The payment industry is in the midst of an exciting and turbulent period. According to research from Business Insider, mobile payment volume is projected to experience a CAGR (compound annual growth rate) of 80% between 2015 and 2020, reaching a payment volume of $503 billion. And in-store mobile payment users are expected to have a 40% CAGR over the same period.
ISVs would be wise to pair their software with payment services to get a piece of these opportunities. Unfortunately, according to research last year by First Annapolis Consulting, 49% of ISVs are not integrating payments with their software, missing out on healthy monthly recurring revenue streams.
Like any good opportunity, there’s a few important choices that must be made and pitfalls to avoid in order to reap the highest rewards. Bom Lee, VP of sales, North American Bancard and Bill Lodes, EVP, business development & strategy, First American Payment Systems offer their timely advice to ISVs.
Before Selecting a Payment Processor, Consider This
First American Payment Systems’ Lodes says ISVs need to first assess the payments needs of their industry and the clients who use their software. “This also includes an honest assessment of what their future payment needs will look like and the payment technologies needed to address those needs,” he says. “Today, many customers are looking for a frictionless payment experience where payment sits in the background and facilitates a positive customer experience overall.”
Another point to keep in mind, suggests North American Bancard’s Lee, regards customer service. “An ISV that merges its software with a payment processing service must possess a highly educated and sophisticated sales and support staff,” he says. “Having the core personnel needed to scale up quickly and efficiently will make integration much smoother. Additionally, ensuring a strategic partnership is in place so your platform is best optimized for payment processing is imperative when integrating a service.”
ISVs may need to do a little homework about payment innovations and technology such as how to integrate recurring payments, EMV (Europay, MasterCard, and Visa) and PCI (Payment Card Industry) compliance, data encryption and account updater software, adds Lodes. “Reading up on these topics and understanding how they can affect a client’s efficiency and growth will go a long way. From there, partnering with a knowledgeable and technology focused payments company is the next step.”
Software Mistakes that Can Hurt Your Integration Success
Security is of the utmost concern for ISVs and businesses. “Not adhering to and embracing the most stringent and up-to-date security protocols for payments can not only open the door for a data breach, it also erodes customer trust,” says Lodes. “ISVs should be able to ensure their clients that their payment solutions adhere to the strictest security protocols.”
Lee concurs and adds, “Another big mistake is failing to optimize your software to accept preferred payment methods. As the adoption of mobile wallets and NFC (Near Field Communication) payments continue to grow, being able to support preferred payment methods is paramount. Optimization of the payment experience for customers while maintaining a secure, trusted transaction are the key drivers in software development success.”
ISVs sometimes don’t integrate a variety of payment technology solutions when the opportunity presents itself, says Lodes. Instead of only meeting the current needs of the client, a good ISV can anticipate future needs and growth, he adds. “Doing this means integrating multiple and varied payment technology solutions that will help clients grow seamlessly. This kind of forward thinking is what sets a great ISV apart from the competition.”
Avoid These Business Mistakes, Too
One of the biggest business mistakes Lee says he sees ISVs make is failing to build an easy-to-integrate software development kit (SDK). “SDKs save time, and open the door to new or recurring revenue streams,” he says. “Another mistake is when an ISV selects a processor that is not a cohesive associate. Ensuring the processor is vested your success is vital to the partnership and mutual growth over time.”
Among list of payment processing-related mistakes, the biggest one is simply not offering payment solutions, says Lodes. “If ISVs knew the money and business that is lost by not offering payment processing products, they would be surprised. The technology has become easy to integrate into so many other software solutions that there really aren’t any good reasons for ISVs to avoid offering payment technology solutions.”