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ing is interchange-plus; ISVs can mark that up or down as "Software companies are niche players. They don't un-
they deem necessary. derstand payments. They need help," Sondhi said. "That's
Recently, Tilled landed a deal with a company that sells where ISOs should play to their strengths," especially cus-
music studio software. "Within 28 days of the first sales tomer service.
conversation the company was processing payments on
our platform, with each of us [the ISV, Tilled and the refer- Related services and technologies, like loyalty, invoicing,
ring ISO] generating ongoing revenues," Avery said. scheduling and CRM should also be part of the mix. This
will often require ISOs to partner with other technology
End-to-end integration typically takes a company like companies first. "They need to become aggregators of tech
Tilled about four days. "It's a pretty dramatic acceleration stacks," Sondhi said.
of time to market for software companies wanting to mon-
etize payments," Avery added. McKinsey, in its report, offered similar advice, suggesting
that ISVs can grow market share by adding value-added
To date, most of Tilled's clients have been card-not-pres- services to their core offerings – services that ISOs and
ent merchants. In September, though, the company an- banks can deliver. In fact, a third of small businesses sur-
nounced it can now process for card-present merchants veyed by McKinsey are interested in value-added finan-
through a partnership with technology company Aevi. cial services.
Build upon strengths McKinsey also made a pitch for ISVs to seek out incumbent

The rise of software-led payments does not signal the de- players, like ISOs, as partners. "While ISVs have achieved
mise of the traditional ISO sales model. success through self-service or offline sales processes, 40
"I don't think it will ever go away, but it is going to be a percent of small businesses surveyed say they purchased
smaller percentage of the market," Liu said. Avery con- their services through a salesperson or payments consul-
curred, noting the move to software-led payments "will tant. Partnerships could leverage incumbent companies'
be a gradual transition." broader reach to drive growth for ISVs," McKinsey con-
cluded.
Sondi suggested that working with ISVs should become a Patti Murphy is senior editor at The Green Sheet and co-host of the
natural extension of ISO businesses. Merchant Sales Podcast. Follow her on Twitter @GS_PayMaven.