Partnerships have always greased the gears of commerce, but in the payments business, where technology evolves by the week and margins hinge on fractions of a cent, choosing the right partner can be the difference between riding a growth wave and capsizing under its weight.
That calculation has become even sharper in 2025’s unsettled economy, said Paulette Rowe, CEO of Stax Payments, a processor that embeds payments for more than 100 independent software vendors (ISVs).
“Most businesses today are asking themselves: ‘Do you partner, do you build, or do you buy?’” she told PYMNTS’ Karen Webster. “Those decisions set your path on profitability and efficiency for years to come.”
In a market where venture funding is tighter and software growth has slowed from “a high of around 22% in 2022 to roughly 13% exiting 2024,” companies can’t simply bolt on payments and wait for revenue to appear, Rowe said. They need partners that help them sell, price and continue to adapt the service.
Against that backdrop, Rowe said she sees three opportunities where the right partnerships can unlock new revenue for ISVs:
- Monetizing payments inside vertical software as a service (SaaS). Many specialist platforms — think dental-office software or fitness-studio management systems — have already captured their core market and now face “limits on total addressable market,” Rowe said. Embedded payments partnerships let them participate in card and wallet transactions flowing through their software, adding an incremental revenue stream without distracting engineers from the product roadmap.
- Keeping pace with technology, especially artificial intelligence (AI). Payments plumbing must now absorb rapid-fire advances in machine learning, anti-fraud tools and agentic AI. During Stax’s last “partner advisory council” session in March, Stax’s chief technology officer demoed some of the new AI capabilities, which led to the idea of a joint hackathon to drive AI best practices across firms.
- Go-to-market and value-added services. Selling payments is “very difficult,” Rowe said. ISVs that try to cross-sell on their own often see payment attachment rates languish below 20% whereas payments could be driving 40% of revenues if managed successfully. In response, Stax rolled out Stax Connect Plus, a white-labeled service in which Stax’s own payments sales force sells and activates merchant accounts on the ISV’s behalf. Early adopters “have doubled their payments revenue,” Rowe said, without hiring in-house sales teams or navigating compliance independently.
Those value-added services extend to marketing support, subscription-billing tools and co-funded campaigns, which is a “win-win,” Rowe said, “because if we double the number of merchants they sign up, it helps us as much as it helps them.”
Rowe said her faith in embedding financial services was forged during stints that ranged from Barclays’ U.K. acquiring arm to the payments team at Facebook (now Meta). At Barclays, she watched small businesses migrate “from buying directly from the bank to wanting a one-stop shop.” Facebook showed her how friction-free payments could supercharge commerce inside social platforms.
“It really taught me how important the embedded space is — and how important it is to get it right,” she said.
That experience shapes Stax’s current strategy. Rather than relying on the industry’s “super-tanker” processors (legacy platforms that can take “six months just to get a conversation going”), Stax has spent the past two years acquiring processing and settlement technology so it can control the full stack, Rowe said. The objective is to respond in days, not quarters, when ISV partners spot a new use case.
Asked where she sees the richest untapped opportunity, Rowe pointed to vertical SaaS serving sectors still dominated by checks and paper workflows. Home care providers and property management platforms sit high on her list. These businesses often cater to older operators who are comfortable with checks, yet the payment decision is increasingly made by younger, digital-first family members or tenants.
“The cost of managing checks is huge,” Rowe said. “Helping those software companies migrate to cards and wallets — and eventually to embedded-finance products — creates stickiness and new fee income for everyone involved.”
Specialty healthcare is another target. Chiropractors and med-spa operators are branching into subscription wellness plans and non-traditional therapies, each carrying unique risk and omnichannel payment flows. Owning its own processing rails lets Stax and its sponsor bank underwrite those niches faster than a general-purpose processor, she said.
As the industry approaches the second half of the year, fraud and data security remain ever-present worries. Stax is trimming the number of third-party providers it relies on while bringing in “state-of-the-art specialists” for real-time risk monitoring, Rowe said.
Webster said during the discussion that Verizon’s latest breach report attributed nearly 30% of incidents to third-party compromises. It’s a statistic Rowe called “sobering” but fixable through tighter contracts and more industry data sharing.
Looking ahead, Rowe urged payments and SaaS professionals to double down on relevance. “Ask yourself: ‘How can I make myself indispensable to my customers’ goals?’” she said.
For most ISVs that means becoming a genuine one-stop shop — but doing so with a clear-eyed build-buy-partner framework.
“Not everyone should try to be a PayFac,” she said. “Think carefully about where you excel, and let partners carry the rest.”
Her parting advice for the industry’s second half: “Get the basics right, then move fast on embedded finance. The opportunity is huge for those who choose their partners wisely.”
