The demand for SaaS solutions has exploded in recent years. This is especially true in the United States, where SaaS companies generated over $113 billion in revenue in the first half of 2022 alone. Worldwide, projections for all of 2022 are around 207 billion. Talking about being SaaSy.

A big chunk of this revenue comes from small and medium-sized businesses (SMBs). For some perspective, SMBs spend an average of $20k a month on SaaS subscriptions and products.

Now consider the global payment processing market. In 2019, the payment processing industry generated $48.60 billion in revenue and it’s expected to exceed $116B by 2027. With traditional payment models, you’re contributing to this number but not financially benefiting from it.

But that changes when you make payments part of your business model. Embedded payments can increase revenue by as much as 5 times per customer compared to software subscriptions only.

This is because you’re also getting a slice of the payment processing pie by earning money on transactions instead of just charging a monthly fee.

But that’s not all.

Your customers also benefit as they’re able to accept payments more easily, which also leads to a better experience for them and their customers. The end result is better retention rates, which increase the lifetime value of a customer.

What if we told you that your SaaS platform could start accepting payments in a matter of days, gain more control over the customer experience, and earn money from card transactions on top of what you earn from subscription billing?

You can achieve all this with embedded payments.

Marking up payment processing fees

In order to generate revenue through payments, your customers must accept payments from their customers. But rather than using one solution for customer management and another to accept payments, your merchants can use your software platform for both.

This does two things.

First, it gives you more control over the payments experience. This, in turn, provides your customers with a more seamless experience for themselves and their customers. Second, it allows you to earn additional revenue by marking up the transactions you process on their behalf.

What does it mean to mark up a payment transaction?

Markup is the portion of the processing fee that’s split between the acquiring bank, acquiring processor, and/or the payment facilitator. When your business starts offering SaaS payments for other customers, you’re able to tack on an additional fee to each transaction that goes to your business.

Interested in maximizing revenue? You can also create custom fee profiles at the merchant level so that they, and you, can reap the benefits. Incentivize merchants by offering volume discounts or adding custom fees for certain kinds of transactions—the sky's the limit.

Custom fees at the merchant level

It’s common for platforms to create one fee profile for all merchants. But did you know that you can have multiple profiles for different merchant types? As profiles determine how a merchant is billed, this strategy provides the opportunity to earn more revenue from payments processed by business type or to be more competitive in a particular industry.

Volume discounts

Another opportunity to be aware of is volume discounts. This option lets you reward merchants processing over a certain volume, which can make your business more competitive and help you attract more customers.

Buyer fees

A buyer fee is a fee that’s used to offset the cost of payment processing fees for certain transactions. These fees are charged to the cardholder on top of the price of a product or service and are strictly regulated (conditions and requirements vary by state). One example is what’s called a convenience fee, which is a fee charged by a merchant to accept a payment outside of its normal payment channels. To learn more about how this works in Finix, visit our Buyers Fee documentation.

There are several ways you can begin earning revenue from payments. Here’s a brief look at the most popular models and services.

Embedding or integrating payments with a PayFac partner

When partnering with a payment facilitator (aka PayFac), you’re outsourcing most of the payment responsibilities to the payments provider. This is also sometimes referred to PayFac-as-a-Service or PayFac-in-a-Box.

This model entails embedding or integrating payments into your platform, which is the fastest, easiest, and most cost-effective way to accept payments while also being able to monetize payments and control more of your customer experience.

Becoming a PayFac with a payments partner

With this model, you’re still using your PayFac partner’s technology, but you gain full control over your payments experience and have higher revenue opportunities.

You’ll still see substantial savings on money and time investments, as you won’t have to build everything in-house, but you will need a dedicated payments operations team. You’ll also be assuming all the risks of a full PayFac.

Independent Sales Organization (ISO) model

An ISO lets companies accept payments and earn money on transactions like the PayFac partnership model. That’s why many independent software vendors (ISVs) operate as ISOs as well.

The key difference between these models is that ISOs only act as resellers for payment processors and/or acquiring banks. They don’t actually touch any of the money. They also tend to have slower and disjointed merchant onboarding experiences due to their “hands-off” nature and lack of customization options.

While cash still makes up approximately 19% of total transactions in the US, digital payments are now mainstream. And that means your platform needs to offer the payment types your customers use—as well as anticipate what they’ll want in the future.

Don’t worry, there’s no crystal ball required (but if you have one, let us know).

Payment trends are quite telling. The most popular methods include credit and debit cards and alternative payments, such as Google Pay and Apple pay, along with other forms of digital wallets. If your platform accepts these forms of payment, you should be in good shape.

Your SaaS platform was built for merchants, so it should be easy for you to work with them. The easier it is for you, the better their experience will be as well. When researching providers and/or payment models, be sure you get a clear picture of what your merchants will experience at every stage in their journey.

This includes everything from the onboarding flow to merchant management. Creating seamless experiences with as little friction as possible should be a top priority. After all, merchants are the lifeblood of your business.

When your merchants are happy, growth happens.

Not all payments management platforms are built for software platforms, but Finix is. You know your customer best, so we put you in control with a flexible payments solution that you can customize to your specific needs.

From granular access permissions and custom fees down to transaction limits—you define and update your settings as your operations scale. Regardless of size, we make it easy to start today and build a plan for the future.

Our version of a successful partnership is your long-term payments growth.

How do we do it? With a powerful operations dashboard and developer-friendly API, we make the integration process stress free so you can start offering a more seamless merchant experience ASAP. With Finix, any SaaS company can become a payments company—without all the heavy lifting.

You can gain more revenue from payments, offer more value to your merchants, and depending on the payments model, you won’t have to divert engineering resources to do it. We’ve got it covered.

The bottom line is, you shouldn’t have to choose between your core platform and your payments solution.