After Brandon Lloyd sold his second company, Bypass, a payment and point-of-sale software company for sports and entertainment, to Fiserv in 2020, he delved deeper into the payments industry and realized something: the company software firms were getting a raw deal from the payment provider industry.
“Companies like Stripe originally built this platform for online merchants so they could easily accept credit cards,” Lloyd told TechCrunch. “Since distribution has been through software makers to resellers, software makers need support. Instead of generating revenue and doubling revenue from SaaS, they pass on all payment revenue to their payment service provider.
It’s not unusual for a software company to pay 2.9% and 30 cents on every transaction, and Lloyd doesn’t think he should have to pay that. Instead, he said their costs ought to be closer to 2% – and it’s that spread that provides them huge business opportunities.
So Lloyd left Fiserv in June 2023, taking colleagues Derek Victory and Danielle Madison with him to found the Austin-based company Forward transfer what they have learned from the payments industry to the vertical SaaS community.
Forward works by allowing SaaS firms to rent their offerings as a service, charging their very own fees. Its software resides in the customer’s software, thus saving money. Forward manages authorizations, settles transactions, transfers money and handles settlements. And because payment fees are lower, customers get some of their savings back.
Lloyd said Forward also focuses on program design, enabling technical integration in lower than a week, ongoing sales support for merchants and the ability to migrate to a registered payment advisor at any time.
Competing with the likes of Stripe and other payments infrastructure firms is a lofty goal, but Lloyd believes the Forward model has an advantage because it shifts the economics back to SaaS firms and helps them get monetary savings.
“The software company has acquired customers to enable payments through its app, but once they do, very few of them achieve success at scale,” Lloyd said. “In some cases, that chance is equal to software revenue. If they get payments right, SaaS firms can double the size of that company from a revenue standpoint.
It’s still early days for the striker. Started processing payments in Q4 2023 during the beta period. Since then, it has made several million transactions. Customers also include former employer Fiserv. The strategic partnership enables Fiserv to expand in the managed PayFac category and bring products to market faster to greater than 1,500 SaaS firms processing payments price tens of billions annually.
Lloyd didn’t provide details, but said the company was generating revenue. And it also pays out revenues to its SaaS customers. For example, for every transaction made through the Forward platform, software firms get better an average of 70 cents by adding payments as a product.
This also aroused investor enthusiasm. On Thursday, Forward announced $16 million in seed funding. The round was led by Commerce Ventures, Elefund and Fiserv.
Lloyd intends to use the recent financing to expand the company’s customer support capabilities and develop technologies, including machine learning and artificial intelligence.
“We have a lot of empathy for software companies because we built them ourselves,” Lloyd said. “When we meet our clients, they remind us of ourselves 10 or 15 years ago. We’re really rooting for them and I think they’re a breath of fresh air in the payments ecosystem.”