Software Platforms Make Payments an Invisible Part of Their Offer

Watch more: Independent Software Vendors Make Payments Central to Customer Experience

The digital pivot transforming payments is pushing independent software vendors (ISVs) to rethink their business models.

What was once an ancillary function is becoming central to their value proposition, demanding innovation and strategic shifts, Nuvei Senior Vice President of Strategic Partners Trey Swallow told PYMNTS.

For years, payments were an add-on for ISVs. Payments “typically weren’t built into their individual software and kind of an afterthought,” Swallow said. This approach meant the primary focus remained on the software itself, rather than the integrated payment experience.

However, the challenges of innovation in the space are now forcing ISVs to adapt. They’re moving away from merely linking to external payment solutions. This shift necessitates a deeper integration, curating the entire user journey within their platforms.

There’s a “brand boost when doing this — because they’re not shifting anybody away from the site,” Swallow said. That means a payment option can be surfaced and chosen, and the transaction can be completed without interrupting the flow of commerce.

The norm for ISVs today is to be “verticals focused … when you get into outside of the retail [segment], you may get into practice management or healthcare or veterinarians or dental,” he said. “You may get into senior care or assisted living. Almost everything is verticalized and vertical-specific.”

This specialization allows ISVs to hone their software to the unique needs of a particular vertical, which resonates more strongly with end-users and ultimately drives greater revenue momentum.

Verticalization also means that payment partners must offer flexible solutions, not rigid APIs, to accommodate the specific nuances and payment methods required by diverse industries.

The strategic decision for ISVs to embrace embedded payments is not merely about user experience; it’s a lever for monetization and scaling their businesses.

This makes embedded payments a financial driver, comparable to, or even exceeding, traditional software-as-a-service (SaaS) or subscription models. To maximize this revenue, ISVs must ensure a seamless and frictionless user experience, particularly during the checkout process.

A successful strategy entails minimizing clicks and actively analyzing data to identify and remove any roadblocks where users might get tripped up, Swallow said. The inclusion of payments from the very first interaction, such as during the signup process, helps to own the entire merchant relationship from the outset.

Beyond the API

While an API is foundational, the discussion around ISV partnerships revealed that the optimal payment solution goes beyond a technical connection. The choice of a payments partner depends on the ISV’s size and stage of growth, Swallow said.

For small- to medium-sized ISVs, the focus is less on just the API and more on “value-added services that can help you scale,” he said.

These ISVs often look for partners who can provide operational support that they may not yet have in-house.

“You may be a relatively new ISV and you’re looking for a partner that has various pieces and parts that they can plug in where you do not have [those functionalities],” Swallow said.

This includes essential services like customer support, an inside sales team for pricing and selling, and handling complex functions such as fraud prevention and know your customer (KYC) processes.

When choosing a payment partner, ISVs should prioritize flexibility and adaptability to specific vertical needs, he said.

Looking to the future, Swallow said ISVs should “keep your eyes toward Europe” as payment processing trends often emerge there before reaching North America, typically within the next five to 10 years.

Integrated solutions will become the norm. He said the all-in-one platform means “you can reorder stock there, you can make your payments, you can shoot your invoices out, manage your AR/AP, hit your ERP on the backend,” all of which gives rise to a growth area for ISVs.

Swallow predicted increased acceptance and accessibility of cryptocurrency as regulations in the United States become more lenient and instant payments become more widespread.

“ISVs are starting to realize that when they double down on payments, the revenue stream that is there is something they aren’t seeing anywhere else,” he told PYMNTS.