November 4, 2019Blog Posts

Gold Rush: The Monetization of Software Card Volume

The proliferation of software and technology has led to the digitization of our global economy, making software central to the progress and advancements of today’s enterprises. This exploding market is attracting the attention of private equity (PE) groups and payment processing companies.

With software centric companies earning higher and higher valuations, PE firms large and small are increasingly making moves in the software and more specifically the cloud technology market. Simultaneously, payment companies see these software incumbents as sales channels, clients, and competitors all rolled into one. This unique blend of payment technology and software has led to the development of payment monetization models by payment companies as way to capitalize on the success of cloud-based technology.

With both PE firms and payment companies looking to capitalize on the explosive growth, it is crucial that all parties remain up to date on software and technology trends if they want to stay relevant in a rapidly evolving market. One of the key trends happening within the cloud-based space is the monetization of payment processing volume. The idea is relatively simple: with cloud-based software being used to run the operations of nearly every type of business, payment acceptance is often an integrated functionality offered by these cloud-based companies. This reality is the reason behind the amalgamation of payment and software companies.

Now, contrary to what many payment experts will say, there are a variety of ways to monetize payments with differing models, each with their own set of rules/regulations, risks, and rewards. Getting into payment processing and monetizing payment volumes is not a simple task; it is, however, a potentially a very profitable one.

PE firms and the management at the software companies must consider a few key questions:

  • How much do you know about the payment’s ecosystem and the key players that function within it?
  • What in-house resources do you have available, or already dedicated to this initiative?
  • What current technological capabilities do you possess?
  • What is your risk appetite?
  • Do you plan to outsource any part of the operation?
  • Do you have the human capital/resources to support customer services, boarding, or chargeback processes?
  • What will your pricing strategy look like?
  • Do you understand what the PCI impacts will be as you take on greater payments’ responsibility?

The software and payment experts at The Strawhecker Group (TSG), have guided hundreds of software companies during this planning period. The firm specializes in assisting organizations with payments education, supplier selection and RPF processes, as well as through the implementation of a desired model. Leveraging proprietary data tools and benchmark analysis, the experts at TSG will assure that your software firm is maximizing their payment volume regardless of the model.

Discover Your Path: There are several options PE firms and software companies have when monetizing payments. As each model is nuanced and comes with its own set of benefits and hurdles, having an expert to assist your organization throughout the decision-making process is essential for a successful implementation. Learn more about our services and email us to set up time to discuss.

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