The SaaS market has witnessed rapid growth in recent times. From $412 billion in 2021 to $591 billion in 2023, the industry has expanded by more than 140%.
However, it now stands at a pivotal juncture. After years of unbridled growth, SaaS companies are moving away from a “growth at all costs” mindset to “responsible growth.” The industry is looking towards building resilience to changes and disruptions.
In this landscape, embedded payments have become a great way for SaaS companies to provide value-added services on top of their core offerings to customers. This helps SaaS businesses enhance their customer experiences and drive loyalty and profitability.
With the plethora of options available, choosing a payment provider and integrating payments into your existing SaaS product can seem daunting. We caught up with payment experts from Forrester and Stax to help you navigate these evolving times and achieve success with embedded payments.
Watch the discussion below or check out some of its highlights in this article.
TL;DR
- Apart from building resilience, SaaS companies are slowly making the shift to more responsible, sustainable, and efficient growth. One of the best ways for SaaS businesses to sustain growth, improve profitability, and drive innovation is to offer value-added services.
- Whether to boost product stickiness with buyers (bring customers back to your product repeatedly), or provide more profitable services to be more price competitive, embedding payment services as part of the SaaS platform offering is a great strategy. Embedded payments involve integrating the payment component directly into your solution.
- Integrating embedded payments into your SaaS platform offers a host of benefits. The right payment partner can offer the latest payment technology, support infrastructure, reliability, and revenue growth.
The Current SaaS Environment
The future for embedded payments is optimistic, with its market size expected to reach $230 billion in the next two years.
The demand for embedded payments is huge. A survey by Finextra (across 1000 businesses in five countries) found that 83% of SMBs want to integrate payment services in their software applications. However, only 9% have embedded payments in their existing software stack.
Disruptions and resilience
At the moment, the SaaS industry is optimistic but cautious. Businesses are also realizing that they need to be adaptable and agile to respond to changes quickly. Lily Varon, Principal Analyst at Forrester says, “The focus is on being able to be resilient, creative, and adaptive in an environment that necessitates it.”
Despite having an optimistic outlook, businesses also have a heightened awareness that disruptions are just around the corner—whether socio-political, global, or others. With multiple global crises occurring back-to-back, SaaS providers are quickly realizing resilience is essential for business growth in the long run.
Shift to responsible growth
Apart from building resilience, SaaS companies are slowly making the shift to more responsible, sustainable, and efficient growth. They’re willing to take things slower, mature their business strategies, and focus on reducing debt overhangs.
Here’s what Lily has to say about this trend. “We’ve seen trimming of headcount. We’ve seen the reduction of debt overhangs. We’ve seen share buybacks and things like that. So you may hear talks of how to build resiliency, how to boost profitably, and how to do it sustainably and smartly in earnings calls and other conversations.”
The Importance of Value-Added Services
One of the best ways for SaaS businesses to sustain growth, improve profitability, and drive innovation is to offer value-added services, says Lily.
Whether to boost product stickiness with buyers (bring customers back to your product repeatedly), or provide more profitable services to be more price competitive, embedding payment services as part of the SaaS platform offering is a great strategy.
While embedded payments can be more complex to implement, as the numbers mentioned earlier show, it is a highly sought-after service that can become very profitable for SaaS businesses.
What are embedded payments?
Fred Nelson, VP of Sales Enablement at Stax provides a succinct definition of embedded payments. He says, “Embedded payments is just integrating the payment component directly into your solution. There are a number of ways to do so.
The payment system can be semi-integrated or a hosted solution. But having a fully integrated, seamless embedded payment solution, something like what Stax offers, really allows the SaaS provider to focus on their core solution.”
This, in turn, can improve customer satisfaction and retention rates. As Fred points out, with an embedded payment system, end users don’t have to go out and access different third-party solutions or open up various third-party URLs to complete payments.
Instead, the user can make the payment right through the software itself while Stax controls everything securely at the back end from the payment component. No need for the SaaS provider to support those integrations, potentially troubleshoot them, or have to manage downstream, the ever-evolving pieces for those integrations—which otherwise can be very time-consuming and costly.
One of the biggest advantages of offering embedded payments to your customers is a boost in revenue. With tiered pricing models and revenue-sharing strategies, SaaS companies stand to make a lot of money with embedded payment services from Stax.
How to ensure success with embedded payments
To be successful in the SaaS industry with embedded payments, you need to keep certain things in mind.
- Ensure that your customer has a seamless installation process. Think of the end-to-end process the customer goes through when setting up embedded payments. Train your support staff accordingly and ensure ongoing customer support even after embedded payments have been fully set up. Try to tailor your support services for each customer.
- Younger customers such as millennials and Gen Z appreciate good customer support. They are also looking for creative solutions and their reasons for purchasing products differ greatly from their predecessors. They have grown up in the digital era and are used to everything being accessible in minutes. So, make sure that your embedded payments system offers the same experience.
- Look beyond just offering a way for customers to accept payments. Reporting, dashboards, analytics, and other monitoring features can be very useful to the customer. Think about harnessing all the readily available financial data and making it useful for the customer’s business.
- Ensure that your software stack is modernized and updated. A hodge-podge of old and new technologies can make the entire system vulnerable and inefficient. This also makes integration much harder and you’ll be spending a lot of time, money, and effort troubleshooting for your customers.
- Balance innovation with integration. You need to constantly innovate with embedded payments, to keep up with the payments industry and to keep your data secure. However, don’t let frequent updates and new features break existing embedded payment integrations with your SaaS platform.
That’s why you must choose the right payment partner who can handle all of the above for you. Stax ensures that its embedded payment solutions are easy to integrate, compliant with security standards, intuitive to use, and quick to set up.
As Fred puts it, “We could have customers approved the same day and processing within 24 hours.”
Long-term Advantages of Integrating Embedded Payments
Integrating embedded payments into your SaaS platform offers a host of benefits:
- Offer the latest payment technologies. When SaaS companies start offering embedded payments, they provide all the technologies and solutions downstream customers look for. Customers don’t have to look at alternative solutions or other providers to meet their business needs.
- Established support infrastructure. You have a strategic alignment between your business and your embedded payment partner. The right partner will listen, respond, and ensure the technologies and solutions are aligned so you can always meet your customers wherever they are in their payment journey and needs.
- Reliability for you and your customers. With the right payment partner, the payment process should work like a well-oiled machine. You should have resources and support when you need it.
- Improved revenue. Choosing the right embedded payment solution provider can lead to a harmonious and profitable long-term relationship. Improved customer satisfaction can lead to improved customer retention and thereby boost revenue.
Final Words
Choosing the right payment provider to partner with when you offer embedded payments can be overwhelming. Thankfully, our experts have tons of insightful information and tips to offer. Identify solutions providers that provide great customer support, modern solutions, and full transparency into prices and their products. Once you’re ready, contact the Stax team for a detailed consultation and make your journey into embedded payments absolutely seamless.
Join the Payments-Led Growth Movement
Sign up to keep up-to-date with the latest trends in payments, vertical SaaS, and technology from industry experts.
