What’s the most common blind spot when getting into payments?
Embedding payments can be hard. There’s a lot of things that you, as a software company, need to take on in order to execute your payment strategy. It doesn’t necessarily mean that’s PayFac, but whatever your payments strategy is, there’s still a lot of things that you have to learn. So let’s break that down. Usually when someone comes to me, they’ve done some Google research, they’ve seen PayFac in a box and name all the other buzzwords that are out there, and so they’re jazzed and excited but they’re also like “where do I go from here”? So breaking that down, usually the first question that always comes up is risk and understanding. What does it mean if I’m taking on risk or not taking on risk. And following that down, how do they technically integrate into a platform, what resources, what development resources, what am I going to have to build in order to execute on this strategy? How am I going to operate on this strategy? What does reporting and finances look like? And finally, how do you sell the strategy? Now you’re taking on the sales of payments and how do you do that?
I think at the onset, it’s really important to understand that risk profile and what the risk is of your business. Yes, there is risk, but there are lots of tools out there where you can mitigate that risk. I always like to start with that one because once you get through all these things and you determine your payment strategy, having a very good talking point to your acquiring partner about your risk strategy goes really well in getting you through that process.
When I think about blind spots, what I like to focus on here… Everyone thinks about what we just talked about, those are some of the things they’re starting to talk about or think about. What they’re not thinking about is this payments ecosystem. Who are all the players? What does it mean to be an acquiring bank, an acquiring processor? What is a gateway vs an ISV vs an ISO? These names and terms get interchangeable all the time. So clearing that noise and getting a good understanding of who all these players are and what roles they play is super helpful as well as this history of payment facilitation. How did we get here? How did we get to embedded payments? Why do I need to work with all these vendors and all these players? Understanding that history and all the players goes a long way in breaking down the frustration of ‘why is it like this’? Why is this how things are done? I think that’s a really helpful blind spot that people don’t normally think about when they go into embedded payments strategy.