BONUS CE SERIES ARTICLE: Community Minded

How two payments giants are supporting software vendors and developers

By Josephine Rossi

Community. It’s a term used to describe groups of people who are linked by commonalities and who share a sense of belonging. Psychologists and sociologists attribute community—or lack of it—to the success and failure of social, political, and economic structures. Researchers have tied community participation to personal well-being, health, and happiness. And even the business world has turned to community building as a means for improving employee accountability and performance.

In the payments profession, “community” has become a necessary part of the vocabulary as rapid technological advancement, changing consumer buying behaviors, and omnichannel commerce have created a need for customized solutions for merchants. Whereas payments acceptance was once an isolated part of the merchant business, it now must be part of a seamless experience for the customer and cohesive business operations for the merchant.

Enter the independent software vendors (ISVs). They’ve arrived on the scene ready to serve with highly customized software solutions that help merchants manage their businesses and accept payments at the same time. More than 10,000 ISVs exist in the United States alone, according to a 2017 joint report from ETA and the Strawhecker Group, and their entry into the landscape is forcing collaboration with the payments industry and changing business practices for the future. With software now at the center of merchant business operations, “the model going forward is technology-enabled, software-led distribution that allows integrated payments with more flexibility and less friction.”

As a result of this shift, collaborating with ISVs has become a must for most players in the payments space. Among other benefits, working with ISVs offers payment companies a new channel for merchant acquisition and increased stickiness as merchants become dependent on business-management software and the cost of cloud-based solutions decreases over time.

For two of the largest acquirer/processor companies in the world—Vantiv, now Worldpay, and First Data—embracing software professionals and building a classic sense of community has been part of their business strategies for years. Creating what both companies describe as “open platforms” and mechanisms for collaboration, however, was made easier through recent key acquisitions.

First Data actually created its Integrated Solutions Group (ISG) prior to acquiring CardConnect in July, but the latter move “put the program on steroids,” according to Rob Nathan, EVP of integrated solutions for CardConnect, a First Data company. “We’ve been spending the last six, seven months working hand-in-hand with First Data … adding our tools, technology, people, culture, and the processes and platform” to facilitate collaboration, he says, noting the company is still “actively in the processes of combining our platform of Clover.”

Similarly, the acquisitions of Element Payment Services in 2013 and Mercury Payments Systems in 2014 gave Worldpay a launch pad for its Vantiv ONE program in 2016, says Matt Taylor, EVP, global integrated payments and SMB e-commerce. “Both [companies] were pioneers in creating the ability for ISVs, or the development community, to connect to a payment platform,” he says.

Taylor ranks Worldpay’s priorities for Vantiv ONE: global e-commerce, global integrated payments, and omnichannel capabilities for merchants of all sizes. “Because the software developers are driving scale, innovation, and capabilities, [it] is really important to have an experience for them that’s attractive, that helps them commercialize very quickly, that removes some of the barriers for plugging into or selling to a single view of the customer,” he says.

First Data also is committed to an effective and holistic experience for software companies to integrate in an omnichannel environment. “There are thousands and thousands of software companies that are looking to have the right partner and more than just a set of APIs,” says Nathan. “I think the key is just having one simple way they integrate, and then a robust platform to manage [their] experience.”

Membership

In theoretical terms, individuals feel a sense of community when membership in a group matters. By forming ISG, First Data sought out collaboration with ISVs, developers, value-added resellers (VARs), system integrators, and other market participants, according to press materials, but Nathan says the company’s “core focus” is attracting and engaging software companies. ISVs that partner with First Data receive an all-inclusive experience, including access to a full library of integration specifications and self-guided or assisted certification processes. Other benefits of ISG partnership include those offered to merchant clients, such as sales, marketing, and training support; automated boarding processes; loyalty offerings; data analytics tools; hardware; and more.

At the same time, the company also enhanced its Clover POS platform to allow developers to build their own branded solutions for merchants. Among several improvements, app developers can now access code and write applications for the Clover app market to enhance capabilities for businesses running Clover POS hardware out of the box, says Nathan. “The app market … is a powerful tool to make Clover a more robust platform.” He likens it to an iPhone user downloading apps from the Apple App Store to build a more personalized and functional mobile device.

Worldpay describes the Vantiv ONE program as a “network” for payments integration. “Taking an open-source approach, the platform does not restrict developers to certain software, payment types, or even processors—its design is simply to give developers the toolkits they need to create payments solutions that can work on any platform,” according to press materials.

Taylor explains that the program has three pillars. The first is called Tech Tools, which is a suite of APIs and software developer kits (SDKs) and an environment for developers to build, test, and certify their solutions. The second is Tech Lift, an “organization” within Worldpay comprising technical support professionals with experience in certification and “problem solving for [the] live processing environment” and software engineers who are well versed in coding, software languages, and formats. The combined team “basically looks at our client needs … and maps out an architecture that would best solve for their needs and help them succeed in the market,” says Taylor.

The third pillar is Tech Tribe, a crowd-sourced community that developers can access through a log-in only portal and is overseen by a Worldpay community manager. The peer-to-peer environment allows developers to interact with other developers to problem solve and share success stories. “It’s something that we continue to be thrilled about as it keeps growing,” says Taylor.

Influence

For any community to flourish, experts say influence should be a two-way street. Because they tend to specialize in specific merchant verticals, software vendors expose payments companies to new sales channels. In return, payments companies offer ISVs that may be green in payments the expertise they need to understand industry nuances and expectations.

Taylor says this is the case for the Tech Lift team. Aside from assisting developers with the mandatory elements of payments such as security and PCI compliance, he points to examples of bridging technologies to provide a better customer experience.

“Maybe a client is only thinking about online payment processing because they are an online-only startup,” he says. “Maybe [we talk] to them about the various mobile wallet options out there from—Apple Pay, Google Pay, Visa Checkout—and showcase [how] that tech add-on could make a difference to some online customers. ‘Solutioning’ also helps them think about factors in driving a better omnicommerce experience for those clients wanting to branch out and grow, helping them think about all the use cases where customers might browse products, shop, return, and more.”

Nathan agrees that the payments company should play a consultative role for developers across all aspects of the merchant payments cycle. The software providers, in turn, also help to keep First Data on track in terms of having the right tools and experiences in place to attract the business-savvy ISV crowd for long-term relationships. “It took us years and years to build [a flexible platform], and we continuously do it,” he says. “We have development sprints mainly that are in response to what our software companies want. It’s challenging to continue to build these things, to innovate … to actually produce what we say.”

Connections

Members of successful communities also have shared connections. Despite all of the technology involved in maintaining a robust software developer program, both companies place a high emphasis on human interaction to nurture relations. First Data has four offices, in Philadelphia, Chicago, Denver, and Kansas City, dedicated to in-person business development with new software companies. “We have solutions engineers that are devoted to understanding our technology inside and out, helping the people that are making decisions from these software companies get across the finish line, and get these deals closed, and make sure that they’re comfortable,” says Nathan.

After an ISV is on board, it works with an integration team, partner development employees who “proactively put together growth plans,” and a marketing team, says Nathan. First Data also deploys a team to meet in person with the ISV. “We’re in their offices, we’re understanding their software environment, … how their sales teams work, and how we can embed our payment experience within their culture,” says Nathan.

First Data also makes it a priority to attend tradeshows and participate in speaking engagements to grow strong community and business development roots. In addition, the company participates in an incubator program with Silicon Valley Bank called “Commerce.Innovated.” It’s described as “an accelerator designed to help commerce, payments, and fintech companies grow their businesses.” February 2017 marked the induction of the seventh class to the four-month virtual program, which provides five companies from the United States, Canada, and Europe with operational mentorship from Silicon Valley Bank, First Data, and their networks.

In Durango, Colorado, Worldpay hosts an innovation lab where the community can experiment with the next generation of payments. “It’s really important for us to keep track of emerging trends and see what the future of payments could look like in the next five to 10 years,” says Taylor.

Payments over voice, robotics, and virtual reality are among some of the concepts currently being tested in the lab. “Our team built a voice-activated auction website as one of the projects, using our payments technologies and Amazon Echo to see and learn more on the voice trend in payments,” Taylor explains. “You could experience this and make a voice payment in person in our lab today.” For those who cannot make it to Durango, Worldpay hosts an online version of the physical lab on the Vantiv ONE portal.

Taylor says Worldpay also offers its APIs and other tools to students and young developers who are looking for access to automated code “to just try things out or test ideas” in a commercialized environment.

“Tech Tribe is geared a lot toward giving access to a community of the young, burgeoning software developers, as well as more established ones,” he explains. “We find the two collaborating quite a bit. If you’ve got somebody that’s young, that’s just starting something in a mobile or alternative currency space, and they want to talk to somebody that’s got an established business inside retail or services marketplaces, they can log in or create an identity in the Tech Tribe developer community and start solutioning together.”

Rewards

The remaining hallmark of a successful community is for its members to feel rewarded for their participation. During a recent earnings conference call, First Data offered investors quantitative results for the company’s ISV endeavors during 2017.

“Our pipeline of ISV opportunities has tripled, and our total number of live integrations is up over 70 percent,” said Frank Bisignano, chairman and CEO. “During the fourth quarter [of 2017], we had 24 new ISVs go live. And finally, merchant production across the ISV channel has more than doubled.”

A Worldpay spokesperson says the Vantiv ONE program has created a new revenue stream and new channel of leads for the company. The program is “growing as fast as or matching the capabilities of the software ecosystems at a market level,” says Taylor, and he attributes much of success to the program being vertical- and product-agnostic. “We’re seen as noncompetitive, and, in many ways, that gives us access to a look at everything that’s going on out there.”

Roughly 4,000 members are active in the developer community, according to Taylor. “It’s been phenomenally successful to get access to the base of innovation that’s happening in the market,” he says.

Moving forward for both companies, challenges also are opportunities. Nathan says there are many hurdles in creating a program like ISG and keeping it running like a well-oiled machine. First Data will be concentrating on “producing revenue and having meaningful partnerships that are impactful to both businesses,” he says. “How do you make it efficient, and actually produce revenue, which is what everybody wants out of these relationships?”

Taylor points to the opportunity of competing for global scale outside of the United States and possibly Europe, where integrated payments is a “very immature” market.

“It’s a fast moving, highly competitive marketplace with consolidation and innovation happening all over the place,” Taylor says. “We’ve got key decisions to make … and that’s as much of a challenge as it is an opportunity.”

This article originally appeared in Transaction Trends Magazine. 

Josephine Rossi is editor of Transaction Trends. Reach her at [email protected].

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