The news: Financial tech company FIS introduced Worldpay for Platforms, a software-as-a-service (SaaS) solution that gives software providers embedded payment capabilities and access to advisory services, per a press release.

Neon One, a software provider for nonprofit organizations, and ResMan, which offers software solutions for the real estate industry, are among the first companies to use Worldpay for Platforms.

Here’s how it works: Software providers using Worldpay for Platforms can help small businesses accept various payment methods and currencies across online and in-person channels. They can also manage subscriptions and invoices. The solution is powered in part by payment facilitator Payrix, which FIS acquired earlier this year.

Why it’s worth watching: The global SaaS market is currently valued at $3 trillion, per McKinsey estimates, and that number is expected to surge to $10 trillion by 2030.

Here are two key reasons FIS and other payment titans—including Worldline—have leaned into SaaS:

1. SaaS offers a cheaper distribution model. Solutions like Worldpay for Platforms minimize costs associated with soliciting business directly from end-clients—in this case, small businesses. Instead, software providers act as middlemen and take on those solicitation costs, keeping overhead costs low for payment players like FIS.
2. And it can also help diversify firms’ client mixes and revenues. SaaS opens a new revenue stream for payments providers with the products and services they already have. Worldpay for Platforms is a collection of financial tools FIS already offers—the only difference is that it targets a different client segment. This lets FIS develop relationships with software providers so it can rely less on merchant clients. Software providers and online marketplaces are becoming a bigger target market for payment providers.

Why this could succeed: Worldpay for Platforms has attractive benefits for software providers and small businesses.

• It can increase software providers’ value propositions. Worldpay for Platforms lets software providers bundle payment tools into their product suite and offer more services beyond their core capabilities. This can make providers more competitive because small businesses may be more inclined to work with providers that give them more value for their money.
• And it can let small businesses avoid third-party payment integrations. Getting payment tools through their software firm means small businesses can work with one less business solution provider, which could be more cost-effective. Economic uncertainty has accelerated small-business demand for efficient, all-in-one solutions, which Worldpay for Platforms can meet—making FIS an even more desirable one-stop shop.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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