Page 26 - gs260202

Insights and Expertise

Day 365 test:

Why ISV payment processor decisions fail

Further, processors change their business models in the
face of revenue shortfalls or complex market forces. Some
of these changes negatively impact ISVs.

Processors, understandably, are incentivized to close
deals. ISVs, meanwhile, are making decisions that will
shape their long-term strategy, GTM positioning, product
roadmap and customer experience. To mitigate this
risk, many teams rely on weighted evaluation rubrics to
introduce objectivity into the selection process.

The comfort — and illusion — of the rubric

By Ken Musante
Napa Payments and Consulting

arriage can be hard. It's not just about tomor-
row or the honeymoon phase; it's about the
long arc … 'til death do us part. Courting, by
M comparison, is easy. Nobody is late on their
first date. Expectations are managed, best behavior is on
display and optimism is high. So it often goes with con-
tractual relationships in payments.

Everything works in the demo. Corner cases can be accom-
modated. New features are "pending QA." Economics are
modeled, terms agreed to, and high-fives are exchanged
as the contract is signed. For a brief period, you're riding Based on this rubric, Vendor A is selected. The pen is
the contract-signing high. Your RFP rubric was thought- dropped. The deal is done. But if the weighting shifts
ful, detailed and quantitative. slightly, a different vendor wins. One could reasonably
argue that security and compliance should be pass/fail,
Unfortunately, contract signings don't pay the bills. Day not weighted.
365 may look nothing like your Day 1 expectations.
Others might ask why there is no scoring for roadmap
This reality is especially acute for independent software credibility, release frequency, pace of innovation or
vendors (ISVs), where payments decisions become deeply integration partnership quality. Without deeper vetting
embedded into product architecture and are costly, dis- and comparison, the rubric provides numerical confidence
ruptive and sometimes impossible to unwind. without operational certainty.
The demo problem And yet, this is how some of the most consequential

Unlike a new car, integrated payments solutions are payments decisions are made, which explains the
difficult to test drive. Some degree of integration is prevalence of buyer's remorse.
required before meaningful comparison is possible, and The ISV knowledge gap
by the time that work is complete, you're often already
committed. Processor contracts are frequently regretted Most ISVs do not have deep payments expertise in-house.
because of a mismatch between expectations, capabilities Payments are rarely their core product. This article is not
and delivery. meant to catalog every consideration an ISV must evaluate,
but it's important to recognize the scope.
26