Independent software vendors (ISVs) build payment processing directly into their platforms, so businesses don’t need to set up a separate system. Instead of using a stand-alone payment processor, businesses can accept payments inside the software they already use – whether that’s a point-of-sale (POS) system, an online booking tool, or an e-commerce platform. This setup simplifies transactions for businesses and their customers.

Below, we’ll explain what to know about integrating ISV payments.

What’s in this article?

• How do ISV payments work?
  
• How do you integrate ISV payments into your platform?
  
• Which industries benefit most from ISV payments?
  
• What are the challenges of integrating ISV payments?
  

How do ISV payments work?

ISV payments are made directly in a software platform, which means that businesses can handle transactions without a separate payment provider. The software provider partners with a payment processor and integrates its technology, usually through application programming interfaces (APIs) and software development kits (SDKs).

When businesses sign up for the software, they’re often automatically set up with the integrated payment processor. Some ISVs handle compliance, risk checks, and underwriting on the back end, so businesses don’t have to manage the hurdles of getting approved for payment processing.

Once the business is set up with the software, it can accept credit cards, debit cards, and other digital payments through the software platform. When a customer makes a payment, the transaction runs through the embedded processor, which handles authorisation, fraud detection, and settlement. The business then gets paid, usually within a couple of days, just as it would with a stand-alone payment provider.

Many software providers have additional revenue streams from these payments by taking a small cut of each transaction, charging for premium payment features, or offering a white-labelled version of the processor.

How do you integrate ISV payments into your platform?

Integrating ISV payments into your platform means embedding payment processing directly into your software, so users can accept and manage payments without leaving your system.

Here’s what the integration process looks like using Stripe’s tools for ISVs.

Choose the right payment setup

Decide how payments should function within your platform. Are you simply facilitating transactions, or do you want to onboard users as subsellers under your brand?

Stripe Connect works for both platforms and marketplaces, and users can get paid out directly or through your system.

Embed payments with APIs

You can integrate payments directly into your software using Stripe’s APIs, which allow you to:

• Collect payments through an embedded checkout, invoicing, or subscriptions

• Automate onboarding, compliance, and payouts for your users

• Handle transaction routing, currency conversions, and payment method selection

Automate onboarding and compliance tasks

When businesses sign up for your platform, you’ll need to collect and verify their information. Connect automatically handles Know Your Customer (KYC) checks, identity verifications, and fraud prevention – so businesses can start accepting payments with minimal friction.

Manage payouts and revenue sharing

Decide how funds should flow. Do businesses get paid out instantly, daily, or on a custom schedule? Connect can give you control over payouts, and it lets you take a percentage of each transaction.

Expand payment methods

Make sure your users can accept payments in ways that suit their customers – whether that’s cards, digital wallets, bank transfers, or local payment methods. Stripe supports a wide range of options, so you can scale globally without additional integrations.

Monitor and optimise

Use the Stripe Dashboard and analytics to track transactions, identify trends, and improve user experience. If something goes wrong, you have access to built-in fraud prevention and dispute management tools to protect your platform and its users.

Which industries benefit most from ISV payments?

In 2024, 65% of ISVs and marketplaces that didn’t yet accept payments planned to add embedded payment capabilities. The industries that benefit most from ISV payments are the ones in which payments are baked into daily operations. Here’s where ISV payments can help make the biggest impact.

B2B software

Software-as-a-service (SaaS) companies that enable other businesses to bill clients, process invoices, or manage subscriptions benefit from integrated payments. A salon owner using booking software shouldn’t have to send customers to a separate processor to check out; likewise, an invoicing platform shouldn’t have to make users go off-site to process payments. ISV payments turn these platforms into an all-in-one solution, which can help reduce churn and create an additional revenue stream.

Marketplaces and on-demand platforms

Any platform that connects buyers and sellers – such as a delivery network or a niche B2B marketplace – needs built-in payments. With integrated payments, customers can pay in-app; sellers get fast payouts; and the platform controls the flow of money while automating compliance, taxes, and revenue splits.

Healthcare and wellness

ISV payments allow medical software platforms to embed insurance processing, copay collections, and financing options directly into patient portals – so patients can pay bills just as easily as they would book an appointment.

Retail, hospitality, and ecommerce

Retail, hospitality, and e-commerce businesses are a natural fit for ISV payments. A restaurant’s POS software should be able to process card payments at the table, and an e-commerce platform should have checkout, order management, and payments working in tandem without third-party redirects. ISV payments turn these platforms into full-fledged commerce engines.

What are the challenges of integrating ISV payments?

Integrated ISV payments make transactions feel like a natural part of your platform. When done right, it can add value for your users and create a new revenue stream for your business. But making this happen comes with some challenges.

Here’s what to expect, and how Stripe can help you overcome common hurdles.

• Managing compliance: When you start handling payments, you encounter a web of regulations – identity verification, fraud prevention, tax reporting, and Payment Card Industry Data Security Standard (PCI DSS) compliance. You’ll need to make sure every transaction is secure and every user is verified. Use a payment provider that can help automate compliance checks (such as Stripe Connect), so users can start accepting payments without waiting for you to complete manual checks.

• Keeping onboarding simple: Getting users set up with payments needs to be fast and easy – but also secure. If onboarding takes too long, or you ask for too much information upfront, businesses might drop off before they finish the process. Conversely, if you make it too easy, you might open up the possibility of fraud. The solution is progressive onboarding – letting users get started quickly while collecting additional details as they scale. Stripe handles identity verification, KYC checks, bank account setup, and more in the background.

• Setting up payment processes: Not every platform has the same payment needs. Some just need a simple way for users to accept payments, while others need more control, such as splitting payments between multiple sellers; holding funds until a job is done; or providing instant payouts. Stripe Connect lets ISVs customise how funds move, whether it’s making direct payouts or scheduling disbursements based on milestones.

• Handling chargebacks and disputes: Chargebacks, refunds, and disputes are inevitable. And once payments are built into your platform, they become your responsibility. You’ll need a combination of clear policies and built-in tools to manage risk. Stripe offers automated fraud protection and dispute management, so you don’t have to handle it manually. Stripe Radar – a built-in fraud detection system – uses AI to flag suspicious transactions, which reduces chargebacks and fraud-related losses.

• Offering the right payment methods: Some businesses rely on credit cards, while others prefer bank transfers; digital wallets; or buy now, pay later options. If your platform operates globally, you’ll have to manage different currencies and local payment preferences. Stripe allows you to accept a wide range of payment methods, all through a single integration. ISVs looking to scale globally can also handle cross-border transactions and multi-currency payments without juggling multiple providers.

• Monetising payments without friction: ISV payments create a new revenue stream, but there’s a fine line between adding value and making users feel like you’re taking advantage of them. Some platforms choose to mark up processing fees, while others monetise instant payouts; invoicing; or embedded financial services. Stripe lets ISVs take a percentage of each transaction or charge for advanced payment features. With Stripe Connect, ISVs can take a percentage of each transaction or charge for advanced payment features. Or, ISVs can set up revenue-sharing models, so they don’t have to handle payment processing themselves.

• Making payments feel truly integrated: Checkout flows should feel intuitive, reporting should be built-in, and transactions should be reliable. Stripe’s APIs enable ISVs to fully integrate payments into their software, so users never have to leave the platform. ISVs that want to keep payments completely in-house can white-label Stripe services, branding their payments infrastructure as their own. Whether it’s custom-branded checkout flows, invoicing, or subscription management – payments should feel like a natural extension of the product.