Payment Methods

For ISVs, An Integrated Approach To Integrated Payments

It’s no secret that businesses want to accept electronic payments, because consumers demand innovation and choice in the way they transact.

But, the process of integrating new software and business functionalities can be daunting and error-prone as companies seek out technology to provide that range of choice to customers, causing friction in day-to-day transactions and even the loss of business. To sidestep such pitfalls, business owners can partner with independent software vendors (ISVs), which, in turn, open new markets. Opportunities abound in offering integrated payment solutions but, as with any partnership — in this case between ISVs and the merchants they serve — the devil is in the details.

Matt Morrow, vice president of business development and integrated payments at TSYS Payment Solutions, told PYMNTS that firms across all verticals want payment processing software solutions that are tailored to their individual operations.

“Integrated payments for some markets has been a no-brainer for a long time,” Morrow said, while in some business arenas the concept is just starting to take hold. Restaurants have long embraced integrated payment platforms because business operations require value-added software to help run table management, open tickets at the bar and send them to the table upon completion of a meal.

“If you’ve got purpose-built hardware and software there, bridging those transactions that are taking place, an integrated payments mode made a lot of sense right out of the gate,” he said.

Looking at other verticals, a dry cleaner or salon operates differently. Unfortunately, payments technology has not historically lent itself to making those businesses more efficient. But software developers have been able to look at smaller firms within those arenas, recognize gaps and see opportunities to build niche software. Attaching an integrated payments solution to software platforms can be helpful, Morrow explained, and evolution has helped speed things along. Where once there’d been terminals that could not talk to a computer and process payments, now operations are sitting on a network “and absolutely can talk to the computer.”

TSYS strives to work with the solution provider to remove the pitfalls of staying compliant as part of the architecture of the design, or it can keep cardholder data off computers, maintaining encryption as it flows over networks, he explained.

The average small business owner cannot be expected to know everything about the payments space and encounters many challenges and opportunities just keeping operations running. According to Morrow, the mission is to make payments so safe that the small business owner does not have to worry about that end of the business. He or she should have enough knowledge in place to recognize best practices and pass an assessment so the company can be PCI-compliant.

As developers find additional ways to help merchants and bring software platforms into the payments ecosystem to assist target markets, they need to create software that facilitates seamless payments, Morrow emphasized. But, they must do it in a way that tells the merchants that “our solution helps you stay PCI compliant … and that we are going to protect your customer’s card data better than what you are using now in a non-integrated environment.”

When TSYS talks to an integrated software prospect, one of the things his firm wants to understand is, “What is your desired user experience?” The speed of a restaurant transaction, Morrow said, can be juxtaposed with the transaction experience in the healthcare space, where the computer system that is helping run the business is handling dozens of other operations — electronic records, appointments and so on — in addition to accepting payments. ISVs and eventual partnerships struck between ISVs and merchants need to mull if transactions are done face-to-face or over mobile devices and whether recurring payments or cards on file are considerations.

Morrow also posited that software vendors need to consider credit card data itself and how that data should be handled. There are “payment-savvy software companies” that want total control, understand PCI, have their own compliance departments and simply desire to work with TSYS’ application program interfaces (APIs). At the other end of the spectrum lie the firms that wish to enable payment experiences but do not want to handle customer data, reducing the scope of compliance as much as possible.

Thus, agility is key in what he said is a “very dynamic environment for a software developer in any market vertical.” That’s because there has been a “massive sea change” in the way consumers behave and in their expectations. The expectation in a basic transaction is that they will have a “modern-day interaction with anybody they do business with and hand their credit card to,” Morrow said. Consumers want mobile, online payments and electronic invoicing. Agility is also needed, as software developers consider the flexibility of their go-to-market strategy and how to align with where their clients are and where they are going.

Looking at a software partnership roadmap, some red flags signal caution as ISVs link with merchants. Morrow said that “first and foremost you want to choose an organization that understands the integrated payments space.” This can come in the form of merchant processors or middle-ware vendors, he said, with organizations in place built around supporting the software business model.

“’Integrated payments’ is the latest buzz in a payments industry that is innovating at a rapid pace,” he added. “Every payments processor that an ISV may consider will say they support ISVs. The software vendor must cut through the hype and evaluate on the merits of their technology, partner program and support, as well as the tools that enable the ISV to grow sustainable revenue from payments integration.”

Companies with longer-standing, dedicated integrated payments programs like those offered by TSYS can help drive customers’ revenue growth and drive adoption in the software vendors’ user base, Morrow explained. He emphasized that integrated payment services firms must understand their users’ sales experience.

“A disjointed customer experience is just as bad as broken technology,” he added.

More and more companies are looking to their software companies to find out who they trust for merchant services and would recommend — meaning these firms have become such an integral part and a valuable component of small business operations “that they have a seat at the table when it comes to important decisions.”

In turn, those software companies are in an increasingly better position to influence their clients “in choosing the right solution for their businesses,” Morrow said. “You have a great responsibility that the choice that you put in front of your clients is something that is going to help them stay compliant, that is going to be easy to use, that is going to give them the user experience they are looking for.”

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The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

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