Payments Detailed

Payment Strategy Must Fit Your Business Model

Creating a payments strategy is a great opportunity to drive revenue and improve client loyalty. But there is no single approach to implementing a payments strategy.

Your payments strategy is unique to your business. We’ll help you sort through the tradeoffs and then we can help determine a payments strategy direction.

Purpose of this article: Define the framework on which to build your payments strategy:
  • The business model and payments strategy
  • The costs and responsibilities associated with your strategy

The business model and payments strategy

Let’s start with the business model. That is, “the logic of the firm, the way it operates and how it creates value for its stakeholders.” The part relevant to payments is “how it creates value for its stakeholders.”
Think about the value in buying a Starbuck’s coffee using your phone. Some of the advantages include auto-adding to your available balance, convenience and speed. There you have a seamless customer experience which also encourages customer loyalty incentives. This demonstrates the link between a payments strategy and the business model. Both the payments model and business model require speed and ease while encouraging brand loyalty.

The costs and responsibilities associated with your payments strategy

Did you know there is a cost to cash? I’ll explain! Once you receive cash, there is time spent counting, reporting, and moving it to a bank…not to mention the potential for missing cash. With card transactions, counting, reporting and movement can all be automated. Each payment option has a set of costs, risk and strategic impact on controlling the customer experience. This is foundational in determining which approach is best for your business.

The operations and risks associated with payment cards can be delegated to and enabled by a partner. Below are the common options. Click here for a definition of each player.

Partner Type Characteristics
Merchant Account Financial institution

  • Connects you to the card networks through a financial institution
  • Minimal attention to the customer experience
Independent Sales Organization (ISO) A software partner with

  • Minimal cost to set up
  • A business referral model
  • ISO provides reporting and operational assistance
Independent Software Vendor (ISV) Software group with

  • Integration to payment technology with a payment processor
  • Reporting that is done through the processor
  • Control of the payment experience
  • Technology integration requirement for onboarding
Payment Facilitator Either a partner* or become a Payment Facilitator **

  • Assume transaction responsibility
  • Responsible for sub-merchants including risk, boarding and reporting
  • High cost of entry
  • Control the user experience
  • Greatest revenue potential

As you take on more responsibility with your payments strategy, your ability to customize the customer experience goes up, as do your revenue opportunities.

*Leveraging an existing payment facilitator such as a Stripe, WePay or Square, allows you to open a payments program quickly. It also allows you to customize the customer experience. However, your opportunities to generate additional revenue through payments is minimized with this option and therefore this route will not help to increase your company’s value.

**Becoming a payment facilitator may seem like a daunting task, but it is possible and boasts the most opportunities to generate revenue. With this option, you can create a consistent customer experience and may elevate your company’s value.

Case Study


If you are in a (B2B) business to business environment, review the Clio case to see how payments increased their customer satisfaction.

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