Updated March 15, 2021

One vital element of growing your software solution is having access to additional funds to hire new talent, run full-scale marketing campaigns, and develop new products. While there are numerous funding routes to pursue, one that is often overlooked by software providers is payment processing residuals. By incorporating the right integrated payments solution into your software, you can uncover a reliable source of business income that can be used to support growth and expansion goals.

An Overview of Payment Processing Revenue

What exactly are payment processing residuals?  When independent software vendors (ISVs) add payments capabilities to their software, often they can earn revenue by partnering with an integrated payments provider.  This revenue can be earned many different ways –such as earning a percentage of credit card transactions merchant customers accept through their software, receiving a flat fee from the integrated payments provider for every merchant customer that uses the payment integration, by arranging a portfolio buyout agreement with or becoming a PayFac to name a few. As the way to earn additional funds are endless, it’s important to find a processor that can develop lucrative customized programs to meet your long-term business goals.

Fast-Track to Revenue

One path to explore for immediate residual gratification is a managed payment facilitator model. As part of the model, ISVs are able to add frictionless boarding to their offering allowing merchants to begin processing in near real-time. With this solution, merchants are able to begin processing in near real-time as the lengthy application process is replaced with a click of a few buttons. The quicker a merchant can get up and running the quicker the residuals will begin to roll in!

Using Payments Revenue to Grow Your Company

Once you’ve selected your integrated payments provider, completed your payments integration and have customers actively using the integration, the next step is figuring out the best ways to invest your additional funds. There are three areas, a lot of software providers choose to focus on:

1. Product Development: There are numerous reasons for your developers to be working on new and improved software features. Constantly adding new products can help you stay competitive in the marketplace and tie concepts like innovation and creativity to your overall brand offering.
2. Marketing: Effective advertising is essential to any company’s success. Even if you provide a groundbreaking product at an amazing price, you can’t see any profit if your potential customers don’t know you exist. Investing in a comprehensive marketing strategy can improve brand recognition, drive sales, and add even more to your bottom line ROI.
3. Talent: This one often goes unnoticed by business owners and leaders, but investing in recruiting motivated talent can yield incomparable results. Hiring experienced, passionate professionals and keeping them on your team can improve your company’s stability, performance, and profitability.  (We’ve done this at Paragon, and it has been paramount to our growth!)

Partnering with the Right Payment Solutions Provider

You have a lot of choices when it comes to who you select as your integrated payments processor. Profitability aside, find a provider that truly understands your long-term business goals and is willing to work together with you to achieve them.