Finding your niche: Untapped verticals for ISVs in integrated payments

Independent software vendors (ISVs) have been presented with unique opportunities to evolve beyond their traditional roles by embedding payments and financial services into their offerings, positioning their products as all-in-one solutions. In turn, the payments industry has responded by offering more simplified integration of financial components, encouraging ISVs to take on more responsibility and own the customer experience end-to-end.

For ISVs interested in increase market share through embedded payments, it’s all about understanding client needs. Just about every company using a software solution to run their business can benefit from integrated payments, with the specific payment needs varying by vertical. Homing in on niche verticals can help ISVs claim their space in an increasingly crowded marketplace.

Integrated payments: Why now?

In 2023, the global embedded finance market had an estimated value near $73.83 billion, according to market research, and this market shows no signs of slowing down. Experts forecast that by 2026, embedded finance will account for 10% of total US financial transactions.

In addition to explosive growth in the embedded finance and payments sector, there’s a very real need for vertical-specific SaaS (software-as-a-service) products. According to former Forbes council member Johannes Koeppel, SMBs are hungry for streamlined solutions, stating, “Many SMBs don’t want separate payment solutions. They want payments integrated into the software they use to run their business.”

This demand opens the door for ISVs to create vertical-specific, “all-in-one” solutions that streamline both client and end-user experiences.

Vertical-specific opportunities for ISVs

Most client-centric software can benefit from embedded payment integration, and ISVs are racing to find their niche in the market. Some industries, like retail, are saturated with digital merchant services solutions, with companies like Stripe and Square monopolizing the market. But for ISVs looking to claim their space, they must identify and target untapped verticals. Here are a few examples:

1. Healthcare

The modernization of the healthcare industry is giving way to more hyper-personalized, digitized solutions. Patient care now extends beyond the walls of medical facilities as remote appointments and video-driven solutions become the norm. The demand for tech-forward solutions is high, but the healthcare industry is also laden with regulatory hurdles. Healthcare providers want secure, streamlined solutions that same time and labor. For ISVs developing software solutions in this vertical, such as telehealth or appointment services, partnering with a payment processor who’s well-versed in and equipped for handling private data is vital.

But the opportunities don’t stop with the end user. The rise in demand for TPAs (third-party administrators) to promote and sell in the health insurance space creates another payment need. These certified providers not only have to accept payment from the end user, but they also need to receive payments from the health plan provider. ISVs who can create solutions to facilitate this and other needs (such as scheduling or customer management software) may be able to carve out their own niche in this specific field.

2. Veterinary service providers

Appointment scheduling and reminders, medication management and insurance records – all things that traditionally were only associated with healthcare are now applicable to veterinary care, and ISVs that combine these services into one digital tool may find quite an eager market. Integrating payments into these solutions can drive further value, allowing vet customers to pay for prescriptions and services from their mobile or desktop device. Payment needs exist outside of the office, too as some veterinarians must travel to visit larger animals, creating a need for payment acceptance on the go.

3. Recreation-based businesses

COVID-19 produced a rise in popularity for outdoor activities – thanks to social distancing, renewed interest in sports such as golf and even pickleball soared, with participants still heavily engaging today. Venues that require participants to reserve tee times or courts online opens the door to other digital opportunities, including integrated payment platforms. Not only does accepting payment through a software or app guarantee that payment is delivered, but it also ensures cancellation fees are received for missed reservations.

4. Beauty and wellness

If your software or application features appointment scheduling, offering embedded payments as a complimentary service can be an enticing value-add for potential customers. Beauty and grooming-related businesses such as barber shops, hair and nail salons or spas commonly offer products alongside their services, opening the door to opportunities to integrate purchasing within the software. As noted by PYMNTS in a collaborative report with American Express, some companies have begun offering “Treat Now, Pay Later” payment options, mimicking the Buy Now, Pay Later microloan service. This allows their clients to pay for services in small increments over time.

5. Automotive services

Salons and spas aren’t the only appointment-based businesses that could open the door to embedded payment opportunities. Automotive businesses such as repair shops and even dealerships offer opportunities for ISVs to pair embedded finance with scheduling software. Consider the auto mechanic shop – a customer that drops their vehicle off in the morning receives a service report in the afternoon, then agrees to and pays for those services digitally before even returning to the auto shop.

6. Non-profits

For businesses whose main goal is to inspire community support and raise funds, the opportunities for ISVs are vast. There are dozens of verticals that fall underneath the umbrella of “non-profit,” each with its own unique hurdles and needs. From environmental conservation groups to trusts and investment funds, nonprofit organizations need to be able to both receive and disburse payments. Strategies such as text-to-give, gift matching and recurring pledges require precise data tracking and management, and the labor required to run these organizations needs payment facilitation, too. For ISVs looking for opportunities within this vertical, it’s wise to partner with a nonprofit-specific payment processor who is well-versed in the intricacies and policy requirements of this audience.

7. Childcare and education

From tuition and tutoring to daycares and day camps, there are plenty of payment opportunities within childcare and education spaces. ISVs who provide LMS (learning management systems) or eLearning software are poised to benefit from the addition of integrated payments. As highlighted by DevPro Journal, many of these businesses offer their clients memberships and subscriptions, creating the need for recurring payment support. ISVs building solutions in this space can offer a wealth of value with help from the right API provider.

8. Death care services

As stated earlier, any business that needs to send and accept payments can benefit from software with integrated payments. Funeral homes, for example, need to accept funds from payees and send funds to their vendors or service providers. For ISVs building cemetery plot management solutions or specialized back-office management software, embedding the financial aspect of the business into these solutions can serve as a huge benefit to this audience.

A strategic approach to evolving payment solutions

Payment-solution scripts have become more accessible to developers and SaaS companies, enabling them to integrate payments into their products with less effort and manpower.

However, hurdles still exist. According to PYMNTS.com, nearly 30% of ISVs say system integration issues make it harder to innovate, highlighting the need for more product-led and scalable solutions. When researching payment processors to partner with, look for providers with composable solutions that allow you to take only the pieces you need. Onboarding and integration support should be a deciding factor as well – for example, Deluxe’s merchant service solutions are ideal for ISVs who want self-service options or more personalized, white-glove onboarding. Continued support is key as well – your payment partner must be able to scale with you as your business grows. Payment integration should also be a value add and not a distraction. Deluxe’s product-led, scalable solutions enable ISVs to seamlessly integrate web-based payment components, acting as a behind-the-scenes utility and ensuring end-users enjoy a cohesive experience that feels native to the software itself.

Finding niches in the market with unmet software needs can help ISVs specialize their services, aligning themselves to the industry as experts in what they do. As the landscape of payment software continues to evolve, ISVs who pair scalable, growth-minded payment solutions with their products will be better positioned to meet the demands of the market, regardless of vertical or industry.