After selling his second company, Bypass, a payments and point-of-sale software company for sports and entertainment, to Fiserv in 2020, Brandon Lloyd dove deeper into the payments industry and noticed something: software companies were being treated unfairly by the payments provider industry.
“Companies like Stripe originally built their platform to make it easy for online merchants to accept credit cards,” Lloyd told TechCrunch, “and now it's being distributed to merchants through software companies, who need support. Instead of generating revenue and multiplying their SaaS revenue, they're handing all of their payments revenue over to the payment providers.”
It's not uncommon for software companies to pay 2.9% 30 cents per transaction, but Lloyd doesn't think they should pay that much. Instead, he says the cost should be closer to 2%, and that difference creates a big business opportunity for software companies.
So Lloyd left Fiserv in June 2023 to found Austin-based Forward, bringing along colleagues Derek Victory and Daniel Madison, to bring what he'd learned in the payments industry to the vertical SaaS community.
Forward works by allowing SaaS companies to rent their services as a service and collect their own fees. The company's software resides within the customer's software, lowering costs for the customer. Forward manages authorizations, settles transactions, transfers funds, and handles reconciliations. It also reduces payment fees, allowing customers to recoup some of the savings.
Lloyd said Forward has also focused on designing the program, allowing for technical integration within a week, with ongoing sales support for merchants and the ability to transition to being a registered payments facilitator at any time.
Forward team photo. Image courtesy of Forward
Taking on Stripe and other payments infrastructure companies is a big goal, but Lloyd believes Forward's model has an advantage in that it brings economics back to SaaS companies, helping them reduce costs.
“Software companies acquired customers so that they could pay through their software applications, but when they actually execute on that, very few companies are successful at scale,” says Lloyd. “In some cases, that opportunity equates to software revenue. If executed correctly, payments can enable SaaS companies to double the size of their company from a revenue perspective.”
Forward began processing payments as a beta period in Q4 2023. Since then, it has processed millions of transactions and already counts former employer Fiserv among its customers. This strategic partnership allows Fiserv to expand into the managed payfac space and bring its product to market faster to over 1,500 SaaS companies that process tens of billions of dollars in payment volume annually.
Lloyd didn't go into specifics, but said the company is profitable, and it also pays out revenue to its SaaS customers. For example, on each transaction through Forward's platform, software companies get back an average of 70 cents by adding the product as payment.
Investors are excited about it, too: On Thursday, Forward announced a $16 million seed round of funding, led by Commerce Ventures, Elefund and Fiserv.
Lloyds intends to use the new funding to expand its capabilities both on the customer side and in developing technology such as machine learning and artificial intelligence.
“We have a lot of empathy for software companies because we built a software company ourselves,” Lloyd said. “When we meet our clients, we see them as they were 10 or 15 years ago. We're rooting for them. We think that's going to be a breath of fresh air in the payments ecosystem.”