Integrating embedded payments into your software-as-a-service (SaaS) platform can add a new revenue stream and greatly enhance the user experience. But, what do you need to consider before diving into the payments game?
In part four of this series, we look at some of the key questions you need to ask yourself and your potential partners to ensure you get the right embedded payments solution, maximize your new revenue, and avoid the headaches and pitfalls of getting started in payments.
3 Questions to Ask Yourself
Before you begin looking for a partner, it’s important to understand what adding payments to your software business will involve. The following are fundamental questions to ask yourself to ensure you’re set up for success when it’s time to screen potential partners.
What Kind of Payment Solutions Do My Users Need?
First, consider what types of payments your users take as part of normal operations. For instance, if you sell practice management software to a medical office, your users need a physical payment terminal, but not a point-of-sale (POS) system. They may also want a way to send invoices and take payments online or by text. Other types of users might need tap-to-mobile solutions or small plug-in card readers to enable field payments, unattended options for kiosks and more.
What Kind of Businesses Do My Users Run?
Beyond your users’ payment needs, you’ll also need to understand the industries they sell in and, more importantly, their risk profiles. For instance, if you sell management software to dispensaries, your users will have a very different risk profile than if you sold to restaurants. The risk profile determines a number of factors when entering payments, including the rates charged on transactions and the payment platforms you’re eligible to use. One of the easiest ways to get an idea of your users’ risk profile is to look up their merchant category code (MCC) and compare it against a list of high-risk codes.
How Much Responsibility Do I Want to Take for Payment Services?
One of the most critical questions to ask yourself is how much of the load you want to carry when integrating embedded payments into your software. On the extreme end, some software companies opt to become payment facilitators (PayFacs) — full-fledged, registered payment companies. They earn the highest possible profits, but they’re also responsible for infrastructure development, initial underwriting, ongoing risk management and many other burdens.
A more turnkey option would be to partner with an ISO or platform that specializes in serving SaaS companies. That enables you to reap the benefits of embedded SaaS payments and earn revenue on transactions, without having to worry about the heavy lifting. You’ll earn a bit less on each transaction, but your journey in the payments space will be essentially frictionless.
4 Questions to Ask Your Potential Payments Partner
Once you have an idea of how payments fit with your business, you can start looking for partners that best fit your needs. If you’re going the platform route, the following are some key questions you’ll want to ask potential partners.
What Will It Take to Integrate Payments?
The primary benefit of choosing an established platform to power your payments on the backend is ease of entry. You don’t have to build anything complex. You don’t need to worry about expensive registrations with the card networks. And, ideally, you shouldn’t struggle with a complex or time-consuming integration process.
To ensure you’re truly eliminating friction, look for a partner who specializes in ease of integration. Ask them what kind of resources will be available to you during the initial phases of setup and rollout, and how involved they will be long-term, after adoption is complete. An ideal partner will offer pre-built, no-code/low-code APIs and SDKs in a developer-friendly environment, so your team can integrate payments seamlessly, without wasting time or resources.
What Will My Share of the Fee Revenue Be?
In the payments industry, the portion of the fees that go to different stakeholders are called “splits.” Not all platforms offer equal revenue-sharing opportunities; your share may vary significantly from platform to platform, so it’s important to compare and ask how revenue will be divided.
Are White Label Payment Services Available?
With white-label payments, your partner’s infrastructure gets redesigned (or reskinned) with your company’s branding. When your users sign up and process payments over time, they’ll see your brand instead of your partner’s — a company they don’t know or have a relationship with. That improves user experience and maintains a sense of trust and security. Because of that, be sure to ask potential partners whether it’ll be your brand or theirs in the spotlight.
What Kind of Experience and Support Will Be Behind My SaaS Payments?
As a SaaS company, you know that no matter how well you build a system, eventually, something will go wrong. When that happens, you need to offer fast and effective support that gets users up and running again as soon as possible. Since you’re not a payments expert, you need an unparalleled support team. Ask your potential partners what kind of support they offer. Is it dedicated? Is it available 24/7? How can you access it? Having a great support team is crucial to keeping payments easy.
Getting Into SaaS Payments
In the final part of this series, we’ll look at the steps you can take to start benefiting from embedded payments. We’ll also compare payment models depending on the route you take, and we’ll discuss the kinds of costs and roadblocks you might encounter as a platform provider or a full-fledged payment provider.
In the meantime, to find out more about how NMI can power your SaaS payments journey, reach out to a member of our team today.
Don’t just turn on payments, transform the way you do business
- Generate New Revenue By adding or expanding payment offerings to your solution, you can start earning higher monthly and transaction-based recurring revenue.
- Offer the Power of Choice Allow merchants to choose from 125+ shopping cart integrations and 200+ processor options to streamline their onboarding.
- Seamless White Labeling Make the platform an extension of your brand by adding your logo, colors and customizing your URL.