9 Things to Look For In An ISV Payments Partner
Payments technology has been evolving dramatically, particularly over the past few years. The growing popularity of digital and contactless payments clearly shows that consumers want convenience—whether shopping online or in-store.
Businesses have already started capitalizing on this trend; several fintech startups have come up with innovative, seamless payment solutions. Independent software vendors (ISVs) and SaaS companies aren’t falling behind either.
An increasing number of ISVs are looking to integrate payments into their offerings to build more functional software solutions by partnering with a plug-and-play payments solution provider. However, with countless players in the market—each with unique features and offerings—choosing the right ISV payments partner can be tricky.
In this article, we’ll take a look at the factors that ISVs need to consider when choosing a payments partner. We’ll also discuss the reasons why integrated payment solutions may be beneficial for your business and the various partnership models you can choose from.
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What Are the Benefits of ISV Payments Partnerships?
There are several reasons why ISV payments could be a strategic move for your business—providing greater value not just for your company but for your software users as well. Let’s take a look at some of them:
1. Additional revenue generation
One of the biggest advantages of ISV payments partnerships is that they offer the opportunity to create a new revenue stream for your business. Typically, you can generate this recurring revenue stream in one of three ways:
- Agent partnerships – In this model, you would be in charge of sales and onboarding while the merchant services provider will be responsible for the activation of the system, providing training, and customer support.
- Referral partnerships – In this model, your payment processing partner would be entirely responsible for sales, onboarding, and support while your role will be limited to referring new leads only.
- ISO partnerships – If you assume the role of an independent sales organization (ISO), you’d be in charge of all sales and support functions. Although this means you’ll have greater control over the user experience, it comes with a greater share of responsibilities and associated costs (compared to the other two models).
2. Improved user experience
Another benefit of an ISV payments partnership is that it can greatly elevate the user experience. Instead of sending users to an external site to complete their checkout—usually involving multiple steps—you can help them checkout in fewer steps on the same page. Obviously, this creates a much more seamless payments experience and reduces friction along the customer’s journey.
3. Enhanced security
When you’re handling payments, it’s extremely important that your security measures are top-notch. Thankfully, an ISV payments partner can handle improving security through tokenization—a process in which sensitive data is replaced by surrogates that have no exploitable value or meaning. This provides end users peace of mind knowing their financial information is safe.
4. Greater efficiency for your merchants and software users
ISV payments can drastically improve and streamline business operations for merchants as opposed to doing everything manually. Integrated payment systems can automate record-keeping—saving time and resources—and also ensure that merchants get paid faster.
What to Look for in an ISV Payments Partner: 9 Key Indicators
Now that we’ve covered the benefits associated with integrated payment solutions, let’s take a look at the things you should consider when choosing an ISV payments partner.
1. Payment Methods Supported
If you want to simplify payments for your software users, you’ll need to consider all the different payment methods that consumers may want to use. As the popularity of digital payments continues to skyrocket, conventional payment methods like credit cards are still very much in use. In fact, 40% of POS payments in 2021 were made using credit cards.
As such, your solution needs to support a wide range of payment methods including debit and credit cards, contactless payments, digital wallets, and even wearables. Besides these, some sub-merchants may offer subscription services or loyalty programs which means payment information will need to be stored securely.
It is, therefore, essential that your ISV payments partner can facilitate a variety of different payment methods, and offers tokenization for storing payment info securely. Also, check if your ISV payments partner can provide the necessary terminals/readers that your users will need to process these payments.
For example, Stax Connect not only supports a variety of payment methods including EMV, contactless, mobile wallets, etc., but we also provide the necessary hardware that sub-merchants may need to accept them. Plus, our solution enables tokenization—both for one-time and recurring payments—so you never have to worry about handling sensitive data directly.
Even if you want to offer only a few payment methods at the moment, it’s best to plan for the future and opt for a partner that can accommodate your changing needs as you scale. You may find yourself having to switch to a different partner down the line if they support only a handful of payment options, to begin with.
2. Applicable Features Needed For Your SaaS Platform and Merchants
Your choice of an ISV payments partner must also depend on the features and value-added services they offer. These may range from simple cross-border payments or fraud prevention to robust reporting, analytics, marketing, and customer engagement capabilities.
Of course, the features that make the most sense for your business will depend on the type of users you cater to and the needs of their customers. But at the very least, look for an ISV payments partner that provides a unified dashboard for sub-merchants to easily monitor payment activity and track user onboarding.
In addition, a payments partner like Stax that takes on the risk of accepting payments on your (and your customers’) behalf would be a big plus. So when you choose a partner, think about the features that are an absolute must for your business and the ones that may be nice to have, and make your decision accordingly.
3. ISV Payments Technology/Platform
In the age of omnichannel commerce, businesses need payment solutions that go beyond the typical brick-and-mortar point of sale. They expect solutions that can be connected on the go and accessed from multiple devices. So, look for an ISV payments partner that simplifies payments by blending in-store and online payment processing on a single integrated platform.
Also, consider what kind of integration support, APIs and SDKs, developer tools, and documentation your payments partner may provide. At the end of the day, you need a partner that greatly minimizes your developmental efforts and gets you up and running in the shortest possible time.
4. Software Integrations
As discussed above, your payments partner needs to provide robust, flexible, and easy-to-follow APIs that facilitate quick and seamless payment integration—regardless of the integration method you use. As an ISV, you need to know how your software may connect with your partner’s platform and the kind of tools and support they will provide to help you enhance your offering.
Also, consider the kind of technical support that may be available. Will they take the time to understand your technical requirements? And will they walk your team through various features or ways to use their APIs to enhance your software’s functionality? All these are important considerations that can significantly impact your time-to-market and your team’s readiness to support new integrations.
5. Relationship with a Sponsor Bank
At a high level, the role of a sponsor bank is to ensure that the funds paid by end customers make it through to the sub-merchant and ACH payments make it through to the processor. They are also responsible for paying a share of the interchange fees to issuing banks and card companies (like Visa or Mastercard).
All this to say, a sponsor bank forms an integral part of a payments ecosystem, and it’s crucial to build a relationship with one if you want to facilitate payments. Unfortunately, this is typically a tedious, time-consuming, and costly affair.
So, it would be well worth your while to look for an ISV payments partner that has an existing relationship with a leading sponsor bank that you can leverage. This will not only help you cut costs significantly but also reduce your time-to-market.
For example, when you work with Stax, you can leverage our long-standing relationship with one of the biggest sponsor banks in the world, saving you the time and expenses typically associated with becoming a PayFac.
6. Fee Structure/Revenue Share Model
When you process transactions through the integrated payment solution, you would typically receive a share of the revenue thus generated. However, this can often get quite complicated. Your payments partner and you must mutually agree on a revenue share percentage (or a split) which may depend on factors such as your processing volumes, pricing model, or the number of merchants.
Many payment partners may boast high residual splits but may not be quite transparent in their dealings. Look for a partner who agrees to clearly outline all the finer details in your residual statement. You can even ask for sample residual statements to be sure.
7. Underwriting Process/Approval Times
To maximize customer retention and loyalty, your sub-merchant onboarding process needs to be as quick and frictionless as possible. It’s, therefore, important to find a payments partner that makes it easy to manage your merchant portfolio—from onboarding to risk management. With the right support, enrollment can be a breeze, so make sure to check what kind of capabilities your partner offers.
For example, Stax Connect’s pre-built enrollment platform can help you monitor your enrollment pipeline and get access to in-depth underwriting statistics, deposit reporting, and user onboarding tracking. Plus, our managed underwriting process saves you the cost of hiring underwriting analysts or investing in costly tools and enables your users to start processing payments in just 20 minutes of getting started. This translates to more loyal customers who are likely to stay with you longer and even recommend you to others.
8. Partner Support Offerings
According to a recent study, ISVs consider customer service as the most important factor when choosing a payments partner. To be truly successful, ISVs must work with a partner that offers robust support every step of the way—from technical support to go-to-market support and everything in between. So make sure to ask about the support structure that your payments partner offers.
For example, here at Stax, not only do we support our partners, but we also offer user support at a variety of levels based on the needs of the customer so that your users can benefit from talking to a team of payment experts. See how Stax supported Big Time, a professional services SaaS company, with their explosion of growth.
Also, check if your payments partner offers 24/7 support as this can help you elevate the customer experience greatly. You need to know if you can get help from a real person anytime you or your customers need it.
Security is paramount when you’re facilitating payments for your customers. Your ISV payments partner needs to protect your users and their customers from data breaches and other security threats by helping you ensure PCI compliance.
Failing to do so would expose your users to the risks of losing both customers and business. So make sure to check if your payments partner offers PCI-validated solutions like tokenization and end-to-end encryption.
Final Words: Choosing An ISV Payments Partner
As an ISV looking to facilitate payments for your users, you shouldn’t settle for just another payments provider as your partner. You need a dedicated partner that can help take your software to the next level.
At Stax, we are dedicated to your growth and success, and we care deeply about helping you build a better, more value-driven product for your customers. Our sales and marketing enablement support ensures that ISVs get access to customized marketing plans that truly maximize the value of their platform to best serve end-users.
Plus, with our custom revenue-share opportunity, each partner can monetize their payment volume instantly, thus growing enterprise value. You can set your own pricing structure and model with respect to the payment features you offer while having access to direct interchange rates.
This enables you to create even more value for yourself and your customers while maximizing the revenue opportunity that comes with owning the payments experience.
To learn how you can build a complete payments ecosystem from scratch in just 30 days, contact us today.