As we continue to break down the considerations software providers must be mindful of when weighing the benefits of accepting payments on their platform, the revenue potential of payment integration is a core conceit to the entire discussion.
Now with that out of the way, we’ll dive in. Further understanding of the revenue potential of payment integration will incorporate both our understanding of processing fees and as well as the five payment models.
Each of the five payment models has its own strengths and weaknesses depending on the size of your organization and what your ultimate goals are. Finding the one that suits you best is a matter of understanding how it will strategically fit into your business model. Ultimately, each one brings a different level of control and revenue potential to your company.
We’ll give you a basic rundown of each below, but if you’d like you can read a much deeper analysis in our guide.
Agnostic: The agnostic model is where you’ll see no revenue potential because you’re leaving payment integration in the hands of multiple partners. Your clients can use whatever provider suits them, but ultimately, you’re left with a lot of work to maintain your interface and no return.
Referral: The referral model starts to introduce a small amount of revenue because you’ve limited the pool to a few preferred partners. You’ll accrue a small amount of revenue that will help offset some of the maintenance costs but expect lower margins.
Shared Sales: With this model, you’ll see even more revenue potential since you’ve chosen to partner with a single payment processor. This option allows for a consistent revenue stream and no significant overhead. By eliminating the multiple partner options of the first two models, you and your clients can also count on a more streamlined process.
White Label: If you go this route, you’ll finally start to see some significant revenue potential from your payment integration. Here, you’ve chosen an exclusive payments partner, but their work is managed behind the scenes. To your clients, it appears as if everything is one integrated system under your name. You can set the margins to fit the needs of the situation and provide a cohesive experience for your clients.
ISO: By becoming an Independent Sales Organization, you are opening the door to the most revenue potential possible. With this model, you are choosing to become responsible for all of the infrastructure, operations and risk that come with being your own payment processor. While it may sound great in theory, the risk alone may not be worth the boost to revenue.
As you can see, each successive model increases revenue potential of payment integration. The decision comes in how much responsibility and oversight you want in the process. This is where Wind River can come in to help you analyze your situation and offer you the best recommendation. If you have more questions or are contemplating taking the dive into software payment integration, feel free to contact us.