Despite Their Uptake, Micropayment Apps Still Face Trust and Security Issues From Customers
Editor's Choice Fintech Latest News North America

Tilled: Five Signs ISVs are Ready to Move on From Stripe

Tilled empowers software vendors, marketplaces and SAAS companies to start generating revenue from accepting credit cards. Here, they share five signs ISVs are ready to move on from Stripe.

With a merchant-friendly platform that can be set up in days with no upfront costs, we can see why Stripe Connect is so attractive to business to business (B2B) software companies in need of a payment solution. 

Managed payment facilitator (payfac) providers, such as Stripe, Square and Braintree, are the initial choice for many independent software vendors (ISVs), but what many are coming to realise is that while these managed payfac providers were good partners when they first started their businesses, they’ve outgrown them. 

Now, they’re ready for a solution that is designed with their business, customers and bottom line in mind. Here are five signs a software company is ready for a Stripe alternative:

1. They’re tired of talking about how expensive Stripe is

So, 2.9 per cent and $0.30 sounds great at first. It’s simple, it’s transparent, but it’s also expensive. As Stripe becomes a bigger line item on a profit and loss statement, it’s time to consider moving on. The problem only gets worse as businesses grow. The real question is: shouldn’t those businesses be generating revenue from the payments flowing through their system? Payments should be a revenue centre for businesses — not a cost. When any business starts to realise exactly how expensive Stripe is, it’s time to start looking for an alternative.

2. Stripe is not negotiating

Maybe after a long, back-and-forth battle, Stripe has come down to 2.7 per cent and $0.25. But let’s face it, it doesn’t cost 2.7 per cent and $0.25 to process most card payments. Stripe is making a lot of money off of the customers that software companies are bringing to them, and none of that money is going to the ISV. Stripe’s flat-rate pricing model is limiting, and it might even be pricing some software companies out of the market if their customers are used to negotiating rates and can find a better deal elsewhere. Even if Stripe is willing to negotiate, it will likely ask companies to start taking on liabilities like chargebacks in exchange for only slightly better rates. That’s more risk, and any lower rates you get from Stripe could be fully negated by the additional liability. Software companies could easily find themselves in situations they’re not prepared to handle.

3. Payments volume is increasing

Most companies pick Stripe as their first option because it’s quick and easy, and, when they’re not processing very much volume, it’s not very painful. But as business grows, and payments volumes increase, it becomes apparent that Stripe isn’t a long-term solution for software businesses. At some point, they’ll need to make a change. Maybe not today, maybe not tomorrow, but someday it will be too painful to give up all that potential payments’ revenue. Eventually, ISVs need to start monetising the payments they’re sending straight through to Stripe.

4. When considering an exit strategy (or a new funding round)

When it comes to venture capital, a lot of VCs are starting to recognise the enormous value of payments processing as a recurring revenue stream. They know that a properly monetised integrated payments strategy can have a huge impact on both the bottom line and the valuation of a software business. That’s something Stripe can’t offer. So, when ISVs are considering their next funding round or a potential exit multiple, and are working to increase margins, revenue, and profitability, they can’t ignore the additional recurring revenue that can be generated from the payments already flowing through their platform.

5. They can’t stop talking about a Stripe alternative

Most companies recognise they need to move on from Stripe long before they actually do. But when they’ve looked at the alternatives, the decision is almost always to delay. It could take months to get another solution up and running — time and effort they just don’t have.

Whether it’s the CEO, CTO, CFO, or VP of sales, there’s someone on the team who’s continually evaluating alternatives to Stripe. They talk about it at every board meeting. They ask colleagues about it at events. They’re ready for a change. Ready for a Stripe alternative?

Do any (or all) of these signs sound familiar? 

If so, it’s time to consider payfac-as-a-service. At Tilled, we recognised that existing alternatives weren’t an adequate solution, and so we spent the last few years building the right one. Our solution is as easy to set up as Stripe, just as seamless for customers, and is designed with a software company’s business (and bottom line) in mind. By plugging in our easy to implement APIs, software companies can start generating a substantial recurring revenue stream from payments today. Stripe can be a great partner in the beginning, but at some point, every business outgrows Stripe. And that’s a good thing! It’s time for a Stripe alternative, and it’s time for Tilled.

Author

Related posts

Fintex Capital: B2B BNPL – The Future of Business Finance?

The Fintech Times

This Week in Fintech: TFT Bi-Weekly News Roundup 21/10

Claire Woffenden

AI for Financial Industry: YUKKA Lab launches new Market Sentiment Analysis Tools

Manisha Patel