Independent software vendors have seen the light with regard to recognizing and appreciating the value of payments processing. Once an overlooked service offering and revenue stream, payments processing has risen to celebritydom in the software community as a way to flesh out an ISV’s existing value proposition to its end-users, and as a long term strategic play for enterprise value creation through the high quality, recurring revenue that it brings to bear.
I recently had the opportunity to attend a Business Solutions Magazine sponsored conference for ISVs, VARs, and MSPs. Though not an owner/operator of the aforementioned business types, I do have a keen interest in the “goings on” of these businesses. I am a consultant and strategic advisor to payments and payments technology companies, and have been on a self-imposed mission to better understand the ISV, VAR, and MSP points of view on payments.
Exposing the Power Play between Integrated Software Vendors and Payments Processors for Ownership of the End-user Relationship
Valuations for ISV platforms with payments integration, and payments processing companies which have vertically integrated high margin, high growth software platforms with measurable EBITDA contribution, are on the rise. The level of M&A activity for both is striking. But beneath this synergistic rapture and its intoxicating boon to valuations lies a fascinating phenomenon which bespeaks a calculating power play between ISVs and payments processors for the keystone to their shared windfall: the end-user relationship.