Horizontal vs Vertical Payments

Horizontal = industry agnostic

• broad service covering a wide breadth of industries

• usually more mature solutions

• examples: Square, Worldpay, Quickbooks, FIS

Key:

• need to own the entire stack and have an incredibly powerful value proposition or else you will lose to incumbents

Vertical = industry specific

• full featured solutions for industry niches addressing specific pain points

• functional specificity narrows their target market but creates high stickiness and higher ARPU if they can serve their market well

• examples: Lightspeed for restaurants, Mindbody for salons/fitness

Key:

• need to REALLY UNDERSTAND industry pain points and be able to solve for them

Overall

• merchant services and card acceptance are table stakes

• payments should be part of a bigger software solution

• horizontal or vertical, they are a one to many opportunity for acquirers

• consider operational costs and acquisition costs no matter what path you choose