There's a strategic opportunity in integrated payments

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Businesses rely on payments to survive yet managing the nuts and bolts of a successful payments operation is often the bottom of the priority list for many small businesses.

When we look at the management systems that help these small businesses run — whether it’s practice management, gym management or retail management systems — integrated payments is a cornerstone of any robust software.

This means fully embedding payments within a system so a business can accept almost any payment type, from anywhere, in any way. Going further, integrated payments can make it easy to facilitate online invoicing and online bill pay, recurring payments with a secure card on file, payment plans and customer communications.

While serving the needs of business customers is the impetus behind integrated payments as part of these management systems, ISVs stand to gain some strategic ground, too. Integrated payments, aside from just being good business, is also a strategic opportunity for ISVs to add several competitive differentiators, leverage new marketing opportunities and generate new revenue streams.

Determining how to market any management software requires a deep understanding of the complex and individualized needs of an ISV’s small-business customers.

One truth that holds across industries is that manual work is time-intensive and resource-draining, especially when it involves high volumes of data across disparate systems. When it comes to payments, this can get really complicated with all the moving pieces.

There’s more to compliance than meets the eye and most SMBs have a hard time comprehending what goes into adhering to the 12 requirements of PCI DSS compliance. Without domain expertise in payments or compliance, many SMBs find themselves subject to a broad scope of compliance that requires an exorbitant amount of IT manpower.

Partnering with an ISV that has the PCI component handled can be a major benefit for SMBs that don’t have the bandwidth to manage compliance in-house and that also don’t have tens of thousands of dollars to spare should they violate any of the requirements.

While it’s not quite in the same spotlight it was after its rollout five years ago, EMV is still a sticking point for many merchants and SMBs. Migrating to EMV-capable hardware and software is not only a big headache but also a financial burden.

When ISVs partner with an EMV-certified payments partner to offer integrated payments through their management software, it can save SMBs months of internal work. Customers — whether medical practices, gyms or retail locations — do not want to be in the weeds with EMV; however, they do need to offer their customers the most secure, compliant payment options available. Enabling EMV-capable payments via EMV readers and mobile EMV can greatly enhance a practice management offering by streamlining the entire process.

The ability to offer secure payment methods to customers is integral for merchants. If their customers do not feel that their payment card information is adequately protected, they will not remain loyal to the brand. According to a survey by Cisco last year, 32% of respondents reported caring about data privacy so much that they have switched companies or providers or data-sharing policies.

A PwC survey showed that just 25% of consumers believe most companies handle their sensitive personal data responsibly. Helping your customers restore and boost their customers’ peace of mind about how their sensitive payment data is handled is key. Working with an integrated payments partner that offers both tokenization and point-to-point encryption (P2PE) is a strong benefit you can pass along to your customers.

IT and integrated payments should be strategic considerations when building out your product. It can be tempting for developers to go the easy route and leave payments functionality in the customer’s court, but it would be a huge missed opportunity. In reality, leveraging integrated payments as a strategic play can be very impactful for the business.

There are several different ways that offering a strong integrated payment option can serve as a competitive advantage for ISVs. For one, integrated payments data provides SMBs with insights into who their best customers are and who spends the most, which is arguably lucrative data. Beyond simply facilitating payments, a robust payments offering provides actionable data that an ISV’s customers can use to grow their business. What’s more, SMBs are willing to pay a premium for those insights, while enabling software developers to monetize payments.

Partnering with a trusted payments partner also means that developers can offer other add-on solutions that streamline payments and, perhaps more important, eliminate the headaches associated with payments. For example, unnecessary card declines are the bane of small-business owners; roughly $40 billion in revenue is lost each year to unnecessary card-not-present credit card declines. ISVs that offer some type of automatic account updater functionality can position themselves as a prominent choice to merchants looking to reclaim tens of thousands of dollars in revenue that would have otherwise been lost.

Partnering with a payments company that has a track record of success can also bring additional marketing opportunities and increased exposure for an ISV’s brand. Collaborating on marketing efforts to promote how integrated payments help SMBs is a double win; it benefits the payments partner and it benefits the ISV. By leveraging marketing materials that a payments company may already have on hand and incorporating an ISV’s branding, it can afford a greater reach and more diverse marketing materials for no additional cost. ISVs that may have a smaller marketing department or limited budget can leverage the marketing powers of their payments partner to create videos, case studies, sales sheets, sponsorships, email blasts and other promos. More extensive promotions like device swap-outs can also prove to be effective in growing the business.

Perhaps the most appealing motivator behind integrating payments into management software is the additional revenue streams that result. Finding a payments partner that offers commissions and revenue sharing options can be especially lucrative. For some ISVs, it means earning more through revenue sharing programs than through software fees. As small businesses grow, the ISV’s revenue share increases exponentially. A strong payment processing partner will help ISVs troubleshoot any issues and grow their business, which will also increase revenue in the long-term.

Making payments strategic means ISVs must proactively anticipate the needs of their customers and work diligently to address them. Partnering with a seasoned payments organization that can automate and streamline many of those solutions is often the path of least resistance to enjoying the rewards of a truly strategic, integrated payments solution.

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Digital payments Payment processing EMV Small business Merchant