After Brandon Lloyd sold his second company, Bypass, a payments and point-of-sale software company for sports and entertainment, to Fiserv in 2020, he got more involved in the payments industry and realized something: Software companies were getting a raw deal from the payment provider industry.
“Companies like Stripe originally built this platform for an online merchant to be able to take credit cards easily,” Lloyd told TechCrunch. “As distribution has shifted from software companies to merchants, software companies need support. Instead of monetizing and doubling their SaaS revenue, they give all payment revenue to their payment provider.”
It’s not unusual for a software company to pay 2.9% and 30 cents for each transaction, and Lloyd thinks he shouldn’t be paying that. Instead, he said their costs should be closer to 2% — and that’s the spread that leaves them with a huge business opportunity.
So Lloyd left Fiserv in June 2023, taking with him colleagues Derek Victory and Danielle Madison to create the Austin-based Forward to bring what they learned from the payments industry to the vertical SaaS community.
Forward works by enabling SaaS companies to rent their offerings as a service, collecting their own fees. Its software resides in its customers’ software, saving them money. Forward manages the authorization, settles transactions, moves funds and handles the deal. And, because there are fewer payment fees, customers get back some of those savings.
Lloyd said Forward also focuses on program design, enabling technical integration in less than a week, ongoing merchant sales support and the ability to switch to a registered payment facilitator at any time.
It’s a lofty goal to take on the likes of Stripe and other payment infrastructure companies, however, Lloyd believes Forward’s model has an advantage by shifting the financials back to SaaS companies and helping them save money.
“The software company acquired customers to enable payments through their software application, but when they go to run it, very few of them succeed at scale,” Lloyd said. “In some cases, this opportunity is equal to their software revenue. If they get payments right, SaaS companies can double the size of that company in terms of revenue.”
It’s still early days. It started processing payments in Q4 2023 in beta. Since then he has made a few million trades. It also already counts former employer Fiserv as a client. The strategic partnership allows Fiserv to expand into the managed PayFac category and bring products to market faster to the more than 1,500 SaaS companies that process tens of billions annually in payment volume.
Lloyd wouldn’t be specific, but said the company was generating revenue. And also pays revenue to SaaS customers. For example, for every transaction executed through Forward’s platform, software companies receive, on average, 70 cents, adding payments as a product.
This has also excited investors. On Thursday, Forward announced $16 million in funding. Commerce Ventures, Elefund and Fiserv led the round.
Lloyd plans to use the new funding to expand the company’s customer-facing capability and technology development, 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 customers, 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.”
