Integrated software vendor: Definition, types, and examples

What is an integrated software vendor?

An integrated software vendor — more commonly known as an ISV — is a software company that engages in a partnership with a payments provider in order to integrate payment processing capabilities into their platform. Doing so enables their customers to accept and manage payments for their businesses, all from the same platform. By integrating payments, ISVs can create greater long-term value for their user base and generate new revenue via processing fees.

3 things you should know about integrated software vendors

1. ISVs are embedding financial services into their platforms to drive an average revenue increase of more than 40% per product built, according to a major new report co-produced by Payrix in partnership with other leading fintech platforms. Learn more about the revenue potential for ISVs.

2. ISVs can choose their level of involvement in their own payments infrastructure by implementing software-led payments that aligns with their goals, needs, and broader payments strategy. Learn more about the different types of software-led payments.

3. When a software company becomes an ISV, because they’ve introduced payments into their environment, they must uphold the compliance requirements of the PCI DSS and empower their users to do the same. Learn more about PCI compliance management.

Why do integrated software vendors add payments to their platform?

Adding software-led payments can offer various benefits to an ISV, and the decision to do so is largely based on a payments strategy that is developed to drive growth and revenue. Adding payment acceptance capabilities to existing software provides its users with an all-in-one platform experience that makes their lives easier. The added value for users extends the longevity of customer lifetime. Combined with the ongoing revenue share opportunities, embedding payments can be a profitable growth plan for ISVs.

Examples of integrated software vendors

Inktavo is a software provider for the printing, promotional product, and branded merchandise industries. They became an ISV after looking for a payments partner that could meet the complex payment needs of their user base, with solutions that would enable Inktavo to fully own the relationship with their customers. In addition to payment processing, they also offer their customers other Embedded Finance solutions like working capital. Learn more about how Inktavo has integrated payments.
RealGreen is a leading provider of lawn care business software. Their journey as an ISV began as a referral partnership with a third party but as they continued to build out their payments strategy, shifted to implement a PayFac-as-a-Service model that would grow their revenue potential. They now offer RealGreen Payments to their user base, delivering an all-in-one experience to their customers. Learn more about how RealGreen has integrated payments.

Integrated software vendor FAQ

How does a software company become an integrated software vendor?

A software company can become an integrated software vendor when they activate a partnership with a payments provider to integrate payment processing solutions into their platform. The relationship between an ISV and a payments provider is nuanced, but typically can be assigned to three models of software-led payments:

Integrated payments
Payment facilitation (PayFac®)
Payment facilitation-as-a-Service (PayFac-as-a-Service)

Learn more about the different types of software-led payments an ISV can leverage.

What role does an integrated software vendor play in payment processing?

Based on the software-led payments model an ISV chooses as part of their payments strategy, their roles and responsibilities of their payments infrastructure can vary. The biggest differentiator between the three listed above is the level of risk and reward associated with each. An integrated payments model, for example, is a referral partnership that enables software companies to add payments to their environment without having to deal with any affiliated risk — all underwriting and compliance responsibilities remain with the payment processor. On the other end of the spectrum is payment facilitation (PayFac®). Within this model, software companies make a strategic decision to bring payments in-house, choosing to take full control of underwriting, compliance, customer support, and more — plus, all the risk and reward that comes with it. Perched in the middle of those two models is payment-facilitation-as-a-service (PayFac-as-a-Service). For ISVs that want the reward, without the risk, partnering with PayFac-as-a-Service provider can be a particularly fitting and beneficial path. Learn more about PayFac-as-a-Service.

What’s the difference between an integrated software vendor and a payment facilitator (PayFac)?

When a software company adds payments into their platform through a partnership with a payment processor, they become an ISV. When an ISV makes the decision to take complete control of their payments by bringing them in-house, they become a PayFac. The requirements for becoming a PayFac are complex and the investments can be costly, but for ISVs with the resources to stand up and support the infrastructure, the effort can be enormously rewarding.