Payment Processors for Software Vendors
January 12, 2019
As a software vendor, you likely do most of your business online at this point. The days of customers buying software at big box retailers are mostly over. Instead, most people purchase software directly from the developer or vendor using an online storefront. To be successful, modern software companies need to figure out not only how to accept online payments but also how to integrate competitive advantages into their software and business models by leveraging the payment step.
Choosing the right software development payment processing provider — and plan — is the key step on this journey to success.
Choosing a Payment Processor for Software Companies
The payment processing marketplace is a crowded one. These days, eCommerce is a big part of our lives, and it goes far beyond selling and purchasing software. So many transactions play out online every day, every hour, and every minute that your business won’t need to look very hard to find a payment processor.
The question is one of compatibility. Merely partnering with a processor that can handle the payments your company receives online for its software isn’t enough. Rather, it’s vital that you look at the payment step as an opportunity to give your business a competitive advantage over other software companies.
You may be of the opinion that all online transactions are more or less the same, believing that there is no real advantage in more closely examining your payment processing options. However, the truth is that transactions do vary depending on where you are shopping online and which processor is handling the payment. Prices, processing fees, downtime — these factors can conspire to make an online shopping or buying experience a huge hassle for any customer. They also all have something to do with the payment processor.
If a transaction won’t go through, the problem likely has to do with a problem on the processor’s end. Processing fees are costs paid by the customer directly to the processor. Higher fees and prices might have something to do with a costlier agreement between the vendor and the company processing the vendor’s sale transactions.
The Advantage of Directly Integrating with a Payment Processor
The best way to gain a competitive advantage with your software company’s payment process is by embracing direct integration. Usually, online payments are set up through a payment gateway system. The gateway processes payments from credit cards, debit cards, PayPal, or other payment methods online. Eventually, payments get to the processor, then to the customer’s credit card company, and finally to what is called your Merchant Account. The Merchant Account is exclusively for payments that have been authorized and approved, and only at this stage are payments distributed to your business.
A payment processing direct integration SDK (software developer’s kit) allows a company like yours to change the game. Direct integration lets you capture payment details through your payment gateway and then transmit them to your processor quickly and directly. This integration helps you cut out some of the administrative lag between your customer’s payments and the ultimate reception of revenue.
One result is faster payment processing, which means your business gets paid faster. Direct integration is often preferable to payment processors, which means you will typically get more attractive rates and lower processing fees if you go this route. Finally, since you aren’t as reliant on external services, there is less risk of downtime somewhere in the pipeline affecting your ability to process payments or get paid.
Is it worth it for your business to choose direct integration with a payment processor? Consulting with a payment processor that offers direct integration will help you answer this question for your business. Contact JetPay today to explore your options.
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