5 steps to successfully monetize your Embedded Payment solution

When done right, offering payments as a feature for your software has significant upside for your business. However, without some sort of payment monetization strategy in place, SaaS providers tend to struggle to generate a tangible return on investment.

Why should you enable payments?

Here’s why other SaaS providers find embedded payments attractive:

• Remaining competitive in your vertical market
• Staying ahead of customer demands
• Adding value to your existing product
• Expanding into new regions or markets
• Retaining existing customers

While these are all valid and viable reasons to enable payments, they can be harder to track in terms of tangible revenue. To really maximize on offering payments-as-a-service, you need to understand how to generate a profit from the volume being processed through your platform.

How can you maximize your revenue? Monetizing 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
• Including fees for non-traditional payment services (i.e. sign-up, monthly SaaS, funding/payout) in your pricing strategy
• A combination of the above

You will be surprised what your revenue can look like by implementing a proper pricing strategy for your payment solution. For example, one Payrix Pro client is monetizing payments to fuel over 90% of their ARR, while eCommerce giants like Shopify continue to use this tactic to fuel over $787.5 million revenue in Q3 2021 (source).

Most SaaS companies are not ready to take on all the heavy lifting when they first add payments to their solution, 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.

With the right Embedded Payments partner, you can enjoy the benefits of offering payments in a much shorter time frame, 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 providers will set you up with a merchant account and then leave you to figure out the rest, whereas others specialize in partnering with SaaS platforms to build mutually beneficial partnerships.

There are payment providers like Worldpay that allow you to embed a core payments solution directly into your platform using sophisticated APIs, and will also help you with some or all of the ongoing maintenance and compliance requirements.

In some cases, you’ll see providers only offer pre-set pricing (such as 2.90% + 30c per transaction) —this caps your potential earnings. Payrix gives you the freedom to control all of the processing fees that are charged to your customers, so you can maximize your revenue on the processing volume flowing through your products.

Similarly, Worldpay provides an all-in-one solution for embedded payments, 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 choosing a partner, it’s important to select one with payments expertise that you can lean heavily into as you are getting started. If you are coming from an integrated solution, you may already have a little experience under your belt — but if you are new to payments, having a partner you can trust to support you and your customers as you get up to speed is critical to your success.

Whether your reputation is already strong or you are still building your name in the market, your payment solution can be used as an extension of your brand to create a more consistent customer experience. This is crucial for driving 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.

Some providers offer co-branding options, while Payrix white-labels our entire platform for your brand including onboarding forms, merchant portals and checkout pages.