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How to Get Modular, Embedded Payments Without Going to Pieces

By Dale Laszig

Lego logs are the perfect analogy for today’s software solutions. Individually, Legos and binary digits are small, uniform and dormant. Together, they’re a miracle of modular energy that can be molded and shaped at will. Not surprisingly, coding can be a lot like building with Legos, so it makes sense for developers to envision the features they would want in a technology stack, then find the right partners to help deeply integrate those capabilities. 

Designing payment software can be like building with Lego logs, according to Andre Machicao, global head of product at Visa. You can follow an outline to get a serviceable product, he stated, or create from scratch. At the Electronic Transactions Association’s April 2023 conference, TRANSACT, he walked the big stage, describing how children who build without blueprints outperform others who follow clearly defined patterns. The payments industry is building without a blueprint, he told the audience, and free builders are outpacing legacy architects.

In today’s blog, we will explore modularity as a principle of modern software design, and how it is helping developers embed payments into highly flexible, configurable software applications.  

Principled Design at the Core

As Machicao noted, software designers frequently go off script and their bold experimentations are taking payments from simple hardware to ever more nuanced forms of digital commerce.  Payment facilitation (Payfac) is a case in point. The idea of supporting sub-merchant customers under a single merchant ID was revolutionary a decade ago, but merchant acquirers saw Payfac’s ability to onboard customers with blazing speed, and a movement was soon underway. 

Like other aspects of PayTech, Payfac evolved from fast onboarding of merchants to diverse capabilities, driven by APIs, and backed by strong partnerships and 24/7 support. A good Payfac partner absorbs the related risks of payment processing, enabling independent software vendors (ISVs) to focus on high-value priorities and more importantly, meet customers where they are, while delivering frictionless checkout experiences across all points of interaction, including mobile, virtual, in-store and online channels.  

Modularity Creates Flexibility

Modularity is a big want in today’s digital commerce ecosystem, especially among multinational enterprises that transact in numerous languages, currencies and regulatory environments. These organizations strive to meet customer expectations and payment preferences while protecting their privacy and personal data. Their approaches in the fragmented payments landscape have created a patchwork of workarounds, some more effective than others. 

Like their customers and partners, ISVs expect flexibility and choice in how to connect, collaborate and share data with other service providers, but integrating disparate technologies has never been easy. ISVs tend to be out-of-the-box thinkers, which is great for building a business but challenging when communicating with other innovators. It takes more than APIs to fully embed payments; a Payfac partner provides the essential connectivity that powers unified commerce. 

Bolt on or Embed?

The best collaborations between ISVs and Payfacs are those that unlock their limitless potential. Modularity holds the key. As we’ve seen with providers and enterprises around the world, there are all kinds of approaches to integrating payments, some more effective than others. 

Over the years, the payments industry’s concept of integration continues to evolve as technology becomes more responsive, intuitive and open-ended. Here are some examples:

Legacy: Standalone equipment and manual invoicing still exist but are less secure, efficient and agile than alternative digital commerce solutions. They function as appendages rather than integral components of your business and brand. 

Hand-off: Packet switching, transaction routing and payment gateways are all part of a transaction’s journey. It is crucial to tokenize and encrypt data at point of entry, in transit and at rest, because each hand-off creates a potential vulnerability that a hacker could exploit. 

Semi-integrated: Large POS systems can keep customer data out of scope by processing payments through adjacent processing devices. Large and small merchants have found it easy and cost-effective to keep these smaller peripheral devices compliant and up to date. 

Integrated: Integrated POS systems have evolved into cloud-hybrid and distributed models that can be managed remotely and continuously updated. Digital app marketplaces and business management capabilities in select models enable users to run their businesses from anywhere. 

Embedded: Ideally, with in-app payments, it’s impossible to see where one ends and the other begins. Commerce is deeply embedded within a brand. There’s no hand-off; customers are not redirected to a checkout lane or payment page. When there’s no daylight between an app and a transaction, that payment is agile, intelligent and secure.

Payfactory – Designed to Build and Scale

In the early days of application design, it was commonplace to use hardware terminology to describe software, because that’s what we knew. Today, we still think of digital commerce in physical terms because of how deeply it impacts our businesses and lives. Imagine physical and digital commerce coexisting in perfect harmony, then see it in action at Payfactory.  

Payfactory CEO Ruston Miles founded Bluefin in 2007, a recognized integrated payments leader in encryption and tokenization technologies that protect payments and sensitive data. Headquartered in Atlanta, with offices in Waterford, Ireland and Vienna, Austria, Bluefin was founded on the core belief that a brand’s value is tied to its ability to deliver a secure, yet frictionless, customer experience. 

In 2021, Ruston founded Payfactory to provide the benefits of agile Payfac that could seamlessly be built into any software system – or as they call it, free building. The company’s free builders understand hardware and software from the inside out and bring principled design and client-first focus to every project. Payfactory’s heritage of security is reflected in every module, from state-of-the-art tokenization and PCI-validated point-to-point encryption (P2PE) to its suite of restful APIs, facilitating choice, collaboration and discovery. 

Built by software innovators for software innovators, Payfactory is here for the long ride and will make that first small step of the embedded payments journey productive and rewarding. Contact Payfactory to learn more.

Dale S. Laszig is a payments industry journalist and guest columnist for Payfactory. Previous to her writing career, she managed business development for leading payments acquirers and POS manufacturers. Connect with her at [email protected], LinkedIn and Twitter.