How to Use the Payrix ROI Calculator
What is your payment ROI?
Your payment ROI refers to the return on investment you could be generating by offering monetised payments through your SaaS platform.
Most software providers can expect to generate up to 2.5x their current revenue by incorporating monetised payments into their software platform*.
How does offering payments generate revenue?
With monetised payments, you can generate a % profit from every transaction your clients (businesses that use your software) are processing through your payment gateway.
There are multiple options on how you can enable payments as a feature in your platform. Depending on your setup, your cost and profit margins will vary.
How do I calculate my projected ROI?
Your projected ROI can be calculated based on the following factors:
- The total $ volume your book of clients are processing per year (Annual Processing Volume)
- The cost rate you pay to process each transaction
- The retail price you offer to your clients
- Your in-house investment to set up and maintain your payment infrastructure
The Payrix ROI calculator is an estimate of your expected return on investment for an integrated payments partnership and is estimated based on go-to-market pricing and estimated interchange fees.
For a more accurate projection, we recommend requesting a free detailed ROI analysis.
How do I calculate my Annual Payments Volume?
For software providers, your annual processing volume refers to the total $ value of transactions processed in a one-year period across your client’s businesses.
It is an estimate of the total $ value that would feasibly move through your platform if you were to enable in-platform payments.
To calculate your Annual Payments Volume, you can either:
- Multiply your number of clients x average transaction $ value your client makes x average number of transactions per month x 12
- Multiply your number of clients x total $ value of transactions processed per client last year
- Multiply your number of clients x average total $ value of transactions processed per client, per year
This requires you to have some level of knowledge about your client’s payment activity and transaction volumes. If you do not have access to this, you can look at industry standards to get an idea of how much money may be moving through your clients’ accounts each year.
If you would like help with finding your payments volume, we recommend requesting a free detailed ROI analysis with the help of one of our payment experts.
Which payment setup will generate the most revenue?
At Payrix, we recommend integrated payments partnerships because it lets you generate a profit from every transaction without having to invest considerable time, money, and resources to get up and running.
Each option for offering payments has pros and cons. There are three key models for offering payments
- Referral arrangement
- Integrated partnership (what we offer)
- Becoming a registered payment facilitator
Each option has varying levels of investment and ongoing costs to maintain. They also vary in levels of risk exposure and responsibility.
Our partners choose integrated payments as it is a lower investment option than becoming a PayFac, and allows you to still generate more profit than a traditional referral agreement. Integrated payment partnerships hold high revenue earning potential and are often the most profitable option for companies who do not want to invest in becoming a payment facilitator.
If you are unsure what option is best for you, check out our handy article Cost vs Profit – Weighing Up Options for Payments Infrastructure, or alternatively, speak to a payments expert to discuss your options in more detail.
Sources:
*Lightyear Capital, 2020