Universal payment solutions like Square and Stripe are popular for their ease of use and straightforward functionality. However, their one-size-fits-all model can be limiting —especially for merchants with unique needs, business models and regulatory requirements.
In a recent piece for the Fintech Times, NMI’s Chief Strategy Officer, Kate Hampton, argues that independent software vendors (ISVs) are better suited to merchants selling in highly niched and highly regulated verticals. Because they are more focused and customizable, they fill gaps that big-name payment solutions can’t.
Big Brand Payments vs. Verticalized Software Solutions
Large platforms are designed to serve the widest audience possible; that means they have to make compromises. While big-name payment processors work fine for most businesses, when a merchant needs a specialized function, the limited nature of these platforms makes them less convenient
Thankfully, ISVs with embedded payments can fill this gap. In her article, Hampton cites hospitality and healthcare as two industries that require niche payment solutions:
Hospitality: The global nature of the hospitality industry requires companies to accept multiple payment types in various currencies and seamlessly blend offline and online commerce. For instance, guests traveling across Europe should be able to book their hotel rooms online (or in person) with the same card at each location.
Healthcare: Healthcare providers must adhere to strict regulations to protect patient confidentiality and data (and face stiff penalties if they fail). Patients may also need access to unique payment solutions, such as long-term repayment options and loans. Big-name payment providers typically don’t have the expertise or ability to meet these unique industry needs.
Merchants in hospitality and healthcare rarely get everything they need from generic payments platforms, forcing them to compromise in areas where they shouldn’t.
Instead, Hampton points to the narrower focus, flexibility and customization ISV partners can offer for merchants in specialized verticals. For example, a healthcare provider taking payments directly through their patient management software can rest assured their solution complies with HIPAA. Since the software vendor is targeting a niche, it understands and serves the specific needs of its target market. Additionally, because ISVs are so flexible, they can offer a custom fix if there is a gap in the healthcare provider’s needs.
According to Hampton, ISV offerings surpass generic competitors in the following ways:
- Tailored Capabilities: Food and beverage companies have different operating models than dental offices, so why should they be expected to use identical payment solutions? ISV payments ensure that businesses can tackle the unique problems they face daily rather than providing them with half-measures that only solve high-level problems
- Targeted Support: Support is always a necessity. Whether troubleshooting an issue or providing guidance on best practices, the support teams at large generic providers will have limited domain-specific insights. By contrast, the support team at an ISV targeting a specific niche can offer true expertise and work with customers to develop unique solutions
- Increased Flexibility: ISV payment solutions are more flexible than the sweeping solutions offered by big providers. Increased flexibility means increased scalability. An ISV is far more likely to provide a solution that grows alongside the merchant rather than locking them into something they don’t need later on
For more of Kate Hampton’s insights on the benefits of ISV payments and why embedded software solutions are sweeping the industry, read the full article in the Fintech Times.
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