Why Vertical SaaS Companies Are Taking Control of Payments
Merchants now expect business software to do more than manage workflows. They want it to drive revenue, accelerate cash flow, simplify payments and surface the insights needed to run smarter.
That evolution formed the basis of the latest installment of the PYMNTS Summer School series, featuring Billi Jo Wright, executive lead, general manager of integrated and platforms, PayFac, at Worldpay, now Global Payments. Wright explained payments are central to the value proposition of vertical software platforms rather than an add-on capability.
“Vertical SaaS platforms have become the operating system for businesses,” Wright said.
Merchants now discover and adopt payment capabilities inside the software they already depend on to manage daily operations, she stated.
Rather than treating payments as a separate function, platforms are expected to embed them in ways that deliver what Wright termed “a frictionless experience, more flexibility into payment capabilities, and even use payments to drive key insights to run their business.”
Data showed that 82% of businesses would consider changing software platforms for better payment capabilities, evidence that payment functionality within software solutions has become a deciding factor rather than a secondary consideration.
Embedding payments directly into scheduling, invoicing, inventory management and customer management allows merchants to reconcile revenue, improve cash flow visibility and automate vendor payouts without leaving their primary software environment.
That embedded experience becomes central to how merchants think about their software and how they use it to manage their business, Wright added.
Payments Become Part of the Product
The business model for many software providers has also changed.
Historically, subscription fees supplied predictable recurring revenue. Embedded payments add a new layer to that model, allowing software providers to earn on transaction activity while giving merchants a faster, more seamless experience inside the workflows they already use.
“This shift isn’t just about embedding payments,” Wright said. “It’s about making payments part of a product.”
According to Wright, platforms that accomplish this often see higher revenue per customer, stronger attachment rates and greater long-term enterprise value. Payments represent only the beginning. Working capital, banking services, payroll and card issuing are becoming logical extensions for software companies that already occupy a central position in merchants’ daily operations.
Execution Matters as Much as Technology
The opportunity, however, carries operational demands that software companies sometimes underestimate.
Wright noted that many firms recognize the revenue potential of embedded payments without fully appreciating the operational work it requires — onboarding, settlement, compliance, risk management and customer support.
“When you offer payments, you are essentially a payments company,” Wright detailed.
That realization helped shape the growth of the PayFac-as-a-Service model, which allows software companies to retain much of the customer experience and revenue opportunity while relying on a payments partner for the underlying operational responsibilities.
“The reality is there’s several options as you think about embedding payments,” Wright said. “You really need to be able to understand where you want to head with that.”
Software providers, she said, should determine how much of the payment experience they want to own, what internal expertise they possess, and what level of strategic and operational support they expect from their payments partner. Those choices ultimately influence how quickly a platform can execute and how effectively it can support merchants over time.
That places data at the center of the next stage of platform competition.
Vertical SaaS providers, Wright pointed out, occupy a unique position because they capture operational data alongside payment information. Combining those datasets can help merchants manage inventory, forecast cash flow, automate financial processes and make more informed operating decisions.
Artificial intelligence could expand those capabilities further.
“What AI is going to do is it’s going to enable a bunch of new software,” Wright said.
Companies that combine operational, payment and embedded finance data to support automation and decision-making will be better positioned to distinguish themselves in a crowded software market.
Watch the full conversation to learn more about:
- Why 82% of businesses say better payment capabilities could justify switching software platforms.
- How embedded payments have changed software from a subscription business into a broader revenue model.
- Why AI is critical in turning systems of record into systems of intelligence.
