The Limitations of Big Tech in Niche Industries

Big tech companies like Stripe and Square play a significant role in the payments sector. They allow merchants to accept payments quickly and offer consumers convenient payment options. However, their one-size-fits-all approach to payment solutions often fails to serve businesses with specialized needs effectively.

In a recent article for The Fintech Times, Kate Hampton, the Chief Strategy Officer at NMI, explores this topic. She explains why businesses in highly regulated and niche industries require customized payment solutions and why big tech can’t provide them.

The Pros and Cons of Big Payment Companies

Big tech payment providers like Square and Stripe do a lot of things well. For consumers, these platforms offer fast and convenient payment experiences. For merchants, they make it easier to handle various secondary payments-related tasks, like sending out receipts or follow-up surveys. Because of their widespread recognition, their brand reputation can rub off on merchants who adopt them, providing an added element of trust.

Unfortunately, tools designed for such a wide range of merchants come at a cost. For instance, businesses in highly regulated verticals (like healthcare or education) may struggle to find big-tech solutions that align with their unique needs.

These generic solutions often fail to meet industry-specific compliance standards and transaction flows. At best, merchants with specialized needs will be handcuffed by generic systems. At worst, they risk failure to meet mandatory regulatory standards.

Hampton argues that independent software vendors (ISVs) are the ideal solution to fill this market gap because, unlike huge companies that develop broad solutions, ISVs create payment systems tailored to the unique needs of specific verticals. Because ISVs offer smaller solutions, customization is also more available. Overall, niche-targeted ISV payments allow for a more nuanced approach that considers each industry's unique workflows and regulatory constraints.

Three Key Factors for Niche Merchant Success

Hampton identifies three factors merchants in niche verticals should look for when considering any payment solution: tailored capabilities, high-value support and increased flexibility.

Tailored Capabilities: The more targeted a payment solution is to a merchant’s unique industry needs, the better. ISVs can integrate targeted solutions into industry-specific workflows in ways generic providers can’t. This makes a payments partner with a track record of industry experience an invaluable asset.

High-Value Support: When questions or problems arise, merchants need fast, effective and frictionless support. For merchants with unique business needs in specialized industries, excellent customer service is harder to find with generic payment providers.

Increased Flexibility: Businesses aren’t static, but generic payment systems are. Embedded ISV payments are more equipped to help merchants scale because they are hyper-focused on their niche. They understand how growth occurs within their industry and how a company’s needs change alongside their business.

While big tech companies offer many advantages for merchants with generic needs, their limitations become apparent with businesses that don't fit the typical mold. For such companies, Hampton strongly recommends turning to ISVs who can offer the customization, support and flexibility necessary to navigate today’s complex and evolving commerce landscape.

For all of Kate Hampton’s insights into targeted ISV payment solutions, read the full article on TheFintechTimes.com.