Why Every ISV/SAAS Company Should Monetize Payments (the Payfac Model)

Introduction to Payment Monetization for Software Companies

If you're running a software company, particularly in the ISV or SAAS space, and your platform handles payment processing, you should be monetizing those payments. In this post, we’ll explore why integrating payments and earning revenue from them is not just a smart move—it’s essential for your business’s success.

Why You Should Monetize Payments

1. You’re Already Doing the Work: As a software company, you’re the one building the infrastructure that enables payments—creating portals, managing transactions, and offering dashboards. The payment processor, in comparison, is doing much less. Given that you're shouldering most of the effort, it only makes sense to capture some of the revenue from these transactions.

2. You Have to Integrate Anyway: Whether you decide to become a payfac (payment facilitator) or integrate with another payment processor, you’ll need to build out the integration. So why not choose a partner that shares a portion of the processing profits with you? If you’re going to manage the payments, you might as well be compensated for it.

3. Competitive Advantage: Many of your competitors are already monetizing payments. If you’re not, you’re leaving money on the table and potentially falling behind. By integrating payment processing and earning from it, you can increase your revenue and stay competitive in your market.

The Payfac Model: A Closer Look

The Payfac model allows software companies to become payment facilitators, essentially acting as their own payment processors. This model provides several benefits:

• Revenue Share: By becoming a payfac, you capture a percentage of the payment processing fees, adding a new, consistent revenue stream to your business.
• Control: You gain more control over the payment experience, which can enhance the overall service you provide to your customers.
• Customization: With the payfac model, you can tailor the payment experience to better fit your software and customer needs, creating a seamless and integrated solution.

Conclusion and Next Steps

Monetizing payments is a must for any software company processing transactions through their platform. By integrating payments and choosing the right model—whether it's becoming a payfac or partnering with a processor that shares revenue—you can significantly boost your business’s profitability.

For a deeper dive into how to make this work for your software company, be sure to check out the rest of the video series. You can also explore the full YouTube playlist here.

By monetizing payments, you’re not just adding a new revenue stream—you’re optimizing your platform’s potential and staying ahead of the competition. Keep following the series to learn more about implementing these strategies effectively.