75% of ISVs and Marketplaces Plan to Enhance Existing Payment Capabilities

Creating new sources of income is key to business growth, and payment features are becoming a key component in doing so. For instance, independent software vendors (ISVs) and marketplaces can generate revenue through processing fees associated with the incorporation of payment features into their services.

Against this backdrop, 65% of ISVs and marketplaces that do not yet have payment capabilities plan to incorporate embedded financial products for payment acceptance this year, according to findings detailed in a recent study conducted by PYMNTS Intelligence in collaboration with Carat from Fiserv.

This move, per the study, would put them in line with the roughly 75% of ISVs and marketplaces who already have payment capabilities and want to improve their integrated financial products this year.

On average, more than 80% of ISVs expect to see a rise in revenue share from payment acceptance in the next 12 months, indicating a high degree of trust among payment providers.

Specifically, 94% of ISVs in retail sales and 75% in wholesale trade or logistics anticipate a noticeable increase in the proportion of their total revenues derived from payment acceptance during the period, as do 60% of multimedia or telecommunications ISVs and nearly 82% of ISVs categorized as software producers and publishers. 

When it comes to marketplaces, nearly 70% on average expect the share of total revenues coming from payment acceptance to be significantly or somewhat higher in the next 12 months. This breakdown includes 83%, 60% and 55% of marketplaces in wholesale trade or logistics, retail sales, and software production and publishing, respectively. Interestingly, all the multimedia or telecommunications marketplaces surveyed expressed the same expectations. 

Further data suggests that payment facilitators (PayFacs), which enable payments for 39% of ISVs and 78% of marketplaces that accept them, play a critical role for those facilitating payment acceptance. According to PYMNTS Intelligence research, nearly 60% of PayFacs only accept digital payments made online or via an app.

It also seems that a company’s size affects whether embedded payments are used and accepted, especially for ISVs. For instance, PayFacs are typically used more by larger ISVs to process payments, with only 21% of those with revenues between $50 million and $250 million doing so, compared to 59% of those with revenues of $1 billion or more. On the other hand, there is a less clear connection between payment facilitation and marketplaces of various sizes.

Drilling down into the data further reveals that while marketplaces strongly favor PayFacs, ISVs prefer a wider variety of payment processing techniques. In fact, 78% of marketplaces use sub-merchant accounts, while 62% of ISVs keep merchant accounts with traditional acquirers, the data shows.