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 dove more into the payments industry and realized something: Software companies were getting a raw deal from the payments provider industry.

“Companies like Stripe originally built that platform for an online merchant to be able to take credit cards easily,” Lloyd told TechCrunch. “As the distribution has gone through software companies to merchants, the software companies need support. Instead of them generating revenue and doubling their SaaS revenue, they’re giving all of the payments revenue to their payments provider.”

It’s not uncommon for a software company to be paying 2.9% and 30 cents for each transaction, and Lloyd believes they shouldn’t be paying that. Instead, he said their costs should be closer to 2% — and that’s the spread that leads leaves them with a huge business opportunity.

So Lloyd left Fiserv in June 2023, taking with him colleagues Derek Victory and Danielle Madison to form Austin-based Forward to take what they learned from the payments industry to the vertical SaaS community.

Forward works by enabling SaaS companies rent its offerings out as a service, collecting its own fees. Its software sits within its customers software, thus saving them money. Forward manages authorization, settles transactions, moves money and handles reconciliation. And, because there are less payment fees, customers get some of those savings back.

Lloyd said Forward is also focused on program design, enabling technical integration in less than a week, on-going merchant sales support and the ability to migrate to a registered payment facilitator at any time. 

It’s a lofty goal to take on the likes of Stripe and other payments infrastructure companies, however, Lloyd believes that Forward’s model has an advantage by shifting the economics back to SaaS companies and help them save money.

“The software company acquired customers to enable payments through their software application, but when they go to execute that, very few of them succeed at scale,” Lloyd said. “In some cases, that opportunity is equal to what their software revenue is. If they execute payments correctly, SaaS companies can double the size of that company from a revenue perspective.” 

Forward is still early. It started processing payments in the fourth quarter of 2023 in a beta period. It has done a few million transactions since then. It also already counts former employer Fiserv as a customer. The strategic partnership enables Fiserv to expand into the managed PayFac category and bring products to market faster to the over 1,500 SaaS companies processing tens of billions a year in payments volume. 

Lloyd didn’t get specific, but did say the company was generating revenue. And also paying out revenue to its SaaS customers. For example, each transaction that runs through Forward’s platform, the software companies are, on average, getting back 70 cents by adding payments as a product.

That’s gotten investors excited, too. On Thursday Forward announced $16 million in seed financing. Commerce Ventures, Elefund and Fiserv led the round. 

Lloyd intends to use the new funding to expand the company’s capacity in terms of customers and on 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 clients, they remind us of ourselves 10 or 15 years ago. We’re genuinely rooting for them, and I think that’s a breath of fresh air in the payments ecosystem.”