5 Things Successful SaaS Companies Do To Maximise Their Payments Solution
Many SaaS companies are becoming aware of the huge opportunity that exists in enabling payments within your platforms. However, in reality only some SaaS providers are generating the success they wish to see. What makes a SaaS company successful with payments? Read on to find out the 5 core elements to drive success with payments for your SaaS platform.
1. Build A Payments Roadmap
Payments can be complex and resource heavy, especially for new entrants and SaaS startups. Without defining a roadmap for implementing your payments solution and properly scoping the resources and time it will take, you can easily get lost and end up back at square one.
We see this all the time with clients that come to Payrix. They start out with the vision of becoming a payment facilitator, but quickly realise that they are exhausting their resources trying to build their core payments offering. Without a solid structure and plan in place, the burden of development, compliance, staffing and maintenance can quickly become unmanageable.
Whether you are working with a payments partner, or going it alone, your payments roadmap will need to consider:
Payments Roadmap Outline
- A clear view of your target audience and use cases
- Outline of development goals and timeframes
- In-depth review of what compliance and legislative requirements you will have to meet (if you are partnering with an existing PayFac, they will have done this already)
- A plan for hiring and/or outsourcing staff to manage your payments solution (some payment partners will offer this as part of their solution)
- A budget and resource plan
- An integration strategy
- A beta testing strategy
- A Quality Assurance process
- Estimation of ongoing resources to maintain your solution
If you are working with a payments partner, a lot of this work will have been done for you (or at least the foundations will be there for you to get a head start). However if you are building from scratch, this process can take a lot longer. We recommend spending significant time planning out your payments solution and weighing up your options before you begin building out your core features or investing in licensing etc.
2. Monetise Your Payments
Offering payments as a feature has huge benefits for multiple aspects of your business, but it can be difficult to generate a tangible return on investment without some sort of monetisation strategy.
Why Do SaaS Companies Enable Payments?
Some of the reasons SaaS companies choose to enable payments might include:
- Maintaining a competitive advantage
- Meeting customer demands
- Adding value to their existing product
- Branching into new regions or markets
- Retaining existing customers
Whilst these are all valid and viable reasons to enable payments, they can be harder to track in terms of tangible revenue. To really maximise on offering payments-as-a-feature, you need to consider how you can generate a profit from the payments that are being processed through your platform.
Options for Monetizing Payments
Monetising your payments usually involves
- Charging a % transaction fee for payments that are processed through your platform
- Charging a flat fee for payments processed
- Marking up payments as a premium feature or bundle of features
- A combination of these
A proper pricing strategy for offering payments can generate a surprising amount of revenue. For example, one of our key clients is using monetised payments to fuel over 90% of their ARR, whilst eCommerce leaders like Shopify used this tactic to fuel over $787.5 million revenue in Q3 2021 (source).
3. Aim For Adoption
The core of your payments strategy should revolve around how you will generate adoption. Without your customers (merchants) using your payment features, you cannot maximise on the benefits of enabling payments.
Driving adoption of your payments solution is centered around understanding your customer needs and communicating the benefits of your solution. Here are some quick tips on generating adoption to help you get started:
HOW TO GENERATE ADOPTION OF YOUR SOLUTION
- Communicate Key Benefits
- Offer Industry Specific Features
- Leverage Existing Channels
- Guide Them Through Signup
- Educate Them On How To Get The Most Out Of It
Just like any feature or service, generating adoption is a key metric to success with payments. If you partner up (see number 4), you can leverage experience and resources from your provider. For example, Payrix will offer a dedicated account manager to SaaS partners, that work with you to develop and execute your adoption plans.
Beyond generating revenue, adoption is an important indicator of customer experience, user acceptance, product-market fit and customer satisfaction.
4. Partner With A Payments Provider
Most SaaS companies are not ready to become their own payment facilitator when they first begin exploring payments, either because they cannot afford to resource the development costs, staffing, legal requirements and adoption plans required to make their payments solution successful, or they have other product development goals that need to be dealt with in-house, making payments unrealistic due to the extensive resources and investment required to make it work.
By partnering up with an existing PayFac, you can enjoy the benefits of offering payments in a much shorter timeframe and with significantly less investment. Choosing the right partner is an important decision, as it will impact the quality and success of your payments solution. Some PayFac’s will set you up with a merchant account and then leave you to figure out the rest, whereas others specialise in partnering with SaaS platforms to build mutually beneficial partnerships.
Payment providers like Payrix or Stripe allow you to embed a core payments solution directly into your platform using sophisticated API’s, and will also help you with some or all of the maintenance and compliance requirements.
Some providers, like Payrix, offer SaaS partners a revenue share agreement by giving you a wholesale rate and letting you generate a profit per transaction, whereas other providers like Stripe will offer a set pricing arrangement of 1.75% + 30c per transaction, unless you can meet specific criteria.
Similarly, some providers can offer an all-in-one solution, whereas others have a module based or partial solution, requiring you to manage multiple providers. This can extend your development costs and time to go live with payments, as well as requiring higher ongoing maintenance.
In terms of merchant experience and management, it’s important to evaluate what support you will need in a payments partner. In the beginning, you may need more support, whereas over time and with experience, you may want to eventually bring more of your customer support and onboarding in-house. Payrix allows you to customise your level of support so you can scale it up over time.
5. Leverage Your Brand
Whether your brand reputation is great or just growing, it’s important to try and maximise your own brand and identity within your payment solution. A consistent brand experience is crucial for driving customer loyalty and retention, and building an inherent value in your company that goes beyond just product features or comparing prices.
Consider how you can create brand touchpoints throughout your payment features, driving more engagement and loyalty from your customers throughout.
Payment providers like Payrix, Stripe, and even some other providers will allow you to display your logo and brand colours on things like your hosted payment pages, automated reports, and throughout your onboarding process.
Other providers, especially ISO’s or strictly rebate partners, may not allow for branding, and instead your customers will essentially be dealing with two disparate systems and providers to be able to accept and process payments.