6 Steps to Scaling Your Business With Embedded Payments

1) Analyze Your Company’s and User’s Payment Needs

The first step to scaling up with embedded payments is understanding exactly what you and your users need. On the user side, that’ll depend on what your users sell and how their end customers want to pay. Is everything done online? Or do they need an in-person hardware option, as well? Do they sell on a one-time or recurring basis? Are they a subscription seller? Do they sell in a risky industry?

On your end, ask yourself how involved you want to be in payments. Do you want to maximize revenue and control at the cost of taking on a big load and increased risk? Or do you want to tap into the revenue potential of payments in a passive way that lets you stay focused on development? 

Taking the time to analyze your needs (and your customers’) and develop a robust adoption strategy will set you up for greater success as you move into the payments space.

2) Selecting the Right Embedded Payments Partner

Once you know what you want from embedded payments, you can start looking into a potential partner to power them on the back end. Depending on your appetite for risk, you have two options: partner with a full-service provider or become a full-fledged payment provider yourself.

Full-Service Platforms:

Full-service payment platforms, like NMI, make plugging payments into your software as simple and easy as possible. This is an ideal option for software providers who want to earn from the payments flowing through their platform in a hands-off way that doesn’t distract them from their core mission. 

You can use application program interfaces (APIs), software development kits (SDKs) or no-code/low-code integrations to connect your platform to your payments partner. Your partner will then handle everything to do with transaction processing from behind the curtain, keeping your branding up front. You get a cut of the revenue with little to no burden on your company. A win-win for most platforms.

Registering With the Card Networks and an Acquirer:

The option that offers the highest revenue and the highest level of control is registering with the card networks and a bank as a payment facilitator (PayFac). It’s also the hardest route, requiring your company to build internal systems and expertise, go through a months-long application process and pay significant fees. It carries the highest risks, too, since you’re responsible for underwriting your merchants. Those factors make it a great option for the largest software companies, but less than ideal for smaller developers.

3) Choosing Connectivity and Implementing APIs To Embed Payment Functionality

If you choose a full-service platform, you will need to decide how to integrate it into your software. For implementing the checkout and payments system itself, the right partner will give you a range of options, including fully custom, low-code and no-code integrations, that allow you to choose how much or how little you do in-house. 

• Need a highly customized checkout? Use an API and SDK to build your ideal experience
• Just need a basic checkout? Opt for a no-code hosted checkout that you can integrate in minutes

When it comes to signing merchants up for your payment services, your primary job will be to get their information to your partner for onboarding. That could be through an in-software sign-up page you build or a hosted mini-site that your payment provider customizes to match your branding. As with checkout, the right payments partner will give you options so you can choose the process flow that works best for you.

4) Monetizing the Payments Flow 

Depending on your partner and how you set up your embedded payments, there are different ways you can monetize the flow of transactions through your software.

The simplest option is a revenue share model. In this arrangement, your payments partner handles everything, including collection of any fees, and you’re paid out your share of the revenue each month as a commission. It’s an easy, hands-off method, and it generally allows some room for negotiation so you can maximize your share of the spoils.

Another option is buying payment processing at wholesale rates. You negotiate the wholesale price you’ll pay up front on transactions, then mark that price up for your users. This arrangement can result in higher revenue, but it adds a lot of complexity and requires more capital. For that reason, most small and medium-sized developers opt for a simpler revenue share model instead.

5) Optimizing the User Experience With Frictionless Payments

The success of your embedded payments will ultimately rely on the experience you provide your users. That will depend on three primary areas: 

• The mix of payment products you offer
• The simplicity of the sign-up experience
• The quality of the support experience

You’ll need to consider all three to provide a positive user journey and maximize your earnings potential. This is a good time to lean on your partner’s payments expertise to ensure you’re building an experience your users will want to engage with.

Product Mix: The more you can offer your users, the more cohesive and streamlined their experience will be. Payment processing itself is the bare minimum, but there are so many more services you can offer to improve the user experience (UX) and open up new recurring revenue streams. Value-added services, like hardware, fraud protection tools, automated card updaters, mobile payments, invoicing tools and more, will improve the appeal of your payment offering and earn you more. Talk to your partner about building a modular, one-stop solution that includes everything your merchants need.

Sign-up and Onboarding: Getting your merchants from sign-up to processing as quickly and smoothly as possible is critical to maximizing adoption. Talk to your payments partner about how to send applications to them and how long it will take to underwrite each account and set them up to transact. Ideally, you should aim for same-day or next-day approvals as that’s what many users expect, especially if they’re familiar with big brand processors.

Support: Eventually, a user will have an issue that requires support to resolve. When it comes to accepting payments, that support needs to be fast and effective. Since your company likely doesn’t have a great deal of expertise in-house, having great support backing you is crucial. Make sure your team has a clear understanding of the support flow so they can efficiently communicate with your payment partner’s support team and resolve issues quickly.

6) Ensuring Compliance and Security

The last thing to consider is compliance. Everyone involved in payments needs to be compliant with the Payment Card Industry Data Security Standard (PCI-DSS). Currently on version four, the PCI-DSS outlines the protocols and security requirements all payment participants need to meet to ensure sensitive customer payment data is secure.

The bad news is that PCI-DSS is complex. The good news is that, with the right platform partner, it isn’t really your problem. Choosing the right partner not only ensures you’ll have access to guidance from a team of PCI-DSS experts, but it also means compliance is built into the technology you integrate into your software. That significantly reduces the PCI-DSS burden by shifting it to your partner, making compliance simple and easy to manage.

NMI’s full-service embedded payments platform offers a one-stop solution for software platforms to start monetizing payments. It’s a simple, easy and effective way to tap into payments revenue today, while still offering a high level of customization for those who want a more hands-on approach to payments. Best of all, NMI Payments offers a better revenue share than the other big platforms, giving you a bigger slice of the pie without the additional risk.

To find out more about how NMI and embedded payments can help you scale up your software business, reach out to a member of our team.