Finding the Right Balance of Revenue and Cost to Maximize ROI
In the second episode of the PayFAQ embedded payments podcast, brought to you Payrix, host Bob Butler interviews Benny Silberstein, the co-founder and Chief Strategy Officer of Payrix. The discussion focuses on the ROI of embedded for software companies.
Benny was introduced to payments about the time the first iPhone was launched – and early on, he questioned why technology in the payments industry seemed so outdated. He started out in the traditional ISO space, but after realizing it was a continuous “race to the bottom,” he transitioned to a embedded payments strategy for software businesses, which eventually led to becoming a payment facilitator and developing the payment infrastructure for Payrix today.
On the revenue side of the equation, software companies traditionally recognized revenue from subscription or licensing fees for their software – and now, they are realizing the revenue opportunity from payments as well. For example, software companies built for running gyms and salons have the potential to make as much or more revenue from payments as they do their own license fees.
On the costs side of the equation, there are several factors, including fees associated with processing a payment (card brand interchange fees as an example). Software companies that are in a referral relationship with a payments company typically have very low up-front expenses and see minimal revenue.
Software companies that operate as full payment facilitators (payfacs), on the other hand, typically generate the most revenue and have to absorb almost all of the costs. They typically hire consultants, have to build out a risk and compliance team and have the payments infrastructure in place to operate a payments company.
The final model discussed is the payfac as a service model. Here, the costs and risks are drastically reduced, however, the revenue upside can be significant. It is the up-and-coming way for software companies to get to market fast while controlling the customer experience.
Whether you’re looking to monetize payments for the first time or want to see more revenue from payments, Payrix can provide you with the right solution. Get in touch with us today.