Why North Says ISVs Are Big Winners

The Rise of API-Driven Payments and the Empowered ISV

For decades, the payments landscape was dominated by established financial institutions and legacy processors, offering limited versatility and customization.Though, the convergence of open banking, cloud computing, and API-first development has fundamentally reshaped the industry.Payment platforms are now embracing API-driven products and developer-pleasant architectures, empowering self-reliant software vendors (ISVs) too build bespoke payment experiences on top of existing infrastructure.

“Payments have eaten software,” Bryan Long,director of product management at North,told PYMNTS. “Anything you can think of, there is an app for it, and there are payments embedded within that app… In the past 15 years, ISVs have been experiencing an increasingly meaningful, new revenue stream thanks to embedded payments.”

A New Era of Competition

This shift towards API-driven payments is substantially impacting the competitive landscape, forcing traditional payment processors to contend with agile FinTech startups that prioritize developer-friendly integrations. This environment fosters innovation, as long notes, “There’s a flood of technology enabling innovation. Anyone with a good idea can now spin up a proof-of-concept over a weekend using AI-powered no-code tools.”

API’s: The building Blocks for Innovation

By exposing modular components of the payment stack — including merchant onboarding, transaction processing, fraud detection, and reconciliation — payment providers are empowering developers to create seamless integrations tailored to specific business models. This opens doors for a wide range of innovative applications, from embedded checkout experiences to subscription billing and marketplace payouts. APIs allow ISVs to leverage robust payment functionality without the need to develop core payment systems from scratch.

The Evolution of ISVs in Payments

The transformation of ISVs in the payments space has been a gradual process, spanning several decades. A major turning point came with the emergence of the payment facilitator (PayFac) model, pioneered by Square in 2009. this model allowed software companies to onboard merchants under a single master merchant account,simplifying the user experience while also increasing risk exposure.

This paradigm shift created a more competitive landscape, liberating businesses from reliance on monolithic payment processors. Today, ISVs are key players in the evolving payments ecosystem, driving innovation and shaping the future of how consumers and businesses transact.

Looking Ahead

The rise of API-driven payments empowers ISVs to create innovative and customized payment solutions, responding directly to the evolving needs of specific businesses and industries. As technology continues to advance, we can expect to see even more creative and impactful applications emerge, further blurring the lines between software and payments.

What advice would you offer to businesses eager to leverage API-driven payments?

Interview: Leveraging APIs toShape the Future of Payments with Amy Thompson, VP of Product at PaymentSpring

API-Driven Payments: A game Changer

Archyde: Welcome, Amy Thompson, VP of Product at paymentspring. To start, can you share your perspective on the shift towards API-driven payments?

Amy Thompson (AT): Thanks for having me. The shift towards API-driven payments is nothing short of transformative. It’s democratizing access to robust payment functionality, empowering ISVs to build customized payment solutions that were previously out of reach.

Empowering ISVs with API-First Approaches

Archyde: How have APIs specifically empowered ISVs in the payments space?

AT: By exposing modular components of the payment stack, APIs allow ISVs to integrate only the functionalities they need. This enables swift growth of innovative solutions tailored to specific business models. For instance, an ISV working with subscription-based businesses can focus on integrating just the recurring billing and payout functionality they need, without building the underlying payment infrastructure themselves.

Competition in the API-First Era

Archyde: This shift has also led to increased competition in the payments landscape. Traditional processors now face agile FinTechs. How do you see this playing out?

AT: It’s a fascinating dynamic. Established players have their work cut out – they need to innovate faster and offer better developer experiences. Meanwhile, FinTechs are leveraging their agility, but they’ll need to prove their longevity and reliability. This competition is great for consumers and businesses, driving innovation and better services.

the Evolution of ISVs

Archyde: Speaking of ISVs,how have they evolved in the payments realm?

AT: They’ve come a long way from merely offering payment buttons. Today,ISVs are driving payments innovation,shaping their offerings based on merchant needs. The PayFac model has been a significant catalyst, enabling ISVs to simplify onboarding and increase control over the merchant experience.

Looking Ahead: API-Driven Innovations

Archyde: So, what are some exciting API-driven innovations we can expect to see in the near future?

AT: We’re seeing a lot of potential in real-time payments, embedded finance, and AI-driven fraud detection. APIs will enable more elegant use cases, such as pay-by-bank integrations and dynamic pricing. I’m also excited about the potential of open banking, which could lead to even more innovative payment experiences.

Thoughts for Our Readers

Archyde: for our readers eager to leverage API-driven payments,what advice would you offer?

AT: Experimentation is key.Don’t be afraid to test different integrations and APIs to find what works best for your business. Also, remember that security should always be a top priority. keep an eye on emerging trends and stay up-to-date with industry news.

Thank you, Amy, for sharing your insights on this exciting topic.