Independent software vendors (ISVs) seem to be in a perpetual growth cycle. As they move toward more SaaS offerings for their clients, the market for cloud software is expected to exceed $100 billion in 2018. But for all this growth, some ISVs continue to leave money on the table by failing to integrate payment processing into their software offerings. Mobile payments are growing at a rate of 80% per year, with in-app purchases and store app payment capabilities helping drive the growth. Software offerings that do not take advantage of this trend risk losing a large volume of potential revenue.
Lost Revenue from Failure to Integrate
More and more, customers are looking for payment simplicity and functionality. Software and apps that provide payment processing enable users to remain in the system to make payments, providing an immediate, user-friendly payment experience. And for those selling to businesses, enabling companies to send and receive payments through the software they are using speeds up the process and adds to the reasons to purchase from a particular vendor.
For ISVs, this also means that building in payment processing technology into their software offerings creates a potentially powerful revenue stream for the vendor. Every electronic payment processed generates a fee. If the software allows customers to run payments directly within or through the system, it creates an ongoing revenue stream for the vendor beyond the purchase price and license fees.
Addressing Security Needs
Critical to this process, of course, is establishing the right security protocols and measures. Computer hackers grow more sophisticated every day, and generate new threats frequently. For ISVs to create value for their customers, they must stay ahead of this curve and prevent data theft or other malicious attacks. A single breach can cost millions in dollars, and immeasurably damage a company's reputation.
Still, privacy laws and concerns create a need to build this kind of protection into any cloud-based platform. In this way, ISVs are often uniquely positioned to understand both the threats in the market and the best practices for preventing a breach. Building in payment processing creates a new potential target for an attack, but should only reinforce the need for protections critical to any SaaS offering.
How to Select the Right Processing Partner
The right partner with which to offer payment processing within software applications will depend in part on the ISV. Because processing needs evolve over time, an ISV should examine its business model and its growth plans not only in the moment, but for several years ahead. The payment processing partner must be able to keep up, to remain nimble, and to develop over time in response to emerging needs and challenges. As with any integrated service, payment processing requires a technology that remains relevant over the life of the software that employs it.
Beyond this, the payment processing partner should be one established enough in the industry to have a track record of success. Whether the ISVs that build in processing are new or staples in the market, payment processing represents an area in which they will not want to take too many chances.
ISVs looking for ways to improve their revenue should almost always build payment processing into what they offer. The challenges of incorporating functionality should be considered, and addressed in the planning stages. But without building payments into the software, the provider is choosing to reduce its revenue below what it can and should be.