With each passing day embedded payments is becoming a bigger part of the payments ecosystem, and it takes an army of different companies to make that happen at scale.
Much of it falls to the independent software vendors (ISVs) that perform the integrations that make modern payments experience possible, and these firms at a crossroads now.
In a conversation with PYMNTS, Payroc Chief Innovation Officer Joe Garza explained that ISVs are facing stiff competition, and they need partners with resources to deliver the seamless omnichannel experiences consumers demand.
Saying that “we’re starting to see that an ISV’s marketplace is as competitive as the payments space,” Garza told PYMNTS that “more and more, without embedded payments, you do take a back seat or a lesser position in the competitive space.”
He added, “At this point it’s not even a want. It’s a must have in the ISV space to stay competitive.”
Along with this comes greater pressure for software companies to find the right payments gateway partner as digital payment volume increases, putting the squeeze on speed and security.
Garza recited a litany of the things a vendor should look for when shopping gateways: Vertical alignment, specialized expertise, a well-defined product road map.
“What have they brought to the market in the last three months, six months, 12 months?” he said. “We see a lot of competitive gateways out there that have taken a leading position early and kind of stayed stagnant over the years.”
That kind of information comes with proper due diligence in vendor-partner selection, and especially in the ISV space which tends to come with the specialized needs of specific verticals.
See also: Payroc Acquires Payments Platform Provider Worldnet
Acquiring New Strengths
On a bit of a buying spree in the recent past, Payroc in April announced its acquisition of Worldnet, which specializes in omnichannel payments solutions for ISVs and positions Payroc to offer more tools and choices to systems vendors integrating embedded payment solutions.
Garza said the company was looking for a platform with executive expertise, the ability to execute quickly and an intense vertical focus.
“At the same time, we still wanted an agnostic approach. [To get] quickly into PayFacs and ISVs and execute on those markets, we needed a stable platform. The same advice that we just talked about with ISVs, we applied to ourselves. Worldnet checked all those boxes.”
Together with recent acquisitions including East Commerce Solutions, Iroquois Merchant Services and Banquest, Payroc is assembling a collection of gateways and payments processing coverage across more verticals from restaurants to unattended retail, in a unified fashion.
He said each is a strong player “able to weather storms in the markets for the last two or three years, doing what they do best, you bring the Worldnet component in and you start putting in what we call Embed Line, which is the ability to board instantly, and do that across all these countries, and we make these companies even stronger when they were strong prior.”
There’s a reason for this now, and it’s opportunity. More companies in more verticals looking for streamlined application programming interface (API) integrations for digital payments.
Garza added that new capabilities available from Payroc “benefit on both sides. These ISVs help us from a cost of acquisition standpoint and acquiring new customers, margin compressions, they help us because we’re bringing more value than just price competitiveness.”
Also, the ability to do more kinds of integrations creates longer tenure with clients, Garza told PYMNTS. An integrated customer typically stays for four to five years, while a non-integrated one typically starts shopping around for another solution in about 15 to 18 months.
For the ISVs and PayFacs that choose the platform, “We’re opening distribution channels for them in different countries,” he said. “We want to make sure that our platform, [especially] the integrated embedded piece of this” is not a heavy lift.
See also: Payroc, Dynamic Payments Partner on Merchants Services in Caribbean
‘Hit the Market Hard’
The fall 2021 acquisition of Puerto Rico-based payment services provider Dynamic Solutions tips the hand that Payroc is moving into new territories and new cross-border services.
“You can kind of see our roadmap,” Garza said. “We consolidated a lot of different companies. We’re starting to emerge in Latin America. One thing we’re seeing … that we believe is a gap in the market is our competitors have these capabilities as well, but we see them as fragmented.”
That’s part of the wider trend of platforming and unifying services for optimal simplicity.
With the platform in place and control of endpoints around the world, the company can offer embedded payments in access in the U.S., Canada, Puerto Rico and Dominican Republic — and it plans to expand its footprint over the next six months.
Puerto Rico and the U.S. Virgin Islands today. Jamaica, Bermuda and the Dominican Republic tomorrow.
“We are continuing those expansions, but again, with one unified approach, one way of doing business, one way of boarding” he said.
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