The Latest on Independent Software Vendors (ISVs)

It’s a great time to be an independent software vendor (ISV). With more and more businesses utilizing software solutions that accept payments, software providers have the opportunity to not only earn a larger share of new business accounts, but to add a new revenue source in the process. How? By integrating applications - like payment processing capability - into their software.

The big questions an ISV needs to answer, however, are how to integrate payment processing into the software, and more specifically, who to partner with in this endeavor.

What is an ISV?

According to The Strawhecker Group, an ISV is defined as “a company that provides software solutions that aid in managing different functions of a business operation. Generally, ISVs specialize their solution to a specific merchant vertical, oftentimes at a granular level.”

Examples of integrated applications are customer engagement tools and phone intelligence tools, but ISVs are also prime candidates to add an integrated payment solution. In that scenario, notes The Strawhecker Group, “vendors offer payments companies a complementary solution and open up a new merchant sales channel. The ISV Channel is often characterized by high merchant retention rates, due to the integral role a multi-functional software system provides.”

One of the big decisions a software provider needs to make is: how much control do I want to have over my user’s experience? It’s a decision that has implications beyond simple user experience. For example, if you choose a web service or full API integration that allows you complete control over the user payment experience, you may need to store, process and transmit cardholder data within your software, which can have potentially costly PCI compliance implications. On other hand, if you’re willing to forego control, PCI compliance requirements may be minimized.

Similarly, you may want a payment processing partner who can offer flexibility in terms of onboarding merchants. Other functionality that is attractive these days is supporting multiple payment methods, as well as offering other security features like encryption and tokenization, the latter of which involves exchanging cardholder account information for a randomly-generated digital identifier (or token).

New Revenue Opportunities via Revenue Sharing

One of the primary benefits of an integrated payment solution is the opportunity to create a recurring revenue stream through one of three common partner models. In The Strawhecker Group’s recent study, ISVs ranked price/commission as the second-most important factor when selecting a payment partner, only behind customer service.

Graphic showing the factors ISVs consider when choosing a payments partner

Partner Models

Regardless of your individual priorities, the three standard partner models are the referral model, the agent program, and the ISO program.

  • The referral model - In this scenario, the software vendor simply refers new merchant leads to their payment partner, who is responsible for all sales and support functions.
  • The agent program - With this model, the software vendor is generally responsible for the sales and onboarding process, while the payment processor’s role is limited to training, activation, and customer support.
  • The ISO program - If the software provider functions as an Independent Sales Organization (ISO), the organization keeps all sales and support functions in-house. With this model, the software solution has the most control over the user experience, though the associated costs and share of responsibility are higher as compared to the other two models.

If you determine more of a partnership approach is right for you, it’s helpful to work with a payment partner that provides a dedicated team of sales specialists. Specifically, you want to find a sales team who are: experts in your vertical, willing to learn your software, and possess an understanding of your clients’ needs. Ideally, your partner ought to work hand-in-hand with you to create customized, co-branded marketing campaigns that are in line with your client engagement philosophy. Global Payments Integrated fits this bill, having worked with over 60 verticals and counting.

At Global Payments Integrated, we invest in our partners and their experiences. We work hand in hand with our partners to build a product roadmap together to continually enhance our solution set available to our partners. Our focus is helping our ISV partners continue to drive adoption and margin for their business while providing their customers with an enhanced overall experience. 

Our Integration Solutions

If you have any questions about our integrated payment processing solutions, please contact us today. Our integration specialists have successfully completed thousands of integrations and can work with you to customize a program that works for you and your clients.