A payment can be successful and still leave a mess. The card is approved. The customer has a receipt. Somewhere else, a finance employee must connect the deposit to the right account, explain the fees and close the books. The checkout celebrates completion rather early.
That gap is the useful starting point for understanding i3 Verticals Strategic Partners. The legacy offering put payment processing, reconciliation and reporting inside another company’s software. Its customer was often a partner who already had customers. The proposition was practical: keep the familiar application, add the ability to collect money, and make the resulting information usable.
- The product: embedded payments with tools to understand the transactions.
- The route to market: software vendors and other distribution partners.
- The turn: i3 sold merchant services to Payroc in 2024, retaining payments for its own vertical software.
01 / Borrow the relationship
i3’s 2018 prospectus describes the mechanism clearly. Independent software vendors integrated its payment technology and offered acquiring services to their own clients. A single commercial relationship could reach many organizations. Resellers, independent sales organizations, financial institutions and associations provided other routes into the market.
The economics rewarded the intermediary. i3 disclosed residual payments to distribution partners tied to net revenues. This was distribution with an incentive attached: the software company could add a revenue stream while the payments provider gained access to an existing customer base. The integration also brought the payment offering into the application’s support structure.
The appealing part is how little the end user needs to care about the arrangement. Someone paying a bill wants the payment recorded correctly. A software vendor wants fewer awkward handoffs. A finance team wants numbers that agree. Align those interests and an obscure piece of infrastructure becomes useful to three parties at once.
02 / Two small names. A billion dollars.
In June 2019, i3 announced its acquisition of Pace Payment Systems. Pace’s customers and distribution were concentrated in public sector and education, including utility districts. It had processed $1.1 billion in charge volume during 2018. That measures money moving through the system, rather than money the company kept.
Its products, Fuze and Insight, gave customers real-time access to transaction flows, with a data warehouse, reconciliation tools and reporting. The announcement priced the acquisition at approximately $52.7 million, with up to another $20 million contingent on subsequent growth metrics.
Then came the operational footnote. i3 expected initial costs from converting Pace’s entire merchant portfolio to a new processor, followed by processing savings and consolidation of duplicate functions. Integration meant moving working customers between systems. The attractive financial model came with a migration project.
Pace’s 2018 charge volume.
Payments processed, not company revenue.
The wider lesson is worth borrowing: buying software also means taking responsibility for its connections. For a vendor considering embedded payments, a demonstration should extend past an approved transaction to the report that explains where the money went.
03 / The founder knew the rails
Greg Daily brought a long payments résumé to i3, whose operating business dates to 2012. He had co-founded PMT Services in 1984 and founded iPayment in 2001. The parent completed its initial public offering in June 2018, selling shares at $13 each.
There is a human counterpart to the technical integration story. i3 describes collaboration across its offices and a Ragnar Relay tradition beginning in 2018, with teams tackling a course exceeding 100 miles. It is a company’s own account of its culture, but an unusually concrete one. Handing work to another person is apparently an activity with both business and recreational applications.
04 / The $438 million change of direction
“i3 began as a payments business,” Daily said when announcing the Payroc agreement in June 2024. Management’s stated reasons were simplification, a sharper vertical-software focus and debt reduction. The sale covered merchant services and associated proprietary technology. It also included certain nonprofit and property-management assets.
“i3 began as a payments business”Greg Daily · June 2024
The transaction closed that September. i3 initially announced approximately $438 million in cash at closing; its later annual report recorded roughly $439.5 million after adjustments. Those figures cover the wider merchant-services business, not a standalone valuation of Strategic Partners.
The distinction that matters: i3 retained payment facilitation and the ability to attach payments to its own vertical software. Selling third-party merchant services did not mean removing payments from the products it continued to own. For Payroc, the acquisition expanded its merchant and partner reach. For i3, it narrowed the business.
05 / Ask to see the morning after
Today, the parent presents a public-sector software portfolio spanning courts, public safety, utilities, transportation, public administration and education. Its August 2026 description of i3 Unify 360 combines utility account management and billing with a customer portal, reporting and integrated payments. The workflow remains the point of attachment.
That territory has alternatives. Fiserv also offers ISV and referral-partner programs. A useful comparison therefore goes beyond whether a provider can process cards: test reporting, integration responsibilities and support. A historical 2020 school-district Pace agreement listed a 2.99% processing rate and $5 monthly maintenance charge. Those were one customer’s terms at one moment, not today’s universal price.
For a prospective partner, the useful questions are concrete. Which team handles onboarding? Can the report match a payment to the account that generated it? Who owns an exception when systems disagree? A lower headline processing rate is hard to evaluate until those responsibilities are clear. The handoff deserves its own demonstration.
The copyable idea is to follow one transaction all the way into the books before choosing the partner. The model depends on compatible systems, a partner with real distribution and economics that survive support costs. If those conditions are absent, embedding the button merely relocates the trouble. The finance employee still has to explain the deposit.