5 ways to scale and monetize payments

February 16, 2023

Most vertically-focused software-as-a-service platforms start small, dedicating 100% of their time, energy, and money to building incredible software to help business owners in a specific segment.

From the get-go, these entrepreneurs understand that integrated payment acceptance is an important value driver. Many platforms initially take a developer-first, low-cost approach and integrate their software with a payment platform, gateway, traditional acquirer, or ISO, earning a one-time fee or small revenue share (or nothing!) in exchange for referring business to the vendor. And this works great . . . to a point.

Growing pains with integrated payments

The traditional payment referral model tips too far in favor of third-party referral partners once a platform matures and scales to a level where they are processing $50 million to $1 billion in payments annually. It is no longer solely about the developer experience of simply integrating into a payment API without ever talking to anybody. Monetizing more of the payment revenue stream will result in greater lifetime value from customers. 

It’s time for the platform to take off the training wheels and embed payments into their core software and business model as part of the end-to-end merchant experience. 

A fork in the road to monetizing payments

As platforms mature, they have an option to continue with a payment referral model, benefiting from a modern tech stack in exchange for lower margins and a poor customer experience. A second option is to take on significant investment and human capital to register as a payment facilitator (PayFac), handling everything from underwriting, compliance, and risk to funding their sub-merchants. As a registered PayFac, the platform makes more margin but is liable for all fraud and write-offs on their platform.

Neither path puts the platform—who would instead focus on their core software business—on the optimal road to success. The trouble is that most payment enablement companies originally built models to serve direct merchants and later evolved their business models to fit the exploding opportunity in the platform software space. As a result, the platform often ends up competing with their vendor due to channel conflict.

There’s a third option, and we call it the “Goldilocks” model because it is just right. With this approach, a software provider partners with a payments-as-a-service (PaaS) company that empowers the platform to embed payments and monetize money movement easily without taking on burdensome operational and compliance tasks.

A winning formula with embedded payments

Here are five critical decision factors that mid-market platforms face when evaluating existing or new payment vendors to support them as they scale for success. 


Considerations: Does the provider serve direct merchants? Do they have a direct sponsor bank or connect through an intermediary?

What to look for: Find a provider that has geared their business model and processes specifically designed to service platforms and their customers. This singular focus means everything—from risk and underwriting to branding, pricing, products, reporting, support, and Go-To-Market programs—empowers platforms to maximize sub-merchant adoption and revenue. Adoption rates skyrocket when payments are part of the initial sign-up process for a platform’’s core software. And a partner with a direct link to a sponsor bank—as opposed to a third-party intermediary—results in better risk decisions and faster access to funds.


Considerations: Who owns the merchants? Can customers and data be moved off the platform? Is the pricing model transparent? Does it allow the platform to set merchant pricing? 

What to look for: Successful platforms deserve simplicity and transparency from a payments partner. A client-friendly provider offers clear contract terms featuring no minimums or exclusivity requirements, eliminating contract negotiations’ hassles. Look for published, volume-based Interchange Plus pricing (make sure you understand the details of “plus”) that adjusts as you scale so you can earn more money. Finally, your customers and your data belong to you, so make sure both are portable if you decide to switch providers.  

Developer experience

Considerations: Must developers code to multiple complex APIs to embed features like onboarding, customer management, and invoicing in their software? 

What to look for: A provider with a modern tech stack has pre-built components to support everything beyond a traditional buy button. Developers drop embeddable components into their software to activate advanced features. These plug-ins speed development time while reducing the likelihood of errors and bugs. 


Considerations: Does the vendor have a robust feature set that addresses the expanding needs of merchants, including payment methods, omnichannel acceptance, merchant reporting, and data analytics?

What to look for: Stand out from your competition by working with a partner that treats ACH payments on a level playing field by accessing real-time bank account balances. Digital consumer payouts are becoming essential to pay workers and customers. Cash flow is essential, and merchants will choose platforms that offer next-day funding, real-time payouts, and push-to-card credits. 


Considerations: Does the vendor have the operational infrastructure to support higher volumes and exception processes? Can they perform at the level needed to deliver a great client experience?

What to look for: Find a partner built by embedded payments experts instead of a provider with a referral-only mentality. Mid-level platforms are not solely developer-driven; ensure your partner has the knowledge and tools to service all key stakeholders regarding the economics, operational processes, product features, and marketing needs.

Rainforest: Commonsense embedded payments

Platforms deserve a transparent, friendly model that lets them embed payments successfully into every aspect of their business to monetize more of the payment stream without the underlying liability. 

Everything about Rainforest has been built intentionally with platforms in mind. Our singular focus is to help software companies succeed. Unlike many providers:

  • We didn’t evolve our business model. It is 100% purpose-built for software companies.
  • We didn’t bolt on a tech stack. It’s modern and developer friendly.
  • We didn’t expand our sales/reseller channels. Just one channel focused on platforms.
  • We don’t compete with our customers. Our programs increase adoption to drive platform success.
  • We don’t hide our pricing structure. It’s published, and it evolves as payment volume grows.

Your payment revenue fuels our success. We bring the people, processes, and technology to make that happen. Grow with us. Reach out today.

Share this article

Subscribe to our blog

Be the first to hear about new content