ISV Payment Integration Trends and Best Practices in 2021


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What You Will Learn in This Article:

  1. Core Payment Integration Challenges: The Hard Data
  2. ISV payment integration Benefits & Opportunities
  3. Offering value-added services to your merchant clients
  4. Payment trends 2021: Future-Proofing Payments

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A payments integration that sets your ISV business apart

Now more than ever, with the advent of Uber and Amazon, software users expect their payment processes to be frictionless and safe no matter where the purchase is made. As such, savvy independent software vendors (ISVs) have an opportunity to stand out among their competitors by delivering a seamless and secure payment acceptance experience on top of the remarkable business management tools their users have come to love. Better yet, if an ISV elects to work with a payment provider, the business can deliver an integrated payment experience without needing to take on unnecessary risks or development, resulting in faster delivery to the market and steadier revenue growth.

1. Core payment integration challenges: the hard data

The following challenges highlight the clear business case for adding a comprehensive payment integration to your software.

- The rising threat of sophisticated fraud

Not surprisingly, the latest Federal Reserve report on US payment fraud found that credit and debit card fraud is on the rise. According to the report, “The overall rate of payments fraud, by value, was rising even as the total value of noncash payments was rising in the United States in recent years...As the number of payments has risen, the likelihood that a payment is fraudulent has also increased.”

Key findings of the report include that between 2012 and 2015, instances of credit card payment fraud rose from 14 million to 30.4 million, with debit card payment fraud instances rising from 13.7 million to 28.7 million. For retailers, a worrying trend is an increase in card-not-present fraud, ballooning in the United States, up 36 percent between 2015 and 2016, at a total value of $4.57 billion.

- Abandoned online shopping carts

A whopping 69.80% of online shopping carts are abandoned, according to an aggregate study. In other words, when almost 7 in 10 customers reach the final stage of purchase - the payments stage - they decide not to complete their purchase. While there are reasons for shopping cart abandonment unrelated to the payment process, 55% of customers will abandon their purchase if they are asked to re-enter payment information; 18% cite a “complicated checkout process”, 17% “didn’t trust the site with my credit card information” and 7% complained that “there weren’t enough payment methods”. The abandoned shopping cart loss to e-commerce retailers amounts to $18 billion a year.

- User desire for a superior customer experience

The Customers 2020 report by Walker already projected that by now, customer experience (CX) would be more important as a unique selling proposition (USP) than price or value. Simply put, negative shopping experiences are more likely than ever to lead to a loss in customers. Retailers are already aware of this trend as 75% of respondent companies increasing their CX technology investment in 2018, according to a Gartner survey.

Friction in the shopping experience, a part of which the payment process is critical as the “home stretch” of any purchase, is detrimental to CX. This includes any factors that contribute to abandoned online shopping carts. Apart from customers falling victim to fraud itself, there is another risk for merchants that tends to fly under the radar: the customer perception that they are not receiving the market standard in anti-fraud and customer payment data protection.

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2. ISV payment integration benefits & opportunities

By partnering with a reputable payments provider, your ISV business is able to help your clients by simplifying the payment experience in a way that’s tailored to their unique requirements - helping to make your business management capabilities more comprehensive. And it needn’t stop there. You can take advantage of a payments integration that delivers cutting-edge capabilities in data security, PCI compliance, and business development (thus supporting sustainable revenue growth) while providing solutions to other important challenges that your clients face.

There are, however, various key areas to evaluate when considering an integration partner. Below are questions you can use to gauge how your company will be able to maximize the payments-related benefits that a provider can offer you, as an ISV, and how you will then be able to offer them to your own clients.

Integrated Payments: Questions To Ask Your Payment Integration Partner

- Do they offer superior data security?

The market standard in data security and simplified PCI compliance are probably high up on your wishlist, and for good reason. With high-profile customer data breach stories making the news regularly in recent years, customer awareness of the problem is high. In fact, according to a PwC report, 85% of global consumers wish “there were more companies I could trust with my data” and 60% say that they expect the companies they do business with to suffer a data breach someday (not a surprise as 34% also said that one or more companies that hold their data have already suffered a breach). Demonstrating superior data security in the form of tokenization and end-to-end encryption technology can, therefore, be a powerful differentiator.

- Do they offer flexible APIs and integration support?

An integration that is developer-friendly enables you to connect your software platform efficiently. Integration support is also an important offering, going hand in hand with flexible APIs. If they do offer support, how hands-on and responsive are they? Is their support 24/7 or restricted to a shorter period, say midweek office hours?

Understanding just how helpful and proactive providers are, helps you identify the right provider for your integration and development needs.

- Do they have a suitable industry track record?

Experienced providers know how to resolve the typical sort of challenge that arises during integration, troubleshooting episodes, and updates through having already faced them, usually many times over. This is where the value of industry experience becomes clear.

You can get a good idea of a payment integration provider’s experience by looking out for mentioned clients with whom they have worked, or client reviews and success stories. But the best way is to ask them directly. Unless they have something to hide, they should be more than happy to provide you with details on their experience.

- Does their payment integration solution support scalability?

The ideal integration not only grows with you, but also helps you to achieve growth. If your ISV has growth plans, it’s essential that your payments software doesn’t impinge on it with technological limitations. The ideal payments integration partner is one that supports your software business’s scalability without any friction.

- Do they offer sales enablement and business growth capabilities?

The payments stage is ideal for up-selling and cross-selling opportunities, as well as related initiatives to power conversion and growth, such as profit sharing and incentive programs. A payments integration provider that offers this sort of program can transform your software by creating the opportunity for an additional revenue stream that wasn’t there before.

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3. Offering value-added services to your merchant clients

Your software business can increase its appeal by offering value-added capabilities that the right payment integration includes.

- Merchant Integration Support

Many companies, especially smaller SMBs, don’t have robust technical resources for obvious reasons. However, this needn’t be an issue as you can step in and add value by offering technical knowledge and support through your payment provider’s merchant support team for your own clients.

- Data Analysis and Management Tools

You can also take advantage of additional services, including transaction management tools, which can include payment reconciliation, reporting, and portfolio management.

- Offline and Online Payments, and Security Updates

These can include helping both online and offline payments, providing custom merchant branding and firmware updates as soon as they are released, and offering a range of payment options, including credit and debit cards, digital wallets, and others.

- User Experience & Cart Abandonment: Provide a Range of Payment Options

The right solution provider should also have an extensive understanding of the pressing concern of online shopping cart abandonment, and as a result, offer a user-friendly experience that minimizes friction and allows the customer to use their preferred payment option.

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4. Payment trends 2021: what’s on the horizon?

If your ISV is keenly aware of new industry trends and of the need to proactively stay ahead of the technological curve, it stands to reason that your payments integration partner takes a similar approach in order to be aligned as your partnership develops. Some of the areas that will be even more sharply in focus in 2021 and beyond include:

- The Rise of “M-commerce” - Shopping via Your Mobile Phone

M-commerce is positioned to take the mainstream by storm as a result of numerous technological advances that are making it easier for people to shop on their phones. App usage continues to grow, and will be a major contributor to sales growth, especially with Millennials and Gen Zers holding massive spending power. Business Insider Intelligence predicts that m-commerce volume will reach $488 billion, or 44% of e-commerce, by 2024.

- B2B Payments Evolution & the Impact of Cloud Technology

The global B2B payments market accounted for US$732.4 billion in 2019 and is estimated to be US$1900.6 billion by 2029 and is anticipated to register a CAGR (compound annual growth rate) of 10.1%. This growth is driven by cloud technology, accelerating the digital transformation of the payments industry, and providing customers with a wide range of convenient payment methods.

- Omnichannel Payments’ Continued Rise

Consumers expect to buy anytime, anywhere, and anyway they choose, and as a result are no longer partial to just one payment method. Instead, they are making use of the channel and payment method that suits them.

A recent PwC report found that the popularity of mobile shopping is even more heavily on the rise now, after the outbreak of COVID-19, than it was before, but consumers’ experimentation with different channels of purchase was confirmed as well. Currently, 63% are buying more groceries online or by phone than before, and 86% are likely to continue to shop online/by phone when social distancing measures are removed. For 2021, consumer trends like this must be taken into account.

- Hyper-personalization

Payments data represents a treasure trove of information about consumer behavior that can be utilized to personalize the customer experience and specific product offerings. Advanced payments analytics are key to better understanding the consumer and to help financial institutions drive growth and assess risk.

- Commercial Augmented Reality

AR is the frictionless buying experience of the future, enabling consumers to shop from wherever they are. Additionally, it allows consumers to effectively test-drive everything from eyewear to sneakers via a smartphone app, then purchase them in the exact prescription and size without ever entering a store.

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Support ISV growth with the right payments integration

Choosing the right payments integration provider for your ISV organization, one that is proven and experienced in providing secure, streamlined payment services and that helps support your business’s growth can be the key factor in demonstrating a unique selling proposition. In the increasingly digitized business landscape and retail economy, customers are demanding more from retailers. And merchants are cognizant of the need to keep up with this trend by offering the most cutting-edge capabilities to outcompete their rivals and enhance the CX, of which a seamless, secure payment process is top of mind.

CardConnect has helped hundreds of software companies integrate seamless and secure payment acceptance into their software. For more information on our capabilities, please visit our integrated payment solutions webpage.