How Software Companies Are Becoming The Payments Provider In 2020

Integrated payments for software platforms have been dominated by Stripe, Braintree, and PayPal for over 10 years. In the last year, we have seen the masses leave those typical providers.

Integrated payments for software platforms have been dominated by Stripe, Braintree, and PayPal for over 10 years. In the last year, we have seen the masses leave those typical providers.

SaaS platforms in 2020 are partnering with other existing payment facilitator platforms that add 2-4X the revenue from payments instantly while offering all of the same functionalities and ease of integration.

The Outdated Way To Integrate Payments

In the early days of payments integrations, software platforms integrated with a single provider or gateway in order to take advantage of referral relationships.

Customers would bring their own merchant account with them, and some percentage of the total revenue would be shared between the payments provider and software company. 

The Problems With This Model 

  • It is a poor onboarding experience
  • You must leave the software for customer service, reporting, and payments management
  • Revenue sharing is not transparent

The days of software platforms having a single preferred payments provider that’s an acquirer or ISO are numbered and outdated. Integrating with a gateway, like Authorize.net, is also becoming a thing of the past. Many payment facilitator offerings now come with gateway functionalities, so that some merchants can bring their own merchant account if needed.

The Best Way to Integrate Payments in 2020

Integrating with an existing payment facilitator payments provider is the solution. Many payment providers offer a hybrid-model where the software company reaps all the rewards of the model, with no up-front costs or risk. There are now white-label payments programs, and many platforms are opting to brand the experience as their own. 

Think Shopify Payments. Shopify was the first major e-commerce platform to adopt the payment facilitator model. In Q4 of 2019, Shopify reported revenues of $321.99 million from payments alone, up by 53% year-over-year from $210.30 million. Not only did the transition create a massive new revenue stream, but it also brought payments reporting and management into the Shopify platform

At SwipeSum, we’re a payments consulting company that advises software platforms of all sizes on payments. Most companies we work with already have been through several payments integrations. In years past there were barriers to entry with the payment facilitation model; heavy upfront costs, risks and liabilities, and registration with the card brands. Those are problems of the past.

Integrated payment providers are evolving fast to meet the needs of innovative startups and entrepreneurs. There is a constant need to keep pace with the competition, and other payments companies are dethroning name brands.

The Benefits of Payment Facilitation

  • Instant onboarding of merchants
  • Ability to stay out of PCI scope
  • Payments reporting and management sit inside software platform
  • Advanced payments features, such as split payments, are included in the offering
  • Most lucrative revenue sharing potential

The product benefits and upgrades to customer experience are unmatched with the payment facilitation model. We have seen integrated payments companies earn over 2% of the total credit card processing volume running through their platform, while staying price competitive with competition. 

The payments industry has always toed the line of being a commodity. As software evolves, that is definitely not the case. Entrepreneurs of SaaS platforms are selecting partners based on solutions and services, not on price. At SwipeSum we preach that is the solution is right, you can get the terms and price where it needs to be. In 2020, the entrepreneur has the power in payments negotiations.

We advise and offer free consultations to all payments companies evaluating integrated payments partners. Our proprietary technology finds any software platform the best solution provider, and then we help to negotiate the most favorable terms and revenue sharing. SwipeSum is your free Chief Payments Officer.

Michael Seaman

Michael is the co-founder and CEO of Swipesum. A veteran of the payments industry, Michael and his brother Stephen have led Swipesum since its inception in 2016. In his free time, Michael likes to play with his two daughters and skateboard.

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