Embedded Payments: What are they, and how can they benefit your software company?
Embedded payments are becoming an increasingly popular offering among software companies. Simply put, embedded payments are a way to seamlessly integrate payment capabilities within an application or software platform. This means that customers can complete transactions without ever having to leave the platform they are using.
For software companies, embedded payments offer a number of benefits, including a more streamlined user experience, improved customer satisfaction and loyalty, and an additional revenue stream for the company. In this article, we outline how embedded payments work, explore the benefits for software companies, detail a few examples of software companies that are implementing this technology, and provide some best practices for successfully integrating embedded payments into your software platform.
What are embedded payments?
When SaaS companies are looking to offer their merchants a way to process payments, they have a choice of three main business models: integrated referral partnerships, becoming a full payment facilitator (PayFac®), or PayFac-as-a-service. Embedded payments occur with the PayFac-as-a-service model and within the full PayFac model. They allow software platforms to integrate the payment experience within their platform, providing customers with a seamless user experience and software companies with more visibility and control over their customers’ payment experience.
Embedded payments can be structured in different ways, depending on your platform’s needs. The primary benefit is that with embedded payments, you’re in the driver’s seat of creating the customer payment experience. When you choose PayFac-as-a-service, you get to customize the features and functionality. You’re essentially white-labeling the payments and the customer gets a frictionless experience that is contained entirely within the software.
What are the benefits of embedded payments for software platforms?
Not only do embedded payments provide a frictionless user experience, but they also deliver a range of commercial and operational benefits. And for software companies that choose PayFac-as-a-service model for their payments, they can realize all the benefits of bringing payments inside the software without the compliance and underwriting risk associated with becoming a full PayFac. These benefits include:
- Improved merchant experience: With the ability to white label or design the payment solution to your specifications, the payments experience operates seamlessly within your existing interface, which provides a cohesive feel for the merchant.
- Dedicated support: Software companies that choose a true payments partner will get access to dedicated payments experts. For example, Payrix has a strategy and implementation team that helps software companies get the most out of their investment.
- Revenue optimization: Embedded payments allow software companies to add a new revenue stream to their business.
- Improved user retention: Processing payments in-platform creates more inherent value in your product, resulting in a better user experience and a more profitable subscriber base. This can result in growing revenue by 2 to 5x per user.
- Valuable data insights: When payments are embedded within your platform, your customers have access to valuable data and insights about their business. Partner and merchant dashboards allow for reporting views that give visibility specific to their business needs.
How can software companies implement embedded payments?
A recent report from IDC estimates that by 2030, 74% of global digital payments will be processed through platforms owned by non-financial institutions. Software companies that take steps now to implement embedded payments give themselves a competitive edge in the market.
The two key options available to software platforms when embedding payments are:
- PayFac-as-a-service: A solution that offers revenue potential, some customization and integration with your platform without the risk and compliance burden of being a PayFac.
- PayFac: Full customization and ownership of the payments experience, with the added responsibility of assuming full liability for risk management and compliance.
According to a recent Forrester report, The Total Economic Impact of Payrix Pro, implementing Payrix Pro, our PayFac-as-a-service offering, can provide a 264% return in three years, with a payback period of less than one year. In the world of software development, where new revenue streams are often resource-intensive and risky, embedded payments offer a streamlined and lean opportunity to secure new income.
Embedded payments case studies: How SaaS platforms are finding success with Payrix
Whether your company operates in the health and fitness industry or in education, there are many examples of how embedded payments have transformed software platforms in a range of verticals. Below, we’ve outlined some case studies that detail how Payrix’s solutions have helped.
Leading platform for K-12 schools, Infinite Campus was growing quickly after a series of mergers and acquisitions. Managing nearly 8 million students across 45 states, the team needed a payments provider that would give the company greater control and efficiency. They chose Payrix due to the company’s consultative approach and ability to provide competitive pricing, automation, robust reporting functionality, white labeling, and more visibility and control over the onboarding and payments experience.
Storable is the leading provider of all-in-one software for the self-storage industry, and it was looking to make the payments experience seamless for its customers. Their end goal was for payments to happen within their software so customers’ lives were easier while providing greater financial control to the company. With Payrix at their side, Storable was able to consolidate over 15 different integrations into one seamless payment experience. They chose Payrix due to its API-first approach and ability to tailor its solutions as Storable’s payments needs and capabilities grow.
Studio management software company fitDEGREE was looking for a way to offer payments without taking on the risk and compliance burden of being a full PayFac. Nick Dennis, the Founder, knew his customers wanted one point of contact with their tech stack, so he sought out an option that would provide maximum functionality to customers without needing to leave his platform.
Opting for Payrix Pro, Payrix’s PayFac-as-a-serivce offering, allows Nick to control the onboarding process and customer experience while Payrix manages the processing, compliance, and risk and liability. The biggest differentiator Payrix offered to fitDEGREE is the robust admin dashboard which allows Nick to support his customers without having to contact Payrix.
Embed payments on your platform with Payrix
Embedded payments are the future of payment processing, offering software platforms maximum customization, flexibility and a frictionless user experience. By choosing Payrix as your embedded payments provider, your company will benefit from the expertise of a white-glove service partner who is always there to help.
We work with each of our customers personally, ensuring their payments solution is fit for purpose and addresses their user’s unique payments needs. It’s the Payrix difference because we know every software platform is different, and your user’s payment needs are different too.
Click here to learn more about the range of payment business models we offer to SaaS companies.