As a B2B software company builds its customer base, it often also builds up a sizeable payments monetization opportunity. For every dollar the software company earns from its customers, its customers likely collect and spend hundreds. Here are 4 ways well-positioned software companies can earn additional revenue on all that payment volume.
The setup: A software company that sells to businesses who serve consumers helps its customers more easily collect consumer payments.
Who this works for: companies that sell software to plumbers or shopkeepers or consultants or pretty much anyone else who’s providing goods and services to consumers. There are plenty of consumer payment options out there, but if the software is core to its customers’ operations an integrated solution has the advantage of tidily tracking everything in one place. Consumers like and expect to pay with credit cards, and credit card payments tend to be the most lucrative to monetize, so B2B2C software companies sit in a favorable position.
Who pays transaction fees: usually the supplier, but sometimes the cost is passed onto the buyer for large and/or recurring payments (like rent or tuition)
What’s it worth to the software company: the value of the payments opportunity is driven by the percentage of each transaction that the software company captures and the total volume going through the system. High payment volume is doubly good because companies with greater total transaction volume tend to be in a better negotiating position. Software companies can also earn more by assuming more risk; acting as a referral partner is the lower risk and easier way to start, but becoming a payment facilitator (payfac) allows software companies to capture more of the transaction fees.