Generating more revenue can be tricky - especially as consumers and businesses tighten their belts and cut back on spending. Should you add more services? Invest in developing new technology solutions? Increase your sales and marketing budgets to bring in new customers? For ISOs, ISVs and merchant service providers, increasing profits can feel like walking a tightrope.
With so much economic uncertainty, you can’t afford to waste money on chance. To help you maximize growth, we’ve outlined three ways for ISOs, ISVs and merchant service providers to generate more revenue with the least amount of risk.
3 Keys to Generating More Revenue
Times are changing. Merchants are less interested in working with separate providers for payments, point of sale (POS) and other business applications than a one-stop shop. Because of this, businesses can no longer rely on setting up merchant accounts as their only source of income. You will win more deals and grow revenues if you package payments with value-added solutions that solve business problems for merchants and provide better experiences for consumers.
In addition to building comprehensive solutions for your clients, there are other ways you can capture more revenue, including becoming a PayFac, white labeling your partner solutions and expanding your offering through partnership.
- Become a PayFacBusinesses looking to generate more revenue should consider becoming payment facilitators (PayFacs). A PayFac takes on merchants through its merchant identification (MID) number and handles all aspects of the merchant experience, from onboarding to ongoing services.This model enables PayFacs to take a higher percentage of payment processing fees and increase their business valuation. However, those advantages come with a cost (and some risks). In addition to paying annual fees to card brands, PayFacs must also hire skilled professionals to manage underwriting, billing, funds distribution and chargebacks. Partnering with a company like NMI that can help launch your PayFac business and provide ongoing support will make the process easier and shorten the time required to start generating profits.
White-Label Your Partner’s SolutionISOs and ISVs that want to elevate their businesses in the payments space with less risk and investment should consider white labeling a payments partner’s solution. White labeling allows you to provide payments under your unique brand. This gives you more creative freedom and control over client experiences than if you simply resold a partner’s solutions and services.White label partners can also use this model to build a successful verticalized business. You can do this by:
- Creating a MID for a specific vertical
- Developing software (or partnering with a developer) to provide all of the solutions customers in that vertical need
- Negotiating the best payment processing fees for customers in that vertical – and the best margin for yourself – based on a high volume of transactions
- Launching your new service under your name and branding
- Partner to Expand Your SolutionIn a recent CCSales Pro podcast, NMI CEO Vijay Sondhi pointed out that software developers want to shift payments from a cost center to a profit center. However, while software companies are experts in the markets they serve, they aren’t necessarily experts in payments. ISOs, on the other hand, are.Another way to generate more revenue is by partnering with an ISO or ISV to enhance your payment solution. A partnership can benefit both parties, especially when one business has a deep understanding of payments and the other an expert knowledge of technology. “It’s the fastest growing segment we see,” Sondhi said. Sondhi suggested to ISOs, “If you help them monetize payments and share some of the economics, you’ll be in a great position.” If an ISO can leverage its sales talents to help a software company break into new markets, it can boost revenue for both. “Focus on the economics and your ability to distribute,” Sondhi said.
Your Path to Growth
Many growing ISO businesses look more like software companies. Likewise, more software companies are expanding to provide merchant accounts services.
“It’s all about economics,” Sondhi said. “The revenue will be distributed to those who add value. If you aren’t adding value, you can’t earn more.”
As the lines blur between payments and software, these trends will continue to gain momentum. Instead of fighting it, consider how you can use these changes to your advantage. Adding value-added services and partnering with innovative companies in the tech and payments spaces will enable you to grow revenue and scale - even amid economic uncertainty.To learn how to expand your offerings and grow your business, contact one of our experts or schedule a consultation.
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