Integrating payments as a software company is expensive, complex and time-consuming. Here’s how we’re solving it.

May 22, 2024

As a software company, you may find payments are often an obstacle to unlocking the next stage of growth. That’s because:

  • Convenient solutions like Stripe are great when you’re starting out, but get very expensive and hard to work with as your transaction volume increases.
  • Legacy payment providers use old technology that is hard to integrate with and has hard-to-follow documentation.
  • Payments is complex to manage and requires having a deep understanding of the landscape, types of technology and payment strategy. This therefore calls for having the right internal resources which can be expensive to manage as a small company.

At Fiska, we saw those problems first hand. Most of our team comes from the software world, and I (Patrick Huynh, CEO) come from the payments world. We saw how payments and software started to converge in the 2010s and how the relationship between merchants and payments increasingly involved software.

We set up Fiska to help Independent Software Vendors (ISVs) implement payments in a way that acted as an enabler, not as an obstacle. An enabler that helps ISVs open a new revenue stream, offer a great merchant onboarding process to customers, have the flexibility to customize pricing and offer multichannel support to their customers. 

In this article, we want to share the story behind Fiska. We’ll talk about:

  • How have software and payments evolved over time (and where are they now)?
  • The issues facing ISVs that want to offer integrated payments
  • How Fiska helps software companies set up integrated payments

Note: are you an ISV looking for a payment partner? Reach out to us now to see how we can help you.

How have software and payments evolved over time (and where are they now)?

The integration of software and payments is a fairly recent development. Back in the early 2000s, software and payments were completely separate, and retailers used legacy point of sale systems with local servers to accept payments. And it was expensive. Running a locally installed point of sale system would cost an initial investment of $10k, with maintenance costing up to $10k per year to run. The result was that only the large retailers could afford to take card payments, and SMEs mostly stuck to cash.

That’s until Square came along in 2009 with an incredible innovation: the dongle. With Square, SMEs could accept payments with their phone and software for an initial cost of $40 and 2.9% + $0.25 per transaction.

And just like that, people accepted that software enabled a much better way to accept payments.

Today, the dynamics are very different. Pretty much every retailer uses software to manage appointments, reservations and inventory. But the problem is, payments haven’t caught up yet. Unless the retailer is using a platform like Square or Toast, they’re stuck using legacy payment providers to accept payments. And as we’ll see below, legacy payment providers cause a lot of issues because they weren’t designed to work with software.

Before working with a legacy payment provider, retailers will typically first look to their software vendor for support. The software company is the one enabling key functions of the business like inventory and reservations, so they should be able to do payments, right? 

This is the trend that companies like Shopify, Toast and Clover have capitalized on: offering payments within their platform. They understand that they are uniquely positioned to talk value to small businesses because they have a strong understanding of their pain points and already have all the transaction data. It’s also a much smoother and easier experience for the retailer. 

Small businesses prefer using their software vendor for everything business management related, including payments. As an ISV, you understand that if your software platform doesn’t offer payments, you risk falling behind your competitors. 

Now, if you’re a software company that wants to offer integrated payments, what are your options?

  • Try and set it all up yourself
  • Work with a payment provider like Stripe
  • Work with a legacy provider

Ultimately, all these options have big drawbacks that led us to start Fiska. Let’s dive into each one. 

The issues facing ISVs that want to offer integrated payments

1. It takes too long, is too complex and too expensive to set up integrated payments yourself

Offering integrated payments within your software requires connecting to the right payment networks, which itself requires having the right certifications and licenses in place. Getting your certifications and completing the actual integrations can take many weeks, even months. Realistically, it could take 6 to 12 months.

Since the payment providers you work with aren’t used to working with software and still operate with old technology, you’ll need to become an expert in 10+ different types of software and technology just to understand which will work best for you and when. 

Setting up your own payments system takes a long time, requires having the right talent in-house and the resources to get certified.

If you’re a large software company with a large developer team and a payments team, then setting up your own integrated payments solution makes sense as it gives you the most control.

But this is a daunting, expensive, and lengthy road if you’re a medium-sized software company with no payment experts on your team – as most software companies are. 

That’s why it’s very likely that as a software company, you’ll start by first using Stripe. However, this brings its own set of issues.

2. Stripe gets too expensive, and doesn’t allow custom pricing or custom merchant onboarding, and very little support

When you first set up Stripe, it’s great. The API is easy to integrate with, the documentation is outstanding, you can set it all up in a few minutes and the pricing is very clear: 2.9% + $0.30 for every transaction. As a small software company, they’re a great solution.

But as your company grows, you realize that 2.9% + $0.30 is expensive. If you want to earn revenue from the millions of transactions going through your platform, your only option is to mark up on the existing 2.9% + $0.30 per transaction. This makes your platform expensive for your customer, and the risk is you stop being competitive. 

Stripe also won’t allow you to customize the payment experience. For example, if you want your customers to be able to accept tips, you won’t be able to. In fact, you won’t be able to customize much on the billing platform. Stripe works great 90% of the time as an out of box solution, but the 10% of time where you have edge cases, they won’t be able to help you.

In addition to that, their support is rather limited. They have a self-service knowledge base and online support system. That’s great if you’re a developer, but if your customer is a restaurant, they won’t have the time or know-how to navigate a knowledge base.

If your customer’s POS terminal isn’t working and they can’t accept payments, it can seriously affect their bottom line, even if it’s just a few hours. An angry merchant will then turn to you for support, and you likely won’t be able to assist because Stripe doesn’t offer you support either. This leads to a situation where you’re offering a poor user experience to your customer who now can’t accept payments. If this happens repeatedly, then you’ll have a high churn rate.

3. Legacy providers use old technology, have poor partner support and are slow to operate

So what are the alternatives to Stripe? The most realistic ones are partnering with the legacy payment providers, those that existed before Stripe.

Legacy payment providers might allow you to customize your pricing and onboarding process, but they have other downsides: their technology is older, their partner support isn’t great, and they are often very slow to resolve any problems. 

The biggest issue is their technology. To partner with them, you’ll need to set up multiple integration points for each channel: one for the payment terminal, one for in-person payments and another for the ecommerce site, and possibly one for each country you want to service. It quickly gets messy, complicated and expensive.

They’ll also onboard your customer on a referral basis, meaning that when your customer wants to set up payments you’ll have to refer them to your legacy payment provider to manage the entire process. This means you’ll lose visibility over the onboarding and won’t be able to help them if there are issues. 

In order to manage the multiple integration points and integrate with older technology, you’ll probably have to hire more people to manage those payments, further decreasing profitability. 

4. Payments are complex, which means you need someone on your team with the right expertise

If you’ve read all of the above, you now understand how and why payments are so complex. To turn payments into a revenue stream, you need to make decisions on which certifications to acquire, which payment providers to work with, what pricing to offer and what the onboarding process should look like when activating payments for your customers.

But if you’re smaller, you can’t afford to hire an entire payments team, and it’s unlikely that you have expertise in payments in-house.

Ideally, you need someone who can answer your questions, make sure everything you do is compliant and that you pick the right partners in the first place. You need someone who can make you aware, for example, of the regulations that you need to comply with to operate.

Stripe and legacy payment providers don’t offer that, which means trying to set up integrated payments is a process that can be costly, exhausting, and lead to many angry customers.

At Fiska, we saw all the issues with Stripe, legacy ISOs and lack of support, and we thought: there has to be a better solution. 

Here’s how we’re fixing this at Fiska.

How Fiska helps software companies set up integrated payments

Our team is made of people who’ve come from both the software and payments industry. We set up the company because we had a strong thesis on integrated solutions for small business and we believed that small businesses were not currently served well with payments. We all agreed that the future was integrated commerce platforms

We launched Fiska in 2019 as a middleware solution that connects software to payment networks. Fiska helps ISVs integrate payments into their software in a way that allows them to generate revenue via customized pricing, control the entire merchant onboarding experience and use modern technology that works well with their platform.

At Fiska we only work with software companies that serve merchants, we don’t work with merchants directly. This allows us to focus entirely on helping ISVs integrate payments in the best way possible.

Here’s how we solve the issues mentioned above:

1. Set up integrated payments in a matter of weeks with our unified payment API 

The key issue with doing payments yourself is the number of integration points and moving parts you need to have in place to make it work.

With Fiska, you can access nearly everything you need to manage payments with one single unified payment API.

We have all the right certifications, licenses and partnerships with payment networks which you can access with just one payment integration. We’re pre integrated into the terminals, pre certified to all the payment networks, allowing you to accept both in-person and online payments.

You’ll also be able to capture and tokenize payment card data in person, online or via mobile to enable 1-click checkout or enable purchases and refunds through any channel. We handle any PCI DSS security requirements on your behalf, and ensure that you and your users avoid the potential data breaches and its liability. 

This means that you just need to integrate with one API, and you can immediately allow your customers to accept omnichannel payments in Canada and the US within weeks, not months or years. It’s easy and fast to set up, and you won’t have to hire an entire payments team, saving you money in the process.

We take care of compliance, security and payments, while you focus on your core business: software.

2. Set custom pricing, custom merchant onboarding and offer full support to your customers

Stripe offers you one point of integration, but at the expense of high transaction costs, inflexible onboarding experience and poor customer support.

At Fiska, we knew we had to change this to make it feasible for growing software companies that wanted to integrate payments as well as turn them into a revenue stream. We found that there were three mission critical features that software companies needed to implement payments as an enabler and turn it into a revenue center: 

Pricing: Our cost basis is interchange, which means that we charge the public interchange costs set by Visa/Mastercard and their various partners, which you can verify and audit at any time. This allows you to integrate into our API and add your own markup and still make a profit on each transaction. Our fees are locked into the partner agreement at the time of signing, which means we don’t increase our fees without first having a discussion. 

Custom onboarding: We have a fully fledged merchant application form which you can use to onboard your customers and embed into your own platform. This flexibility allows you to know when a part of the system is broken and what isn’t working if a customer calls you. You can customize the fields of the onboarding process, and even add your own branding on the set up and payment terminal. With Fiska, you can define and seamlessly embed payment account activation into your own sales and onboarding process.

Full and white-label support: When things go wrong, customers will remember when you were able to solve their issue swiftly. Not being able to accept payments can lead to loss of revenue for the customer, which is why having strong support is so important. At Fiska, we offer multi-channel support to you and your customers: you can call, email us and Slack us, and if you’re unable to answer your own customer questions, we’ll provide a second level support to your customers. This ensures rapid resolution and helps your users feel confident about their work with you.

3. Integrate with modern technology to build the user experience that you want

As a software company, you’re used to working with modern programming languages and technology. You don’t want your developers having to learn outdated technology just to enable (and maintain!) payments.

Fiska is a software company at heart. We have a modern tech stack, a team of developers and engineers that can build software. We’ve run a SaaS company ourselves and know the importance of using modern tech stacks. 

Our single unified API that allows you to execute one integration for any channel you need. This makes development projects a lot easier, reduces risks and costs and shortens your time to market. It also makes it a lot easier for you to launch new payment features as you scale. Our SDKs are easy to understand and integrate into, and you don’t need to be an expert in payments to work with them. 

Since we’re a software company, we can help ISVs with the right engineering resources to design the integration, streamline the project and resolve any issues as they arise.

Ultimately, with Fiska you won’t have to deal with managing multiple different stakeholders like with legacy payment providers, or with an outdated tech stack. You’ll get a modern tech stack with one point of integration.

4. Work with a partner that acts as your Head of Payments

Finally, at Fiska we understand that payments are complex and that as an ISV you need guidance to understand how best to implement payments. 

When you first work with us, we’ll do workshops, help you understand the implications of each payment channel and give you guidance whenever you make a key decision. We’ll educate you on the ecosystem and the basics of payments. We’ll help you understand the difference between a PayFac and an ISO, and when it makes sense to become one or the other.

You can think of us as your “Fractional Head of Payments”. You can call or Slack us when you have any questions, and we can be very hands on and help you set priorities when making a decision. We can also help you put together the roadmap, select the best pricing strategy and design and improve the user experience for your customers.

Fiska allows you to turn payments into a revenue center and have better control over merchant onboarding

Software and payments are now joining forces more than ever before, and every software company is looking to integrate payments in their business. But implementing this quickly, well and in an affordable way is still not possible. That’s what we’re solving at Fiska.

We do believe that software is a much better distribution channel for payments than legacy payment providers, and that as a software company, you are better positioned to offer financial services to your customers. With Fiska, you can now do that in a way that generates revenue, gives you more control and works with your modern tech stack. 

If you’re an ISV and are interested in learning more about how we can help you, reach out and book a call with us.