What do ISOs and ISVs want in a payments partner?

Digital payments have absolutely taken off over the last few years. The total market transaction value is projected to reach $11.53T in 2024 and Statista predicts it will skyrocket to $16.59T by 2028.

To keep up, many independent software vendors (ISVs) and independent sales organizations (ISOs) have been teaming up with payment providers to enhance their software and service offerings. But with so many payment gateways available, each boasting unique features, choosing the right one is a big deal that affects everything from customer satisfaction to revenue. So, it’s important to consider differentiators like ease of integration, security, and fees before making a decision.

Earlier this year, Envisionit surveyed a group of 100 ISVs and ISOs to see what makes them tick. What factors weigh into the procurement process for payment providers? What determines whether they choose a provider or not, and what factors could entice them to switch?

Learn more about common integration requirements and revealing decisioning structures among ISOs and ISVs. Download the full ISO/ISV Field Survey Results & Takeaways.

The evolution of the payments playing field

ISOs are facing increased competition as ISVs align with merchants and payment providers more directly. ISVs offer integrated software solutions that embed payment processing capabilities, creating a seamless experience for merchants by combining business management tools with payment functions in a single platform. This direct alignment allows ISVs to bypass traditional sales channels, like ISOs.

The trend toward ISVs partnering directly with merchants and payment providers is driven by the growing demand for value-added services and more customized solutions. Merchants are increasingly looking for comprehensive software that can handle multiple aspects of their business operations, including payments, customer management, and analytics. ISVs can meet these needs more effectively than ISOs, which traditionally focused more on payment processing rather than holistic software solutions.

However, this does not mean that ISOs are being entirely pushed out. ISOs still play a crucial role, especially in markets where direct integration with ISVs is less common or for smaller merchants who may not require the full suite of services that an ISV provides. ISOs also often have deep industry knowledge and established relationships that can be valuable in acquiring new merchants and supporting their payment processing needs. Also, many ISOs are starting to offer value-added service and niche specializations, like risk or industry-based services, to compete with ISVs like Stripe and Square.

What do ISVs and ISOs want in a payment provider?

Both ISVs and ISOs look for several key features and qualities in a payment processor to ensure seamless integration, reliability, and value for their customers. Our survey revealed that these groups have had negative experiences with high processing or hidden fees (55%) and a lack of integration with existing technology (53%), and want to align with a provider that fits their specific needs.

Here are the primary aspects they consider when choosing a payment provider:

Speed/ease of integration

ISVs and ISOs prioritize payment providers that offer robust, well-documented APIs and software development kits (SDKs) that make it easy to integrate payment functionalities into their software platforms. The integration process should be straightforward and flexible, allowing ISVs to customize the payment experience according to their needs and the needs of their end-users.

Security and compliance

Security is a top priority for ISVs and ISOs, as it directly impacts the safety of sensitive customer data and compliance with industry standards. ISVs look for payment providers that offer robust security features, such as encryption, tokenization, and fraud detection, and that comply with regulations like PCI DSS (Payment Card Industry Data Security Standard).

Monetization

Monetization is a critical factor for ISVs and ISOs when selecting a payments provider, as it directly impacts their ability to generate additional revenue streams through transaction fees and value-added services.

Seventy-five percent (75%) of survey respondents are currently monetizing their payments, and the remaining 25% are aware of the potential to monetize transactions but they are not currently doing it.

By choosing a payment provider that offers flexible monetization options, ISVs and ISOs can enhance their profitability while delivering comprehensive payment solutions to their customers.

Competitive pricing and transparent fees

ISOs and ISVs prefer providers that offer competitive pricing models, transparent fee structures, and no hidden charges. This helps manage costs effectively while providing affordable solutions to their customers.

Scalability

Scalability is vital for handling increasing transaction volumes and expanding into new markets. Payment providers should offer scalable solutions that accommodate growth without compromising performance or security.

Customizable payment solutions

Flexibility and customization are critical for ISVs that serve various industries with unique needs. Payment providers that offer customizable solutions—allowing ISVs to tailor payment flows, user interfaces, and other features—are highly valued.

Reasons ISVs and ISOs would consider switching to another payments provider

Potential incentives

The majority of respondents preferred the option of free value-added services to other incentives, like free limited trials or lowered processing fees (against volume).

Tactics for fintech marketers to connect with the right ISVs

To effectively connect with ISVs and establish embedded payments, fintech marketers can employ several tactics:

1.) Identify key ISVs. Research and identify ISVs that operate in sectors aligned with your payment solutions. Focus on those with robust software applications that could benefit from integrated payment processing. Here are some resources to use:

G2 Crowd and Capterra: Comprehensive directories of software products and ISVs, including customer reviews, ratings, and descriptions of their solutions.
Crunchbase: A database of companies, including ISVs, that offers detailed information on funding, growth, and key contacts.
Frost & Sullivan and Ovum: These companies also provide valuable market insights and reports on technology providers, including detailed information on ISVs and their market strategies.
Partner portals: Many ISVs have dedicated partner portals that outline their partnership models, benefits, and requirements. Visiting these portals can give you a sense of how the ISV structures its partnerships and what it looks for in a partner.

2.) Highlight benefits and value. Clearly communicate the benefits of embedding your payment solutions within the ISV’s software. Emphasize how it enhances their product offering, adds value for their customers, and potentially generates additional revenue.

Social media (50%) ranked just behind ‘word of mouth’ (51%) as the most reliable source of information on payments innovation, so be sure to keep the content flowing.
Events and trade shows (46%) also place highly among ISOs and ISVs as a good resource for updates on the latest payments tech.
Email marketing (41%) is also a good way to communicate new solutions

3.) Leverage joint marketing. Collaborate with ISVs on joint marketing initiatives, such as webinars, case studies, and promotional campaigns. This can help raise awareness of the integrated solution and drive adoption.

4.) Offer support and training. Provide ISVs with the necessary training and support to ensure they can effectively sell and support your payment solutions. This builds trust and facilitates a smooth partnership.

5.) Participate in industry events. Engage with ISVs at industry events, trade shows, and conferences. These platforms offer opportunities to network, showcase your solutions, and discuss potential partnerships.

By strategically aligning with ISOs and ISVs, payment providers can enhance their market presence, drive growth, and deliver value to businesses across various industries. These collaborations will remain crucial for success in a dynamic and highly competitive environment. If you’re ready to dive deeper and make stronger connections, download the full ISO/ISV Field Survey Results & Takeaways.