Parts one and two of this series covered the basics of the payments industry and why the market is ideal for software providers to start offering payment processing to businesses (merchants). So, what can independent software vendors (ISVs) do to ensure their entry into the payments space is successful and profitable?

Success comes down to three things:

  • Encouraging merchants to abandon traditional processors in favor of software-driven payments
  • Providing a best-in-class payment experience
  • Keeping them onboard for the long haul

In this blog, we’ll explore the strategies software providers can adopt to make their services as attractive as possible — from merchant signup through the lifetime of the relationship. 

Enable Merchants to Stop Thinking About Payments

The core value proposition of software-led payments is centralization. 

Imagine a contractor with a small fleet of vehicles fitted to provide on-site maintenance and repairs. That contractor likely uses a business management solution to set schedules, track their workforce and monitor inventory levels and vehicle movements. They have everything they need to manage their operations in a central platform — except for payments. 

If they want to take payments in the field or send clients an invoice for their services, they must find a third-party payment provider. Unfortunately, that means the contractor will have to pay more for payment processing and manage an additional vendor relationship — a costly, inconvenient position for any business owner.

This is where software developers shine. By incorporating payment features into the software solutions merchants use for everyday operations, ISVs can provide a convenient, centralized business solution that reduces unnecessary costs and eliminates the hassle of juggling multiple vendors.

Remember, merchants don’t want to think about payments; they want to focus on their business. Payments should be as simple and invisible as possible. Embedding payments into an app or software solution is an excellent first step in removing weight from a merchant’s shoulders.

Own as Much of the Payments Process as Possible

An ISV that offers integrated payments on a referral basis effectively still passes a merchant off to a third party. Signup might be fast and easy, but if any issues arise, the merchant has to go through an intermediary or get help from a vendor they’re unfamiliar with. This sacrifices speed and puts trust and comfort at risk.

Conversely, the more of the payments process a software provider owns, the more streamlined the merchant lifecycle will be. For example, a software provider acting as its own independent sales organization (ISO) has far more control over a merchant’s experience than one sending leads to a third-party ISO behind the scenes. A software provider that becomes a payment facilitator gains even more control by taking on responsibility for pricing and risk management (although this particular route requires ISVs to take on more risk than most are comfortable with).

For many software providers, partnering with an all-in-one platform allows them to enjoy the best of both worlds — offering merchant accounts directly while maintaining simplicity and leaving the door open for future growth. 

Offer the Widest Set of Merchant Services

Another way software providers can simplify payments for their customers is to offer a comprehensive set of merchant services. Merchants require more than basic payment processing. They also need:

  • A way to securely store payment data
  • Access to fraud protection
  • Advanced processing options (like Level II and Level III processing)
  • Invoicing support
  • Modern hardware
  • Flexible payment options (like digital wallet acceptance, text-to-pay, contactless payments, digital payments and more)

Getting everything they need to transact from a single partner is a massive win for merchants. The more a software provider can offer, the less friction a merchant (and their customers) will experience. Over time, these comprehensive, embedded payment solutions will position software vendors as critical partners, increasing stickiness and encouraging loyalty.

How software developers can improve the merchant payment experience

Stay Ahead of the Technology Curve

The payments industry is changing; everyone can feel it, especially merchants. A merchant’s inability to keep up with trends and consumer preferences will impact their ability to compete. That’s why many merchants are turning to software vendors for payments — they know the right ISV merchant service provider can help them modernize their offerings.

Merchants want to keep up with consumer preferences; they know their business relies on it. However, they don’t want to repeatedly go through the process of modernizing and finding new partners. They have bigger things to worry about. As a result, future-proofing is a valuable selling point for ISVs. 

Today, a merchant might demand the ability to process credit cards and digital wallet payments through their software. Tomorrow, they may want to integrate financing, buy now, pay later (BNPL) systems, or direct payments. Beyond that, who knows what next-gen payment rails a merchant will need?

For software providers and developers, keeping up with the leading edge of payments tech and consumer demand ensures merchants have high-value payment solutions no matter where the space goes. For large software companies, that might be doable in-house, but for most, the best option is to find a payments partner that can keep payments and technology moving forward on their behalf. 

Tackle Your Merchants’ Fraud Problems

Fraud is a huge problem. It impacts everyone in the payments chain, including merchants, software providers and payment providers. Unfortunately, it’s especially rampant in card-not-present situations (like ecommerce) where customers enter their payment details online or through software. In fact, global card fraud losses could reach $397.4 billion over the next decade, according to the Nilson Report.

Offering fraud prevention is an excellent way for ISVs to solve a big problem and increase their overall value proposition (while also protecting themselves). Whether provided as core services or add-ons that open up new revenue channels, software providers can give merchants anti-fraud tools like:

AI-Powered Fraud Detection: Technologies like Kount use the latest in artificial intelligence to scan transactions and detect potential fraud faster and far more accurately than any legacy system can. Training on billions of past transactions allows these AI-powered tools to catch far more fraudulent transactions and return far fewer false positives. That keeps merchants safe while minimizing false alarms that can cause customer frustrations. 

Chargeback Defense: Chargeback defense systems ensure merchants are aware of every dispute and assist them in filing timely responses. The result is far fewer losses from chargebacks and greater trust among all parties. 

Payer Authentication: Payer authentication, like the 3D Secure protocol, offers an additional layer of security on top of transactions by requiring payers to enter a password or verify transactions via text. This extra layer of protection is mandatory in many places, such as the U.K., the European Union and Australia.

Lean on Partnerships to Stay Competitive, Relevant and Profitable

Just as merchants want to centralize and simplify transaction processing, software providers can enhance their payment offerings with the right partner. The right payments platform will allow a software provider to access everything it needs to offer a complete payments solution, including a full suite of merchant services, cutting-edge payment rails and technology and advanced fraud protection. 

NMI Payments offers software providers a turnkey, all-in-one ISV payments system that includes:

  • A complete merchant onboarding system and merchant account issuing
  • An industry-leading gateway that integrates into software quickly and easily
  • A full suite of value-added services, including the most advanced fraud protection tools available

NMI has been at the cutting edge of payments technology for over 20 years, ensuring ISVs and their merchants always enjoy the industry’s best service backed by an unwavering commitment to innovation. 

To find out more about how NMI can make offering embedded payments simple and easy, reach out to a member of our team today.

Don’t just turn on payments, transform the way you do business

  • Generate New Revenue By adding or expanding payment offerings to your solution, you can start earning higher monthly and transaction-based recurring revenue.
  • Offer the Power of Choice Allow merchants to choose from 125+ shopping cart integrations and 200+ processor options to streamline their onboarding.
  • Seamless White Labeling Make the platform an extension of your brand by adding your logo, colors and customizing your URL.

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