?
Pay attention to factors like pricing transparency, payment integration options, data and reporting capabilities, and security measures. You want a provider that offers a wide range of payment integration options to fit your specific business needs.
Q: How do I ensure the ISV I choose is the best fit for my business?
To ensure the best fit, evaluate the ISV based on your specific business needs, such as the scale of your operations, your industry’s specific requirements, and the geographic regions you serve. Also, independently verify the ISV’s claims through reviews on trusted sites and consider their customer service and technical support capabilities.
Q: What steps should I take to start integrating an ISV payment solution?
The integration process will vary from one provider to the next. Contact the ISV to discuss customization options for your unique business model, and ensure you understand their pricing structure, security standards, and support services. Be sure to follow the ISV’s onboarding process to embed their payment solutions into your platform or service.
