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PAYMENTS INSIDER
Partnering With Software Vendors A guide to help ISOs and acquirers strategically build their ISV/VAR partnerships By ETA Payment Sales and Strategy Committee
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s consumer demand for seamless retail experiences grows, so too does the need for integrated software solutions to meet that consumer demand. Software as a Service (SaaS) is a $70 billion market. Partnering with an ISV can be an efficient way for merchant service providers to round out their customers’ software needs and address gaps in their existing suite of products, without taking on the burden of developing new software in-house. Many software vendors offer white-label products that can be scaled up and integrated quickly. Including software in your merchant offerings can increase customer retention, particularly as merchants come to rely on your software to run their businesses. The key to successfully partnering with software vendors and developers is to clarify what you’re both looking to get out of the collaboration, and establish metrics for
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evaluating and improving the partnership as it progresses. Generally speaking, the term “independent software vendor” (ISV) refers to a software producer that is independent of (not owned or controlled by) a hardware manufacturer and whose primary function is creating and distributing software. The difference between an ISV and a value-added reseller (VAR) is that the ISV generally owns the software, whereas the VAR sells it on behalf of a third party. But the differences don’t stop there. ISVs tend to specialize in specific industry verticals, whereas VARs more often focus on specific geographic areas where they can quickly deploy sales agents, according to The Strawhecker Group. VARs often include installation and tech support in their services and focus more on offering software solutions that are installed on the merchant’s
servers, whereas ISV product offerings tend to be cloud-based. These are very broad distinctions and do not apply to every software vendor on the market, so it is critical to clarify them before formally embarking on the partnership.
Selecting the Right Partner
There are software vendors to suit every merchant vertical and business model. But before you select a vendor to partner with, you must be very clear about your end goal: Are you ultimately trying to get access to the vendor’s merchant customers, or are you only interested in its software product? If you are seeking to expand your customer base, there is some due diligence involved. Specifically, you will need to determine how much influence the vendor has over its merchant customers. Will it be able to direct your clients to its services? Is it one of many software