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Home » Blog » An ISV’s Guide to Monetizing Payments in 2025

An ISV’s Guide to Monetizing Payments in 2025

  • January 28, 2025

Like any business, software companies are always on the hunt for ways to maximize revenue. If you’re an independent software vendor (ISV), payment monetization offers a unique opportunity to turn digital payments into reliable revenue streams. 

In this post, we’ll be discussing how to monetize payments that are processed through your software. We’ll explore the benefits of payment monetization, different monetization models to try as your payment volume increases, and more. Keep reading if you’re ready to get strategic about payments.

What is Payment Monetization? 

In a nutshell, payment monetization refers to generating revenue through payment integration or embedded payments in your software. As opposed to just selling software licenses or subscriptions, ISVs can turn in-app transactions into additional sources of income. 

There are different types of monetization methods that SaaS companies can benefit from, such as: 

  • Processing fees: Software companies can charge users a processing fee for transactions made with debit cards, credit cards, or other payment methods. 
  • Revenue sharing: If you’re working with payment partners, you could have access to revenue sharing opportunities, commissions for referrals, or similar arrangements. 
  • Transaction markups: ISVs can add a small transaction markup whenever a customer uses their in-app payment service.
  • Platform fees: Some SaaS platforms charge a small platform fee for any transaction that occurs within their software ecosystem.

Payment monetization is attractive to ISVs because it’s a source of passive income. And your customers are already making payments, so it’s an opportunity for reliable ongoing revenue with minimal investment on your end.

The Benefits of Payment Monetization

The benefits of embedding and then monetizing payments go beyond just drumming up extra cash — as valuable as that is. Some other reasons to consider payment monetization include:

  1. Increased customer retention: No matter what industry you’re in or what kind of software you offer, customers crave convenience. If they can make payments without the hassle of leaving your app or website, they’ll be less likely to churn.
  2. Scalability and advanced features: If you partner with a reliable payment services provider (PSP), you’ll have access to scalable payment infrastructure and advanced payment features like fraud protection and industry-standard security protocols. 
  3. Differentiation in the marketplace: The option for in-app payments has become increasingly important to SaaS users, making it a valuable differentiator for software companies. 
  4. Increased transaction volume: When you allow users to make payments directly in your app, they’ll have access to a frictionless experience that encourages them to make larger and more frequent purchases, generating even more passive income. 
  5. Access to new payment methods: Partnering with a seasoned PSP can give you access to a broader range of payment capabilities that your customers would appreciate, such as digital wallets, buy-now-pay-later arrangements, or cryptocurrencies.

Payment monetization can enhance both the financial performance of your software and the overall value it brings to your customers. 

The Growth of Embedded Payment Monetization 

The shift toward embedded payments over the last few years has been one of the most significant trends in the broader financial landscape. 

To remain competitive, SaaS companies have had to constantly find new ways to offer users the convenience they crave. That’s one of the reasons that the embedded payments market is expected to top $291.3B by 2033. 

The other reason embedded payment monetization has been growing so quickly is that it’s a win-win. Customers get the seamless experience of making in-app payments with just a tap of their phone screen, and ISVs get access to ongoing passive income. 

Something to Consider: Flat Rate or Tiered?

An important consideration for ISVs that are planning to monetize embedded payments is whether to implement flat rate or tiered transaction charges. 

A flat rate simply means you charge SaaS customers the same fee regardless of the size or type of a given transaction. A tiered transaction rate involves changing the transaction fee based on a number of factors: 

  • Larger transactions typically incur lower fees
  • Long-time subscribers or frequent platform users could be eligible for lower fees 
  • Credit card purchases might incur higher fees than ACH transfers or debit card purchases

There’s no right or wrong approach when it comes to applying flat rate or variable transaction charges. But it’s certainly an important choice for ISVs to be aware of.

Monetize Payments with MSG 

As an expert in the digital payments realm, MSG Payment Systems has decades of experience helping software companies embed and monetize payments. We’re proud to offer our valued payment partners benefits they can’t get from a generic gateway or PAYFAC provider: 

  • Customized payment solutions: MSG can tailor payment solutions to the unique needs of an ISV’s business model, whether it involves subscriptions, recurring billing, or usage-based billing. 
  • Fraud prevention and security: MSG offers advanced security tools like 3D Secure, which can authenticate transactions in real time to cut down on embedded payment fraud.  
  • Comprehensive support and advice: Unlike generic gateway providers, MSG offers human support, along with strategic advice that can help you maximize revenue through embedded payments.

To learn more about how payment monetization can help you generate reliable revenue in 2025 and beyond, reach out to the MSG Payment Systems team today. 

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