What Payments Consolidation Activity Means to a Software Developer

Recent payments consolidation activity should have you asking your payments partner some important questions.

payments M&A

To say there’s been a lot of merger and acquisition (M&A) activity over the past few years in the world of payments could be a slight understatement. Some major payment processors have merged, which have resulted in the world of the mega processors. These consolidation efforts can create opportunities for both parties, but sometimes leaves questions for partners and merchants.

For ISVs, M&A activity in the payments world might mean coming to work one day and realizing that you have an entirely different partner than the day before. There is a possibility that you are now linked to a partner you had consciously decided not to partner with. Regardless of the situation, payments consolidation activity should have you asking your payments partner some important questions.

Key questions to ask your payments partner.

Any payments partner worth doing business with will be open and transparent about their current position in the marketplace, so here are some key questions that you can be asking your payments partner to understand what their business strategy looks like.

  • Will a merger or acquisition change the features of the solutions you provide to customers?

A key reason acquisitions take place is because both companies want to expand their technology suites and resources. Knowing the advantages of a diverse technology offering can be advantageous to an ISV.

  • Will a new organization handle customer service the same way?

As an ISV, you want to know if you and your customers will still receive the same level of personal attention that you had before. Or, will a new process be put in place? Understanding the customer service dynamic is important when determining a payments partner.

  • What other options exist?

Even if the positives of a merger don’t outweigh the negatives in your mind, as an ISV, you’ll want to know if there are better alternatives. Here is where a payments partner can really show their value as a good partner by discussing viable solutions – and some that might not benefit their own business interests.

  • Will prices change?

Payment processors can have a varied fee structure. Any payment partner worth their weight will happily walk an ISV through the fee structure. The payment partner should also address if the merchant’s statements will reflect the same types of fees – and at the same prices.

Knowing your payment partner’s selling strategy.

How does your prospective payment partner go to market? How long have they been utilizing this strategy?

As an ISV, you want to know if your payment partner’s strategy is backed by trusted industry experience, or if they are moving in a different direction due to any acquisition activity. Having a trusted and accomplished sales force is a good indicator of what the selling strategy might look like, so ask your prospective partners what their sales team out in the field looks like, and how it could be a resource to you.

Protect your partnership and revenue share if your partner gets acquired.

When you are first engaging with a prospective payments partner, you’ll want to have a clear understanding of the revenue split. This is an important question to ask up front so you understand what your ISV business will be making with the payments partner, but you’ll also want to know how the revenue share will change, if at all, in the event your payments partner is acquired.

Will a new contract be negotiated with the acquiring company? Does your contract act as a grandfathered agreement? Are you able to opt out of the contract and pursue a new payments partner? These are some questions you can ask when evaluating a prospective partner, and the answers might play a role in which partner you choose to align with.

Forming a partnership with a payment processor to integrate payments with your solution is a significant investment in time and preparation because these changes could have a lasting impact to your customer’s experience. Also, changing payment processing partners is not a process you want to go through often, so take your time and do the proper research upfront. 


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Pat Ward

Pat is in his second decade in the Payments Industry. Throughout his career he’s focused on creating long-term and profitable partnerships with best-of-breed Independent Software Vendors. Since joining North American Bancard (NAB) in 2014, Pat has been instrumental in building out NAB’s Integrated and Semi-Integrated Partner Programs, and for bringing some of the best POS companies into the NAB Family.