ISVs can outgrow their payment provider almost as fast as kids outgrow shoes. The ramifications of an ill-fitted payment program can be increased customer attrition and reduced customer acquisition.
Just like your kids’ shoes, it’s all about growth and maturity. The more your software advances and your customer base diversifies, the more unique and diversified your needs become. In this article, we highlight the top indicators that may suggest you’ve outgrown your payment provider and that it may be time to look for a new one.
Think back to when you first enabled payment functionality in your software. If you were like many new entrants in the integrated payment world, you were looking for fast and simple. After all, your expertise lies in your software, not in payments. Plus, your development staff likely had a heaping plateful of projects already waiting in the queue. As a result, your appetite for reassigning a bunch of resources to work on payment integration was probably non-existent.
You may have started out with Stripe or a similar provider that doesn’t require a lot of configuration to get started. There’s nothing wrong with taking the quick and easy integration approach – unless your customers need more than one-size-fits all.
Stripe and others like it were designed to support certain types of merchants, namely online merchants. Add omni-channel payment acceptance (e.g. mobile payments, terminal-based payments, recurring payments) into the mix and quick and easy can become hard and laborious. As your customers evolve and your base grows, you’re likely to encounter broader payment needs than what you can support with your entry-level integration.
Okay, this may seem a little weird. How can you outgrow a payment provider that has recently grown exponentially larger through a merger or acquisition? Well, you outgrow them in terms of customer focus. Time and again software providers tell me their integrated payments vendor had been acquired – not just once but multiple times. This has resulted in higher rates for their customers and a huge gap in the service they receive. Often their customers have no idea where to call for support or how to interpret the new fees appearing on their invoices. Essentially, the customer experience goes down the tubes. That’s not good for you or your software customers.
LinkedIn claims that 2020 launched the decade of the customer. I believe that is true as I’m seeing a heightened awareness of the customer experience. The smart money is on businesses that continuously strive to improve it.
When you have third party integrations such as payments, a large part of your customers’ experience is out of your hands. That’s why it’s so important that your payment partner maintains the same customer focus that you have. Often the larger and more corporate your provider becomes, the smaller the focus on your customers.
Some payment providers do not offer the opportunity for you to earn recurring revenue on the payments that are accepted through your platform. Entry level providers such as Stripe, do not offer to share the payment revenue with their software partners. There can be millions of payments processed, and you still won’t receive any of that revenue.
Perhaps you’re thinking that in the grand scheme of things, recurring payment revenue is a little further down your priority list. That said, if allowed the opportunity, payment revenue can develop into a nice steady flow of income that you may not want to let pass. I can think of a hundred things I’d do with an added source of revenue – regardless of the size.
A growing trend among software providers is to explore different options when it comes to their payment integration. White label payments, for example, allow you to control more of the pricing and customer experience. Another option gaining popularity is Payment Facilitation (PayFac). In this scenario, the software provider assumes a greater amount of the payment risk and customer service, but the payout is much greater.
As your software and payments capability mature, you may want to consider deepening your role in the payment process. Some integrated payment providers won’t allow you to do that.
Software companies that offer payments need ongoing interaction and support from their provider – pure and simple. . Too often, once the integration deal gets signed, what should be the start of a payment partnership quickly turns into a simple vender relationship. And, that’s not enough.
I was talking with the president of an ISV recently. He shared that his payment provider relationship had begun to unravel soon after they were acquired by a larger company. He would send email questions about how to handle certain situations, and he would get one-word responses. No further exploration of the issue or explanation of the answer.
Once he transitioned to a new provider, this same scenario resulted in paragraphs of answers along with additional exploratory questions. It was a night and day difference for him and his team.
If you think it’s time to look around for a new integrated payment partner, check out this article by Mark Wilson, founder of TermSync software. It’ll give you a good feel for what to look for.
And, if you’re still undecided as to whether a payment partner change is in order, here’s a brief partner assessment that will help you with that decision.