Let’s face it, as entrepreneurs we’re typically spread thin and lean heavily on specialists to help us fill the gaps in our expertise on specific functions of our business. Emphasis on getting our product to market in the shortest time-frame often means thorough vetting of potential vendors is left for a later date. The problem with this model is that once the applications are fully functional, even if it is known that specific components are not optimal, updates typically take a back seat to more important customer demands or product shifts. This is most critical for your integrated payments vendor since cost will continue to rise as you scale.

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While a few merchant processors dominate the news with their often inflated valuations and the public spotlight that comes with those figures, many entrepreneurs often feel “stuck” with these initial choices and the high prices they build into their products. Sure, each of the biggest players offer enterprise pricing and volume discounts, but what does a software company do until they reach $10,000,000 in annual sales?

But what about the Technology advantage?

select few processors recognized the continued uptick in data security violations, and invested heavily in Integrated Payments platforms that would remove cardholder data from sensitive environments and create more secure payments platforms; a product called Point to point encryption (P2PE) and tokenization. The PCI security council has outlined this standard and provides a full list of the 24 processing networks that meet this criteria. We’ll continue to see processors adopt this new standard, but until then, data security breaches from major retailers and ecommerce businesses will continue to make headlines.

Differentiation – Is it all about Price?

With the commoditization of payment processing, and the increased adoption of this new “Standard” for card data security, the rates retailers pay for merchant processing continues to decline, with some exceptions. Companies like Stripe, Square and Braintree charge flat rate pricing, which creates predictability, but also comes at a premium. These rates, typically 0.50% to 1% higher than traditional payment processing companies, help contribute to higher than “normal” profit margins. While a 1% premium may not sound like much, apply that to an annual volume of $1,000,000, and you’re quick to realize a $10,000 added expense to your bottom line. A significant amount when talking about a commoditized product. Merchant processors that quote “Interchange Plus” pricing is much more fair and bills at the transaction level.

Ease of Integration, but don’t leave money on the table

With the proliferation of the “easy api”, bringing payments into software applications has become increasingly simplified. Customization for specific needs is the new normal, and developers are looking for new tools to differentiate their applications and streamline workflows. While many companies will offer integrated payments solutions, not all offer Strategic partnerships and affiliate programs that allow for additional revenue sources. By aligning resources and joint marketing ventures, software companies and developers now have the ability to capitalize on the payments infrastructure to generate additional revenue streams.

The point is, familiarity with specific payment gateways may save a couple hours in the development stage of your secure payments solution, neglecting alternative options, and lack of thorough research, may end up costing your company significant amounts of money in the future.

Learn more about the Strategic Partnership program, and our Easy API for developing scalable integrated payments solutions for your business today!

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