Vertically focused integrated payments take commerce experiences to the next level by embedding them directly into the specialized platforms businesses rely on in various industries. Whether it’s healthcare, retail, hospitality, or automotive services, these tailored platforms cater to their clients’ unique needs and workflows. By seamlessly incorporating payment functionalities, they streamline operations and enhance the end-user experience.
For example, a healthcare management system might allow patients to book appointments, manage records, and pay for services within the same platform. A restaurant point-of-sale system may integrate payment processing with table management, order tracking, and staff scheduling.
This is compelling for these reasons and more:
- Seamless user experience: Payment features are embedded into everyday operational tasks, reducing user friction.
- Industry-specific tools: The software addresses the unique needs of a particular vertical, enhancing usability.
- Improved efficiency: Businesses save time and resources by managing payments alongside other operations in a single platform.
- Increased revenue: Software companies unlock a new path to significant revenue, and their merchant acquiring partners get quick access to the merchants these software companies support, bolstering their revenue as well. TSG knows software companies making 10x more revenue from payments than software license fees alone.
Going Deeper
The rise of integrated payments is reshaping the traditional software model. Software companies increasingly view payments as critical to their business. They are entering the payments space by partnering with payment processors and taking more ownership of this activity. Examples include Shopify integrating payments into its e-commerce platform with its own payment gateway and offering a proprietary point-of-sale product for in-store use, or Toast offering restaurant-specific software with built-in payment solutions.
Integrated payments increase customer loyalty because it places critical functions in one system and makes it smoother to operate. This also makes it difficult to switch tools. For example, a retail store using an inventory management system with built-in payments will hesitate to swap tools due to potential disruption.
TSG’s AIM analytics platform shows that ‘merchants’ (the clients/users of software companies) connected to software companies are typically 20% larger than non-integrated merchants, a testament to satisfied end-users.
The importance of partnership
Payment processing providers and software companies are joining forces and expanding into underserved niches and new regions, delivering the cutting-edge, API-driven solutions the market is now expecting.
In one of TSG’s software company surveys, respondents that were unsatisfied with their payment processing partners cited a lack of innovation, difficult implementation, and ambiguous pricing. To thrive in today’s landscape, software companies should ensure their partner can help with areas such as:
- Automation: Payment workflows should provide automated onboarding and efficient dashboards for tracking their payments activities.
- Omnichannel capabilities: Integrated solutions should unify in-store, online, and mobile payments and offer the ability to add new features when needed.
- Embedded finance: Beyond payments, software companies can integrate additional financial services such as lending, insurance, and payroll. In one TSG survey, 91% of software companies with an embedded banking solution said it was very or extremely important to their business.
- True partnership: modern software companies need payment processing partners that focus on developer experiences, offer guidance on building high-performance payment channels, and have clear, transparent communication and contract terms.
Zooming Out
With nine out of 10 software companies surveyed by TSG feeling that payments are either ‘very’ or ‘extremely’ important to their core business model, software companies need to ensure they are giving this part of their business significant attention and investment.
With the right mix of planning and partnership, software companies can unlock new growth opportunities and position themselves at the forefront of modern payments, and enhance value for themselves and their customers.
by The Strawhecker Group
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First published: April 11 2025
Written by: Clearent by Xplor