Have you outgrown or hit a wall with your current payment provider? If so, perhaps one of the following challenges sounds familiar to you:

• You feel that your existing provider doesn’t meet the specific needs of your customers.
• You’d like to switch providers but, from the outside, they all look the same. How do you know which one is a better fit for you?
• You don’t understand how payment provider fees work and want to choose one with fair pricing. 

We know that finding the right payment provider can be difficult, especially because, at a glance, so many seem to offer the same features. When you first started, you probably (and naturally) picked the provider that offered simple pricing and was the fastest and easiest to integrate. But you’ve since learned that that isn’t necessarily enough. So, what should you be looking for when you choose your next payment provider?

In this article we’ll cover: 

• Three mistakes to avoid when picking a new payment provider
• Four considerations to make when choosing your payment provider
• How Fiska can help you get more value from your payments
• How we helped a SaaS business create a customized payment experience and increase revenue share

Note: looking to start working with a payment provider right away? Book a demo and learn more about how Fiska can help software companies integrate payments. 

Three mistakes to avoid when picking a payment provider

1. Don’t put too much emphasis on cost

SaaS platforms rightly invest in building up knowledge about payments. But, once you understand interchange and pricing it’s easy to jump to conclusions and pick the cheapest option. Instead of focusing too much on better revenue share or buy rate, pay attention to the added value a partner can deliver through: 

• Proactive collaboration 
• Responsive support
• Higher conversions
• Stable technology and higher up-time
• New revenue streams

2. Don’t treat payments as a commodity 

We’ve often heard SaaS platforms say that all payment providers are the same; a necessary but unwelcome cost center. But we believe your payments partner is potentially one of the most important partnership decisions you’ll make. If you base your decision purely on commercials, you’ll end up paying more in the long run as you suffer the effects of: 

• Unreliable technology
• Lack of industry knowledge
• Inflexible pricing
• No room to scale

Instead, you want a payment provider that will help you build a long-term strategy for your payments. For example, you might start out as a referral ISO but, as you scale, you might decide to become a full-liability PayFac. Does the payment provider have the technology and expertise to support this transition? Or will you find yourself issuing RFPs yet again?

Instead, consider the additional revenue the right provider could bring in 

Another important mindset shift is seeing payments as a potential revenue driver. Some SaaS companies have found that their payment revenue now exceeds that of their core solutions by a significant margin. 

Take Shopify, for example. Despite a tough market, its run-rate is almost $7bn and it’s still growing at 31%. Where’s this growth coming from? Payments. Shopify’s subscription revenue is up just 21% compared to 35% for payments and merchant solutions. Plus, it’s coming from a much larger base figure ($3.1bn from payments compared to $444m from subscriptions).

If you treat payments as a strategic partnership, instead of a commodity, you’ll open yourself up to new benefits such as: 

• Additional revenue streams
• Access to industry experts
• Proactive support on strategic payment decisions 

3. Don’t overlook risk and compliance

Payments are much more than a technical integration; it’s your gateway into the financial ecosystem. This is a highly regulated environment, which is constantly under attack from fraudsters.

We know it can be frustrating when risk and compliance measures slow things down. But procedures, such as account underwriting, manual reviews, registering with Visa and Mastercard, or requesting social security info during account onboarding are vital to keeping everyone in the chain safe. 

The right provider will understand the level of compliance needed for your specific industry and will apply the right level of security. Cutting corners with a supplier that has a higher risk appetite could be very damaging in the long run.

Four considerations when choosing a payment provider 

1. Are the commercial terms a good fit for your business model? (Hint: this doesn’t just mean the cheapest)

When looking at price, it’s tempting to evaluate providers on whether they will bring you the best margin per transaction. Pricing is a relatively easy benchmark because most providers follow the same structure: Interchange sets the cost and the provider then charges a fee on top of it. But here are a few other things to consider: 

• Is the buy rate a direct interchange passthrough or is there a fixed markup? In other words, does the provider make money from interchange markups or revenue share? Or both? A markup means that your costs will be higher, regardless of how you price your clients.
• Is the revenue share competitive? Some payment providers may provide you with a high revenue share, but also a higher base cost (buy rate). In this case, you might be earning less than you think. 
• Are there minimum fees that you must pay? Some payment providers offer attractive buy rates and revenue share, but they charge a monthly fee. This can be thousands of dollars, which will affect your profit margins. 
• Do you benefit from economies of scale? If your customer base generates high processing volumes, you’re in a strong position to negotiate on fees. 
  
• Is the markup enough for the provider to deliver a good service? If the markup is very low, your payment provider is earning less. This poses the question: will the revenue from the partnership allow them to continue to invest in technology, provide a great service, or have a viable business in the long term?

Ultimately, it’s important to look at the whole picture when evaluating a partner’s pricing model and ensure it’s the best fit for your business. For example, if your company is just starting out with lower volume, you’ll want to make sure your provider doesn’t charge a minimum monthly fee. Whereas if you’re already processing high volume, you’ll want to make sure the markup isn’t too high. 

2. Does the provider understand your industry?

A one-size-fits-all payment provider offers instant onboarding, but it makes no distinction between different types of companies that may have different payment requirements.

Take a Quick Service Restaurant (QSR) and a sports club, for example. In the case of the QSR, payments are low value and typically made in person, which makes them low risk. Plus, since they are in the business of quick service, processing speed is vital and every fraction of a second shaved off the time adds more value to them.

A sports club, on the other hand, usually has a higher-than-average transaction value (ATV) – for example, $500 for a summer sports camp. Service delivery is delayed and payment is often taken online, which makes transactions high-risk. The club doesn’t care if the transaction is a fraction of a second or two seconds, but it needs to know the payment will go through securely. 

These are two different types of businesses with very different payment profiles. A QSR may work very well with a solution like Stripe, because payments are low risk. But the sports club may find themselves in a situation where, due to their higher risk, Stripe freezes its funds. If this happens, the onus falls on the sports club to prove the transaction’s legitimacy. 

This is a poor user experience for everyone. And it’s all down to a one-size-fits-all approach instead of offering a custom payment set-up for different businesses.

If you’re onboarding merchants with high ATV, you’ll want to work with a payment provider that will complete compliance during the initial know-your-customer (KYC) process. This avoids unwelcome surprises, like funds being frozen at a critical moment. It might take a little longer to onboard your customers, but will provide a much better experience for every party involved.

Ideally, your payment provider has a clear understanding of your vertical and business model. It can support you with payments, compliance, risk management, and customer experience in a way that works for your business. In this way, you can be sure your customers’ payments are in safe hands.

3. How good is the technology and the level of support?

Some legacy payment providers operate with outdated technology. These are incredibly time-consuming to integrate and configure because developers have to use bloated and less ergonomic protocols, interfaces, or SDKs.

As a software company, you want to ensure that any solution you add to your tech stack uses modern practices and technologies. This ensures the solution starts adding value from day one and doesn’t become an ongoing drain on your development resources. To make sure of this, get your developers access to the payment provider’s documentation and sandbox so they can test everything thoroughly before you make any final decisions.

Another vital part of your payment partnership is the level of support it can provide. When a customer loses the ability to accept payments, their business grinds to a halt and their bottom line is seriously impacted. Naturally, they will turn to you to fix the issue immediately. And, if you can’t, you risk losing your customer. This can be a real issue, especially if your payment provider doesn’t offer support. 

That’s why it’s so important to know you have a human at the end of a line, email, or Slack channel when you run into issues (day or night). 

A good partner is a consultant. They will make sure the pricing model suits your business, they will educate you on the relevant certifications, and help you decide whether an ISO or PayFac model is better for you. They will also be proactive in ensuring your merchants are successfully onboarded and adopting your payment solution.

4. Do they offer a white-label solution?

Some payment providers redirect customers to an external environment to complete the payment. This additional step creates an extra layer of friction, which can cause drop-offs. Plus, it takes customers away from your environment, which leads to an inconsistent experience.

When you introduce payments into your offering, you want to retain control over the customer relationship and ensure the experience is consistent end-to-end. A white-label payment solution makes this possible because it allows you to match your payments to the look and feel of your platform. It also enhances the stickiness of your platform by embedding yet another solution a customer would have to replace if they switched.

How Fiska can help you get more value from your payments

At Fiska, we specialize in helping software companies integrate payments with one API. By partnering with us, you get to use one API to process in-person, online and mobile transactions, and you can also use our white-label merchant onboarding to customize the onboarding journey. 

Our focus is on helping you turn payments into an enabler rather than an obstacle. You can learn more about why we started Fiska here: Integrating payments as a software company is expensive, complex and time-consuming. Here’s how we’re solving it.

Get a fractional Head of Payments specializing in SaaS to power up your payments capabilities

The payments industry is complicated with lots of moving parts. We understand that as a SaaS business, you need proactive support and guidance on how best to implement payments to suit your business. 

When we work with a software company, we take on the role of their ‘Fractional Head of Payments.’ We’ll help you set priorities, advise on your roadmap and pricing strategies, and ensure you deliver the best experience to your customers and the best results for you.

We will also help upskill your teams through workshops to ensure you understand the financial ecosystem and the basics of payments. If you’re deciding between becoming an ISO or a PayFac, we can help you make a decision (generally, it’s better to start off as an ISO). So you can move forward knowing you have a dedicated team of experts behind you.

Additionally, with Fiska, you get a partner with a laser focus on payment processing for SaaS businesses. We don’t try to be all things to all people. Working with us means bolstering your team with highly specialized experts. 

Set up payments in weeks with our unified payments API and go to market faster

Many things can slow a launch down, from technical issues to licensing oversights. To avoid this, we make the process as simple as possible with a single API that includes all the relevant licensing and partner integrations. All our terminals are ready to go straight out of the box. So, in just a few weeks, your customers can be accepting payments across online, mobile and in-person – directly from your platform.

Create your own pricing and dictate what you earn

Our cost is based on interchange so you benefit from the mark-up and we make money via the revenue share. Our fees are set in the partner agreement and we won’t increase them without letting you know. 

This allows you to add your own markup and set your own pricing with your customers so you can make a profit on each transaction. You can choose to do this either with fixed-rate or interchange plus pricing.

Design your onboarding flow to match your brand so customers feel at home

An issue with some payment providers is that they redirect users to another domain to complete onboarding. This means you lose control over some of the experience, which damages your brand if the experience is not up to your standards. It can also lead to higher customer drop-off rates because of the added friction of being sent to an unfamiliar environment.

With Fiska, you can embed the merchant onboarding application form into your platform, tailor it to your customers, and ensure it matches your brand. You can even add your branding to the payment terminals. This keeps the experience consistent. Plus, having control over the onboarding flow lets you see if a part of the process is broken so you can troubleshoot it if a customer runs into issues.

How we helped a SaaS business create a customized payment experience and increase revenue share

When this SaaS business initially started with payments it wanted a provider that could enable the quickest proof of concept and go to market fast. So Stripe was the natural choice.

But, as soon as they built the integration, the team immediately saw restrictions. They couldn’t offer different experiences for different customers. On top of that, the pricing model, which was locked at 2.9% or $0.30 per transaction, was becoming expensive as volumes grew. 

They found that Stripe’s solution was great for getting started but less so for scale due to cost. So they switched to Fiska.

At the start of our partnership, we analyzed the software company’s customer processing patterns, their ATV, and the types of cards they typically used. We then worked with them to create a pricing model that was a better fit for their customers. 

We also built a full custom checkout. We sat with the product team, mapped out the requirements, and had a demo within a week. Everything was then integrated via our single API so the company could go live with in-person, online, and mobile payments all in one go. 

As a result of this partnership, the SaaS company became more competitive, was able to capture more customers, and we were able to provide them with a revenue share which translates into additional, predictable income for the business.

When looking for a new payment provider, prioritize partnership over price

Ideally, you want to pick a payment provider that helps turn your payments from a cost center to a new source of revenue and business growth.

Instead of fixating on cost per transaction, evaluate the provider on the level of partnership it can offer by asking questions like: 

• Do you understand the specific needs of our customers and are you willing to adapt your solution accordingly?
• Will you let us set the pricing model that suits our business model?
• Can we control the customer experience end-to-end? Can we design our own onboarding process for example?
• Will you provide advice and guidance to upskill our team and support our future growth?
• Will you be at the end of the line/email/on Slack when we or our customers need you?

These are the components that make up a successful payment partnership. Get it right and you’ll have a strategic partner. And you’ll be free to focus on your business’ growth.

Interested in learning more about Fiska? Book a demo to get started.