SaaS payment gateway
What is the SaaS business model?
SaaS (Software as a Service) is a business model that involves providing software to customers for a monthly fee. SaaS is most commonly hosted in cloud infrastructure, which means that users do not need to install anything to access the product's functionality. In simple terms, the SaaS model is when a customer works with a ready-made solution online.
The most popular types of SaaS services include:
- Customer Resource Management (CRM)
- Enterprise Resource Planning (ERP)
- Accounting and Billing
- Project Management
- Web Hosting & E-commerce
- Human Resources
- Data Management
SaaS billing types are quite diverse. In most cases, a user purchases a service subscription to gain access to the product's functionality. The types of subscriptions can vary depending on the period of time, the number of users, the feature set, etc. Usually, the most expensive subscription includes almost limitless possibilities, including the development of customised solutions according to customer wishes and additional integrations with the platforms they use.
Convenience, flexibility, and relatively low expenses compared to licensing fees in software installations make SaaS products highly attractive to users worldwide. Recognising the profitability of this type of business, developers began to offer software, apps, databases, CRMs, and other products on a subscription basis on a massive scale.
How do SaaS payments work?
If you are a software company that sells SaaS services, then you are most likely selling through a subscription model and offering your customers access to your product or service for a fixed period of time, usually monthly or annually. In order to make money from SaaS payments, you need to facilitate them. You can do this by setting up your own payment gateway or working with a third-party payment processor that can handle all aspects of accepting credit card payments on your behalf. The process is quite simple: the customer buys your product or service online, pays you, and the payment is processed by your chosen SaaS payment system, which takes care of everything from taking the money from their credit card to transferring it into your bank account.
SaaS companies handle payments in a variety of ways, ranging from collecting credit card information upfront to asking for it after the customer has already signed up. But there is something that unites such payments: they're impossible without SaaS payment processing solutions.
What is SaaS payment processing?
SaaS payment processing refers to the ability of businesses to collect payments from customers without having to deal with the hassle of building and maintaining their own payment processing infrastructure. This is accomplished by using a third-party payment processor, which handles all aspects of online payment processing from start to finish. Usually, SaaS payment solutions are cloud-based platforms that integrate seamlessly with your existing financial infrastructure, enabling you to accept payments in multiple currencies without having to build your own processing. The SaaS payment platform's benefits include centralised, secure, scalable payment processing, integration with any billing system or payment service, the flexibility to use multiple payment methods, real-time reporting, and analytics tools.
Setting up SaaS payment processing is one of the most critical steps in starting your company. Not only does it help you get paid, but it provides an easy way for your customers to pay you.
You already know that SaaS payment processing is a complex concept that includes many participants. To seamlessly accept diverse payment methods from your customers, it's essential to have a dedicated payment gateway for your SaaS business along with a merchant account. A SaaS payment gateway is an online payment processing solution designed to enable merchants to accept credit card payments directly from their websites. It authorises online payments and establishes contact between a customer, a merchant and the other parties involved in transaction processing.
Merchant account for SaaS businesses
A merchant account is an essential tool for SaaS (Software as a Service) businesses looking to accept online payments. It enables these businesses to process credit and debit card transactions from their customers securely and efficiently. In this context, a merchant account serves as a bank account that holds funds collected from these transactions before they are deposited into the business's actual bank account.
Upon registration with a payment service provider, you gain access to their software, enabling you to process transactions promptly. While the SaaS payment gateway and merchant account are often offered by the same payment system, it's worth noting that they can also exist as separate entities.
How does the SaaS payment gateway work?
Let’s find out how the SaaS payment gateway participates in processing online payments:
- Customer enters their card details on a merchant’s checkout page.
- Gateway encrypts the received information and securely sends an authorisation request to the merchant’s acquiring bank. It also sends another request to the card network serving the cardholder (Visa, Mastercard, or other).
- The card network sends a confirmation to the acquiring bank and informs it of the amount to be debited from the customer's account.
- The issuer checks the customer’s account balance and sends the transaction confirmation back to the network.
- After transaction approval, the funds will be debited from the customer's account and credited to the merchant's account.
Being an intermediary of each electronic transaction, the payment gateway protects cardholders' data from breaches and unauthorised use by applying encryption, tokenisation, and other security measures.
Why is a SaaS payment gateway important for business?
There are numerous benefits associated with utilising a SaaS payment gateway. Firstly, it eliminates the need for additional hardware or software, streamlining the payment acceptance process. This not only simplifies operations but also reduces maintenance costs. Moreover, SaaS payment gateways adhere to stringent security standards, ensuring a high level of protection for both merchants and customers. Additionally, such gateways offer effortless integration into existing websites and e-commerce stores without requiring any extra coding. Most gateways come equipped with ready-made plugins, making the integration process seamless and hassle-free.
How to choose a SaaS payment gateway?
Business owners are often confused about which SaaS payment gateway to use for their business. There are so many SaaS payment solutions out there, so it can be hard to know where to start. Given that clients' satisfaction directly impacts the success of a SaaS business, the choice of a payment gateway requires careful consideration. To assist you in making an informed decision, we suggest paying close attention to the following factors when selecting a SaaS payment platform for your company.
Security & compliance
Despite the robust security tools that providers have, there’s always a risk of data breaches and fraud. Such incidents can harm the reputation of a company and lead to a loss of revenue. Only those SaaS payment solutions that meet the strictest requirements of the Payment Card Industry Data Security Standard (PCI DSS) can efficiently protect your customers' sensitive data. Check out all the security measures and tools a particular provider uses and make sure that they have a valid certificate of compliance with PCI DSS.
Payment options available
If a SaaS product aims to reach an international audience, they need to adapt to customers’ payment preferences and the methods available in their region. The more options you integrate into your website, the more likely customers will subscribe. At Corefy, we support more than 400 payment methods, allowing you to enter the international market quickly.
Understand the fee structure of the payment gateway, including transaction fees, setup fees, monthly fees, and any additional costs. Compare different options and consider the volume of transactions you anticipate to ensure the pricing aligns with your budget.
Almost all SaaS organisations run on a recurring payments basis, which means that customers can purchase access to a product for a regular fee based on a monthly, semi-annual or annual subscription. By providing your clients with the opportunity to activate recurring billing, you save them from being left without your service at the most inappropriate moment. What’s more, you protect your business from losing clients.
Reporting and analytics
Look for payment gateways that provide comprehensive reporting and analytics features. These insights can help you track transaction data, monitor sales trends, identify issues, and optimise your payment processes.
SaaS payment facilitation requires a complex and thorough approach, as well as an in-depth analysis of your target audience. The good news is that our payment orchestration platform is capable of meeting all your SaaS business needs. Please contact us for more details!
Ready to boost your business to the next level?
Get in touch with us and we will try to provide you with the most relevant offer.