Build or Buy Embedded Payments? A Guide for ISVs
For many independent software vendors, embedded payments start with a tempting question: “Why don’t we just build it ourselves?”
Owning payment processing can seem like a way to control the customer experience, customize workflows, and capture more revenue. But building in-house also means taking on responsibilities that are easy to underestimate, including merchant onboarding, risk management, fraud prevention, dispute handling, and compliance.
For most ISVs, the real question is not simply whether embedded payments are worth offering. It is whether building, managing, and protecting payment infrastructure in-house is the best use of time, budget and product resources, or whether partnering with an experienced payments provider creates a faster, safer path to growth.
In this blog post, we’ll explore the factors ISVs need to assess when deciding whether to build or buy a payment processing solution.
What it takes for ISVs to process payments
In addition to facilitating transactions, ISVs that build their own payment processing solutions are on the hook for several critical functions that aren’t readily visible. Managing risk and charge disputes, onboarding new clients, remaining legally compliant and preventing fraud all fall under the ISV's purview. Mastery of the following roles is essential to creating a seamless and secure payment processing system:
Risk management: Performing due diligence is an essential first step in processing payments. Not all prospective clients have pure intent—verifying a merchant’s identity and having security checks in place helps insulate the business from risk. ISVs must be prepared to evaluate each application before accepting it.
Onboarding: Onboarding clients is a process in itself. Once a business is approved, providers must seamlessly integrate their system with the payment gateway before they can begin to process transactions. After the account is set up, they’ll need ongoing training and support to use the new platform effectively.
Dispute management: Transactions don’t always go according to plan. When customers have insufficient funds or contest a charge, payment processors must evaluate the likelihood of winning the dispute before accepting it or requesting additional documentation.
Fraud prevention: Cybersecurity is an ongoing job for payment processors. They must continuously monitor for unusual activity to predict and quickly detect fraud. For ISVs that process their own payments, fraud prevention is particularly important as they would be assuming full liability.
Compliance: Payment processing is a highly regulated industry. ISVs must understand and adhere to ereporting guidelines for card brands they acquire and banks they’re working with as sub-merchants to remain legally compliant.
What ISVs need to decide before building payments in-house
Do we have the resources to manage merchant onboarding and support?
Are we prepared to own fraud monitoring, disputes and compliance requirements?
Can our product team maintain payments infrastructure without slowing core roadmap work?
Will building in-house help us scale faster, or create operational drag?
Where would a payments partner reduce risk or speed time to market?
For ISVs, partnering does not have to mean giving up control. The right payments provider can help preserve the customer experience while reducing the operational burden behind the scenes.
Why ISVs partner with a payments solution provider
Building a robust payment processing system from scratch is risky and resource-intensive, which is why many ISVs choose to outsource the entire cycle or parts of it they don’t want to handle in-house. But beyond managing the hidden headaches, there are additional benefits to trusting an experienced partner with payment processing:
Faster speed to market: Bringing in an external payment processor eliminates the learning curve for ISVs. They can execute efficiently and quickly integrate an ISV’s existing software with an API.
Reduced PCI-DSS and security exposure: If an ISV processes their own payments, they store sensitive payment data that opens them up to greater exposure. They are also subject to stringent PCI-DSS security standards. Working with a third-party absolves ISVs of this burden.
Better scalability: As the business grows and needs to process more transactions, an established payments partner can help ISVs adapt and scale more quickly and securely than reworking the system themselves.
Expertise and support: Some of the functions required to process payments—like underwriting and risk management—require expertise that many ISVs do not already have in-house. Instead of adding new talent to their teams, they can outsource these duties to an experienced partner that already has certifications and connections in place that would otherwise be time-consuming and costly to attain.
How to make the right choice for your business
Deciding whether to build or partner to integrate a payment processing solution is a complex decision that requires careful consideration. Each ISV must weigh the unique challenges and potential benefits of both options to determine the best path forward for their specific business needs.
ISVs can ask themselves the following questions to assess their preparedness for building a payment platform:
Readiness: What is the size and maturity of my business? Have I explored all my options related to optimizing payments and reducing processing costs?
Costs: Am I prepared to cover the additional costs required to build and maintain my own payment processing platform? What talent would I need to hire to have the necessary expertise in-house?
Time: How long will it take to become a payments processor? Can I afford to wait that long?
Risks: What is my risk tolerance, both for financial losses and reputational risks? Am I comfortable assuming liability as a payment processor?
Finding the answers to these questions will prepare you to take the next steps forward in building or buying a payment processing solution as an ISV.
Choosing the right embedded payments path
The best embedded payments strategy depends on where an ISV wants to focus its resources. Building may offer more direct control, but it also adds operational, compliance, and risk responsibilities. Partnering can help ISVs move faster, support merchants more effectively, and focus internal teams on the software experience that differentiates the platform.
Ultimately, ISVs want to ensure the payments experience feels like a seamless part of their software, which might initially make building their own platform look like the best path. But the right payments partner can help ISVs achieve that—while also taking the strain of processing payments off their shoulders. Not ready to decide if you want to build or partner? You don't need to lock yourself into one choice today. Choose a payments partner that can meet you where you are and easily scale to meet your changing needs.
CSG Forte grows alongside your business. Whether you’re at a stage where you want to offer payment acceptance within your software or you’re ready to become a payment facilitator, CSG Forte’s flexible partner program is designed to scale to your needs. We make it easy to ramp up your offerings on an a-la-carte basis as your business grows, until you’re ready (or not) to take on the whole process.
Contact us today to discuss how our embedded payment solutions for ISVs can support your goals, no matter where you are on your journey.