Vertically focused SaaS platforms understand the revenue potential that often hides within their existing customer base. Private Equity companies continue to gobble up software companies, often operating with the thesis that an effective payment monetization strategy will drastically improve the payback period and revenue potential. HONOR is focused on integrated payments and often finds ourselves having these conversations with payment groups, private equity firms, holding companies and SaaS owners looking to plan ahead for a sale or capital raise. Regardless of the motivation, one of the most critical components of a successful payments program is an adoption rate of >80%. A successful payments adoption plan generally has two key components that we think of as Carrots and Sticks.
Carrots:
Increased Functionality- Signal Sign On, Omni-channel devices and surcharging are a few options for platforms to unlock.
Increased Geography – Allow your users access to other regions or expand your supported base.
Negotiated Rates- Simple usage based pricing is an easy value to provide to your customers. A simple 2.90% and $0.30 is common, just make sure you can accommodate custom pricing too!
PCI compliance- Payment Facilitation(PayFacs) models and traditional payment programs operate under different PCI rules and require different SAQs, if any at all.
Default Boarding- Building a native boarding experience via API or a hosted page for instant approvals is one of the most effective strategies for increasing adoption.
Sticks:
Limited Functionality- Restrict access to advanced features like omni-channel payment tokens or loyalty programs.
Surcharged pricing- Shopify charges an additional 1% for customers to bring their own payment providers, after all Shopify incurs additional expenses supporting those connections, shouldn’t you?
Limited Reporting- Whether a platform has their own merchant reporting portal or is redirecting to their service provider, information like chargebacks may be difficult to provide for non-native users.
Limited Support- Your customer service and success teams will be more effective supporting embedded transaction paths.
What levers do you find the most effective?
