Learn about payments and the payment facilitator model from our team of experts
Why Vertical Software Companies Are the Payments Companies of the Future
Software companies are rapidly becoming the primary way businesses accept payments from their customers
Old-school payment terminals are slowly fading out of existence, the few remaining ones desperately clinging to every dive bar that has yet to upgrade to a modern payment solution. They’re being replaced by iPads or other sleek devices.
At the same time, tech giants like Uber and Amazon have created payment processes so seamless and intuitive that sometimes it doesn’t even feel like you’re using your credit card.
As consumer expectations are changing in response to these trends, businesses are undergoing their own transformation. Across every vertical – from salons that need to manage inventory and book clients to plumbing companies that need to juggle schedules for technicians in the field – businesses are increasingly managing their day-to-day operations using comprehensive solutions offered by software companies.
These software companies are masters at identifying problems their customers have in running their businesses, then creating product features that provide the solutions to those problems.
And of course, one business need that transcends all verticals is the need to accept payments from customers. Those evolving consumer expectations mean that payments can no longer operate under a one-size-fits-all model. Those salons might want to allow their clients to book and pay for appointments using the same system. The plumbing companies might want their technicians to be able to accept payments while they’re at a job, rather than sending an invoice later and waiting for payment.
Software companies, being the problem solvers that they are, figured out that, in order to provide a complete business solution to their customers, they also have to provide a solution for processing payments. Who better to provide that customized, tailored payment solution than the software company that is already engrained in those customers’ business? Just as software has become verticalized, payments must follow suit.
These companies first began integrating third-party payment solutions into their software, giving customers a way to manage their businesses and accept credit card payments from their own customers.
However, with this third-party integration comes a couple of problems. First and foremost, the software company is now giving control of their customer’s experience to a separate payments company that may not fully understand or be able to deliver solutions for the specific needs of their vertical. Secondly, the software company misses out on high-margin payments revenue, which flows to the payment provider instead.
Many software companies are finding that the next logical step in this evolution – the better solution to these problems – is that the software company has to also become the payments company. This allows them to control the payment experience from start to finish, creating the ideal payments solution for their specific vertical and taking a bigger bite out of the payments revenue pie.
Now that there are payment platforms that allow software companies to bring payments in-house more easily, owning payments is not just reserved for the tech giants of the world. Vertically specific software companies like WorkWave in the field services industry, Modernizing Medicine in the healthcare industry, and RunSignUp in the athletic event industry have all began offering their own payment solution to their customers – one that is deeply engrained in their overall offering.
These companies know their specific customer base better than any horizontally focused payments company ever could. Now they are able to dictate the entire payment process for their customers, determining everything from the onboarding process to the fee structure. They also have become the single point of support for their customers’ needs, avoiding the frustration of having to route them over to a third party for payments-related issues or questions.
By embedding payments into their own systems, these software companies have actually become payment companies. Doing so has allowed them to deliver complete solutions that fit the needs of their customers, and to do it their way.