Embedded Finance Beckons as Independent Software Vendors Evolve

Gigi Beyene, senior vice president of integrated payments at Nuvei, told PYMNTS that the role of the independent software vendor (ISV) has evolved through the years, and more change is on the horizon.

ISVs trace their roots back to the 1960s, and through the ensuing decades have become indispensable for providing software solutions for specific verticals, enabling practice management for dental or medical practices, for example, or front- and back-office solutions for restaurants.

Along the way, Beyene said, the ISVs have developed a loyal client base, and a natural expansion would include payments — specifically, embedded payments.

In helping clients integrate payments into their own products and services, the ISVs boost their own top-line momentum (and that of their merchant clients) and make their relationships with client firms even stickier. This integration also helps accelerate revenue for both the ISVs and their clients by offering seamless payment experiences that can significantly increase sales and customer retention.

As Beyene told PYMNTS, “integrated payments have helped increase operational efficiencies, have reduced costs — and have changed the narrative for merchants.”

What Needs to be Considered

To get embedded payments firmly in the mix, ISVs must mull their own options as they examine partnerships with payments providers. Among the most immediate considerations is to find a provider that offers integrated solutions that can work across a broad range of processing platforms. Optionality is key, too, as ISVs and their partners must be able to support traditional card payment options, alternative payment methods and mobile options.

“There have to be solutions for all of those environments,” he said, with simple integration points tied to payment links, hosted payment pages and gateway solutions that takes the merchant outside the scope of payment card industry risk as commerce moves toward unified, omnichannel settings. Cross-channel commerce, said Beyene, can help lift a merchant’s revenues by the high single-digit percentage points quite quickly as they combine mobile and digital options with in-store shopping.

Beyond the integration itself, there needs to be a robust selection of other features for merchants, such as recurring billing, tokenization, automatic account updates and currency conversion.

“All of these features have to be available because each ISV represents different use cases with their individual merchants and MCC codes,” Beyene said.

Onboarding also needs to be seamless and speedy, as ISVs often bring in multiple merchants at any given time, which helps build their client base. Nuvei, by way of example, offers its AppLink Web API, which ties directly to an auto-underwriting robot, so merchants are approved and payments-enabled within 24 hours.

“The onboarding process is the first touch point with the processing partner, so it needs to be a good one,” he said.

Asked by PYMNTS how the role of the ISV will evolve and shift through the next few years, Beyene said that banking as a service, card issuance and buy now pay later, along with business finance and lending, remain significantly untapped growth markets.

“These embedded finance solutions benefit all merchant types, whether it’s SMBs, or B2B or B2C firms.  And embedded finance can be a standout differentiator for a lot of ISVs,” he said.

If making the transition into payments and embedded finance might be considered a first step in the payments realm for ISVs, the evolution to “payment experts” would be the next logical step.

In order to future-proof their businesses, Beyene said, ISVs must “think about payments as a core component of their business and their offerings.”

Payments may have once been considered a cost center to be managed — but now offer an opportunity to generate revenue.

“It’s a critical component to lean into payments,” he said.