Payments-Led Growth: Diversify Revenue Beyond the Subscription

Stax Connect’s Kim Schwendeman, SVP of Payments Adoption, and Ray Lau, VP of Marketing, came together to kick off the first-ever Vertical SaaS Summit, where vertical SaaS leaders joined to share strategies, perspectives, and insights to grow beyond the subscription.

Hosted by Stax and Sweet Fish Media, the Payments-Led Growth session informed vertical SaaS leaders about the keys to success in today’s macroeconomic environment. By integrating payments into their technology, vertical SaaS companies can build a new pillar of revenue and incorporate a valuable feature for their users.

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What is Payments-Led Growth, and Why Should Vertical SaaS Leaders Consider it?

Saas Platform Growth With Integrated PaymentsKim and Ray explain at the beginning of the session that, put Payments-Led Growth is thinking beyond the subscription. It’s a strategy for vertical SaaS platforms to drive revenue by integrating payments into their product offerings. That integration of payments does a lot of things for a SaaS company’s customers but primarily reduces friction. Integrating payments makes it much more straightforward for customers to conduct their business, says Kim.

Not only does Payments-Led Growth benefit your customers, but it also creates company-wide alignment across revenue teams, from product to sales to marketing. Payments as a capability drive significant, scalable, and sustainable business growth. “When you think of it, payments are just a natural complement to a SaaS platform’s product offerings.”

So, why should more vertical SaaS companies consider incorporating payments within their platforms?

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From Explosive Growth to Today’s Macroeconomic Climate in SaaS

Since 2010, the industry has seen unprecedented growth in SaaS, with evolutionary changes in innovation across the ecosystem. Since the beginning of the pandemic, however, there’s been a slowdown in the economy, and SaaS is said to be experiencing its first-ever recession.

During this time, Kim recalls her experience in a previous financial organization, where she and her colleagues would have countless Zoom meetings to figure out how they could help their business owners and consumers lift the slowdown. Many businesses needed to incorporate more digital technology, including digital payments, to comply with COVID-19 restrictions and adhere to social distancing. Consumers were also more adaptable to digital changes, including those that may have been less inclined to before the pandemic.

This pull towards a digital economy lent itself to larger IT budgets and an emphasis on innovation in how goods and services are consumed and commoditized.

Today, we’re facing massive macroeconomic headwinds, with many signs of recession: inflation, rising interest rates, and decreased demand. As a whole, the SaaS industry drew down by 53% from Q1 to Q3 of 2022, and over 150,000 tech workers in the U.S. have been displaced.

Kim advises that growth and efficiency combined to create profitable growth will be critical for companies to thrive in the current economic climate—and that’s where Payments-Led Growth can help.

How to Succeed With Payments-Led Growth

Payments Led Growth Framework For Saas PlatformsAs Senior Vice President of Payments Adoption with Stax, Kim recounts her experiences with partners from all ends of the spectrum in payments integration. Her most significant takeaway is that you must commit to driving revenue through payments to succeed.

While integrated payments are a great way to get to parity with competitors, that alone as a driving factor often doesn’t lead to success. Without a financial imperative with the intention of driving profitable growth, post-implementation can be stagnant.

Partners that successfully implement the Payments-Led Growth framework:

  1. Bake the financial reward into their AOP.
  2. Recognize that integration is just the beginning of their payments journey.
  3. Hire individuals to support driving adoption for new and current users.
  4. Don’t look at payments as a mere feature or product offering but as a priority and driver in profitable growth for their business.

Using Adoption Expertise to Leverage Payments

As mentioned previously, the initial integration is just the beginning of the Payments-Led Growth journey. Adding a feature such as payments can widen your product offerings; however, if it’s not marketed or part of a customer’s onboarding process, payments can often fall flat. Kim says, “It’s one thing to have a thousand customers and a payment capability, but if nobody’s using that capability, then you’ve got unrealized potential.”

That’s why many partners of Stax Connect lean on our team of adoption experts. Sales representatives are well-versed and highly competent in their software, but they’re not always payment experts. That’s where a strong payments partner, such as Stax, can come in—educating marketing, sales, and leadership on how to sell payments and drive awareness of payments as a capability.

Payments-Led Growth Success Stories

Integrating payments with Flexible Technology can dictate the path that makes the most sense for your business solution. With a white-labeled API and pre-built enrollment workflows, accepting payments can be done within days. For more advanced systems or platforms that want to own and monetize costs fully, fully ingesting an API with multiple payment capabilities is also a solution.

Stax also can provide partners with custom fee structures, surcharging, and other strategies to monetize their payment capabilities. Shelterluv, a platform for animal shelters and foster-care programs, uses custom fees in their checkout process to leverage payments for their non-profit business.

Final Word: Diversifying Revenue Beyond the Subscription

Many companies that consider incorporating payments into their products need to ask themselves three key questions:

  1. What payment capabilities do you need? Many payment methods are available for transactions—including ACH, split payments, Text2Pay, tokenization, and more.
  2. Who offers these capabilities that you can integrate into your SaaS platform? Some partners may have all the capabilities you need but offer limited support.
  3. How can you monetize your payment capabilities in the right way to drive growth for your organization and benefit your customers?

We believe that all companies are payment companies; they don’t know.

Typically, most software enables consumers to consume goods and services that must be paid for. If you don’t have a payments component to help, then you’re effectively pivoting your customers outside of your solution somewhere else, which creates friction for them in the long run.

Payments-Led Growth is about thinking beyond the subscription and how you can leverage payments to drive sustainable and profitable business growth. It is the key to success in the current economic climate.

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What Are Split Payments and How to Implement Them on Your Software

As technology evolves, the commercial landscape is quickly changing from a physical to a digital realm. Advancements in financial technology (or fintech) have made it easier for businesses to cater to each customer’s individual preferences and needs.

As such, paying for products and services is now possible in real-time and rather inexpensively. Innovations like digital split payments provide greater convenience for customers, allowing them to pay however they want, which also improves the customer experience.

ISVs and SaaS companies that offer payment processing through their software must, therefore, think about implementing such features that will enhance the user experience and provide greater value. In this article, we’ll take a closer look at split payments including their benefits, and discuss how you can easily implement them on your software platform.

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  • A transaction that involves using multiple payment methods to pay for a single purchase or a bill being split between two or more users is a split payment. Another type of split payment is where you divide the cost of an item into a fixed number of installments—usually interest-free—to be paid at a later date.
  • Split payments allow consumers to avoid negative impacts on their cash flow, pay over time, utilize interest-free offers, and split expenses with other contributors. They also help merchants reduce friction at checkout, boost incremental sales, reduce cart abandonment, get repeat purchases, increase conversions and average order values, and boost customer loyalty.
  • Unfortunately, implementing split payments in your software isn’t straightforward, but working with the right payment partner can drastically reduce the complexity. Stax Connect has the capabilities to help your end users pay for a transaction using multiple payment methods or split a bill easily.

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What Are Split Payments?

In its simplest form, a transaction that involves using multiple payment methods to pay for a single purchase is called a split payment. For example, a customer may want to pay for a single transaction using a combination of any of the following forms of payment: credit card, debit card, vouchers, store credit, rewards, gift cards, digital wallets (like PayPal, Venmo, or Apple Pay), cash, etc.

A person using two or three different credit cards to pay at checkout or a bill being split between two or more users also counts as a split payment. Many banks and financial institutions offer such functionality by allowing their customers to request payments from people they split a bill with (known as sub-payees).

There’s also another type of split payment (sometimes called deferred or partial payment) that has become quite popular in recent years. This is where you divide the cost of an item into a fixed number of installments—usually interest-free—to be paid at a later date. Here’s how it works:

  1. At checkout, a merchant gives the customer the option to pay for their purchase in three or four installments.
  2. The merchant’s bank or lender pays for the purchase in full, upfront.
  3. The customer immediately pays the first installment at the point of sale (POS).
  4. The customer pays the remaining balance in weekly, bi-monthly, or monthly payments depending on the agreement between the customer and the merchant.

Most customers appreciate the flexibility that these “Buy Now, Pay Later” (BNPL) schemes offer. In fact, 32% of shoppers who choose this payment option do so because they prefer to pay over time—even if they have the money—so they can avoid any negative impact on their cash flow or budget.

Key Benefits of Split Payments

Split payments are beneficial for consumers, businesses, as well as for merchants. Consumers have the freedom to split a shared household or restaurant bill with others or buy something expensive without putting a huge strain on their finances. In sum, split payments allow them to:

  • avoid any negative impact on their cash flow
  • pay over time
  • utilize interest-free offers
  • split expenses with other contributors

Split payments are particularly beneficial for businesses when they have to deal with multiple sellers or vendors. For example, global eCommerce marketplaces like Amazon deal with thousands of sellers. Split payments make it possible for them to pay up all sellers in the correct amounts when a customer purchases products from different sellers in a single order.

As for merchants, split payments offer a host of benefits. The payment flexibility brings in incremental revenue which may otherwise have been delayed or lost completely. It also:

  • reduces friction at checkout
  • accelerates repeat purchases
  • boosts customer loyalty
  • increases conversions and average order value

How to Implement Split Payments on Your Software

While split payments may offer tons of benefits for users, unfortunately, implementing this feature in your software isn’t exactly straightforward. There are quite a few things you must consider. For example;

  • Verification. In the case of credit card payments, if a customer uses more than one card to split a payment, they will need to be verified using an address verification service (AVS) to make sure that the billing addresses match with the issuers.
  • Refunds. With multiple payment methods, refunds are a bit more complicated as they will need to be sent to the same payment method that was used while buying. Such customers may need greater support to help them navigate the process.
  • Integration. By enabling split payments, you will need to support a wide range of payment methods. Not only will this require integrating with multiple providers, but also make compliance more complex.

The good news is that the right payment partner can take care of all these considerations for you. Stax Connect has the capabilities to help your end users pay for a transaction using multiple payment methods or split a bill easily. Sub-merchants will be able to accept partial or split payments against an invoice easily.

The Stax API is capable of supporting a wide range of payment methods including credit and debit cards, ACH processing, digital wallets, and so on. Plus, we are PCI-compliant which mitigates risk for your business as well as your users. In addition, our support team comprises real payment experts, so you and your sub-merchants can benefit from our various levels of support.

Contact us today for a consultation and learn how Stax Connect can help you implement a complete payments ecosystem with minimal investment of time and money.

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How to Find a Sponsor Bank for Payment Facilitators

Payment facilitators have become increasingly mainstream across the country and the globe. By offering businesses a payments ecosystem alongside their other services, all on the same platform, many SaaS companies have exploded in popularity. In fact, it’s projected that the number of payment facilitators will nearly double from 2020 to 2025 (from 1,244 to 2,381), totaling $4 trillion in annual payment volume.

However, despite these FinTech companies facilitating payments and what seems like banking services, they’re not actually accredited banking entities, which is why all PayFacs have partnerships with sponsor banks to ensure regulatory compliance in order to offer their financial services. But what exactly is a sponsor bank? Why is sponsorship so important?

In this article, we’ll explain everything you need to know about the sponsor bank business model, including finding the best sponsor bank provider for your organization.

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  • Becoming an official bank requires a lot of effort, time, and risk, which is why most PayFacs find a reliable bank partner to underwrite the risk for their customers and transactions.
  • Sponsor banks provide many much-needed services, like ensuring anti-money laundering (AML) compliance through transaction monitoring or Know Your Customer. 
  • When looking for a sponsor bank, you should check the ratings, ask how many PayFacs they’ve worked with, and find out how long they’ve been a registered sponsor.

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What’s a Sponsor Bank?

As a quick recap: a PayFac lets software platforms or SaaS companies aggregate sub-merchants (their customers) under one merchant account and offer integrated payments alongside their other offerings.

This can lead to more competitive pricing, streamlined transaction processing, and easier onboarding for multiple clients, which can translate to increased profit margins for the SaaS company.

PayFacs offer various online banking services, like ACH transactions or credit card payments. However, that doesn’t mean they’re legally a bank! 

Becoming an official bank requires a lot of effort, time, and risk; it also forces PayFacs to focus less on doing what they do best. That’s why most FinTech companies find a reliable bank partner that actually moves the money for them and takes on the risk for their customers and transactions. So what are the top benefits of partnering with a sponsor bank?

Anti-money laundering (AML) compliance

PayFacs move a lot of money around and often work with small businesses or startups. That’s why it’s critical to meet AML requirements as part of the company’s risk management. 

What happens if you don’t do so, or you partner with a sponsor bank with weak AML regulations? Well, the Office of the Comptroller of the Currency, which is a U.S. Department of Treasury independent bureau, filed a consent order to cease and desist with a New York bank that didn’t “monitor or investigate suspicious transactions.”

That’s why it’s paramount that PayFacs work with a sponsor bank that has a strong compliance department. Additionally, it should be easy for FinTechs to take their own initiative and contact the bank should they want to report suspicious activity.

Transaction monitoring

While a secure sponsor bank should have strong risk management protocols in place to reduce the need for regular PCI compliance, it’s important that they provide (cloud-based) transaction monitoring services as part of their AML services. To prevent financial crimes, the sponsor bank should be able to spot suspicious transactions, assess customer risk, and meet regulatory requirements.

Customer due diligence (CDD)

An important part of ensuring compliance within the PayFac ecosystem includes verifying customers’ identities. It helps proactively reduce the risk of nefarious activities such as fraud, money laundering, or even terrorism. A sponsoring bank can lead the process of carefully assessing the (potential) risk of doing business with a customer, saving significant time, money, and reputational risk down the road.

Customer due diligence and KYC are often used interchangeably, and while KYC involves performing CDD on customers as part of AML regulations, there are some differences to be aware of. Essentially, KYC is part of the onboarding process, when FinTechs collect personal data on their customers. CDD is the process of actually verifying the information, and should be done regularly to ensure accuracy.

At the end of the day, a solid sponsor bank should provide PayFacs with all the tools necessary to comply with anti-money laundering regulations, so the payment facilitator can focus on running its business and ensuring the best customer experience possible.

What to Look For in a Sponsor Bank for Payment Facilitators

Check the ratings.

Don’t fall into the trap of just reading what the acquiring bank has to say for itself—look at real reviews from real people. Are their customers satisfied with their compliance? How is their customer support? Have they been recognized or awarded for their service?

Ask how many payment facilitators they’ve worked with.

While you’re unlikely to get a precise answer, this is a good way to gauge who your potential future sponsor bank works with and is underwriting for. Try asking for an aggregated figure, so you can get more info about the rough number of PayFacs or ISVs they work with. 

Plus, consider asking what amount of the bank’s clients are high-risk or not classified. If they’re high on the former, they may not be selective enough and could wind up embroiled in legal difficulties. If they’re high on the latter, it could be a sign they don’t have enough insight into their portfolio companies.

Find out how long the bank has been a registered sponsor.

Ideally, you should go with a bank that has some experience under its belt, so you can rest easy knowing they’ve got your back and have a tried-and-true system in place. The longer they’ve been in the game, the more likely they are to have fine-tuned their approach.

Wrapping Up

If your company wants to provide your customers with payment processing options alongside other services on your app or website, then Stax Connect might be for you.

Our fully-managed payments facilitation ecosystem makes it as simple as 1-2-3 to start getting paid in as little as 30 days. And since we fully understand the integral importance of a bank sponsor partnership, Stax does the hard work for you.

From Visa to Mastercard, we already have relationships built with the world’s leading sponsor banks, which all have decades of experience. Take the burden off your shoulders so you can focus on providing your customers with an unforgettable user experience—all with transparent pricing. It’s that simple.

Contact us today to start monetizing your payments with Stax Connect.

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5 Payment Processing Tools to Implement on Your SaaS Platform

As a SaaS company or ISV looking to offer payment processing through your software, you are likely to have some very unique needs. Unlike a regular eCommerce merchant, you would typically need functionality that supports recurring billing or subscription management. 

While it may be simple to integrate a standard credit card processing solution with your website, it is likely to lack some critical SaaS payment processing features.

There is absolutely no dearth of secure payment solutions out there. However, to make sure that the solution can meet your demands effectively while optimizing payments and billing for your users, you must choose wisely.

In this article, we’ll take you through some of the best payment processing tools that might suit your requirements perfectly.


  • Payment processing software simply provides business owners a means of accepting payments from customers electronically by integrating with their online stores. It typically consists of three components: payment processor, payment gateway, and merchant account.
  • The features that SaaS companies or ISVs should evaluate in a payment solution are its integrations, payment methods supported, pricing model, reporting capabilities, ease of use, security, and customer support.
  • The top payment processing solutions in the market today, suitable for integration with SaaS platforms, are Stax Connect, Stripe Connect, Adyen for Platforms, OpenEdge, and NMI.

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What Is Payment Processing Software?

Let’s try to understand what payment processing tools really are and what they do. You may think of payment processing software as a program or service that facilitates the processing of customer payments by businesses—made via methods other than checks or cash. Customers can pay with credit cards, debit cards, digital wallets (e.g. Venmo, PayPal, Apple Pay), ACH, or wire transfers.

There are typically three components to any payment software:

  1. Payment processor – An entity that acts as a mediator between the merchant’s bank and the customer’s card-issuing bank by communicating with the customer’s card network (such as Visa, Mastercard, Discover, American Express, etc.) to route and manage transactions appropriately.
  2. Payment gateway – An entity that establishes a secure connection between the merchant’s website and the payment processor so that a customer’s card data can be transmitted safely.
  3. Merchant account – A business bank account or a holding account for the merchant where customer funds are received.

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As you can see, payment processing software should not be confused with a payment gateway. The latter is simply a component of the former. Sometimes, payment gateways could be integrated with virtual terminals, card readers, or point of sale (or POS systems).

Typically, all three components discussed above are included in a software package. But there are many different types of payment processing tools that support in-person payments as well as online payment processing. Some of these may even function solely as a gateway or a processor.

Since most payment processors charge processing fees on every transaction, small businesses are sometimes wary of adopting payment software. However, there’s no denying that robust SaaS payment processing software can streamline the checkout process, reducing shopping cart abandonment and failed payments, while elevating the customer experience greatly.

What Features Should SaaS Companies Look for?

There are quite a few features that ISVs and SaaS companies should look for when searching for the right payment processing tools for their platform. Here are some of the most critical ones:

  1. Integration capabilities. Your payment platform should be able to connect seamlessly with your users’ business applications. Look for a solution that provides several different application program interfaces (or APIs) so you may customize your platform any way you want. This way, users can enjoy a host of useful features that enhances their payment experiences. For example, a QuickBooks integration can eliminate tedious tasks like the manual reconciliation of invoices. This can save plenty of time, so users can focus on other critical areas of their business.
  2. Multiple payment methods. The greater flexibility your users can offer to their customers in making payments, the better. To that end, see to it that your payment software supports several different payment options including contactless payments, mobile payments, digital invoicing via email and text, recurring billing, ACH processing, split payments, etc. Also, check if the payment processing tool can handle multiple currencies. This can elevate the checkout experience and boost your revenues in the long run. 
  3. Pricing transparency. Different payment processing solutions have different pricing models. Make sure to conduct in-depth research to avoid overpaying. Most importantly, look for a partner that has a transparent pricing structure with no hidden fees or surprises. 
  4. Reporting and analytics. See to it that you are able to gain insights into user activity and manage payment data across multiple channels and locations from a single unified dashboard that you can access from anywhere and at any time. This is critical as it can help you monitor and track onboarding status as well as the health of your enrollment pipeline. 
  5. Ease of use. Check if the solution is simple, intuitive, and easy to use. This is a must as you do not want to spend extra on development or training your staff to just operate the platform. A complex solution also leads to confusion and time wastage on insignificant tasks.
  6. Security. Robust security features are vital, as they can save you from serious threats like hacking and payment fraud. Make sure the solution you choose offers PCI DSS compliance. This ensures the processing of payments through secure channels that keep cardholder data safe. Also, see to it that the payment software offers other security features like tokenization and encryption so that sensitive transaction data can’t be misused even if it falls into the wrong hands somehow.  
  7. Customer service. Finally, check out the company’s reviews and ratings on popular forums to see what their customers are saying about their services. You want to make sure that your payment partner provides round-the-clock support so that you and your users may get the help you need at any time. 

5 Best Payment Processing Tools for SaaS and ISVs

Now that we’ve covered what payment processing tools can do for you and what you should look for in a solution, let’s take a look at some of the best payment processing solutions for your needs.

1. Stax Connect

Stax Connect is a product offering from Stax for ISV/SaaS companies looking to integrate a complete payments ecosystem within their platforms (i.e. allowing them to facilitate payments for their users themselves instead of having them go through a different company).

  • Its customizable and all-in-one API allows you to tailor the payments experience any way you want while enhancing your existing software infrastructure.
  • Stax Connect’s user-friendly dashboard can be accessed from anywhere so you can get real-time insights into payment data and user activity.
  • Its pre-built enrollment platform ensures that users don’t need to wait days for underwriting approval. Instead, they can start taking credit card payments within just 20 minutes of getting started.
  • The solution is PCI compliant and supports a variety of payment methods including invoicing, recurring billing, payment links, ACH, credit and debit cards, mobile wallets, and so on.
  • One of the biggest benefits that Stax Connect offers ISVs and SaaS companies is sales and marketing enablement support. Partners get access to customized sales and marketing programs to help them maximize the value of their platform for end-users.
  • Its “custom revenue-share opportunity” allows each partner to monetize their payment volume instantly, growing enterprise value. Partners can set their own pricing structure and model based on the payment features they want to offer to their users. What’s more, they are able to access the direct interchange rates, so they can create even more value—for their business and their users. 

2. Stripe Connect

Stripe Connect is a product from Stripe that can help ISVs and SaaS companies integrate payments into their platforms. 

  • It enables sub-merchants to receive both in-person and online payments using credit and debit cards, digital wallets, international payments, and buy now, pay later options. 
  • It also facilitates billing, invoicing, and subscription management and has capabilities for fraud protection, revenue optimization, and tax automation.  
  • Stripe offers several APIs that you can use to customize the product as per your needs. However, its APIs and tools are slightly complex and may require expertise in software development. 
  • Stripe Connect is PCI Level 1 compliant and it encrypts all credit card information as a safety measure.

3. Adyen for Platforms

As the name suggests, Adyen for Platforms is Adyen’s product offering that allows SaaS companies to embed payments into their platforms. 

  • It delivers a smooth payment experience online, on mobile devices, and in-store. 
  • Adyen offers a developer-friendly API that you can use to enhance your software offering as you see fit. 
  • The solution also has built-in verification, onboarding, and compliance for various countries and markets.
  • The pricing of this solution isn’t listed on the website and you will need to contact their team for more information. However, their processing fees vary by payment method and country/region.

4. OpenEdge

Global Payments Integrated (formerly OpenEdge Payments, LLC) provides financial technology services to a wide variety of businesses. It also offers a cloud-based solution that ISVs and SaaS companies can use to add payment capabilities to their software. 

  • It offers a fast and easy API that developers can use to customize their platforms. 
  • The solution supports multiple payment methods as well as security features like encryption and tokenization to keep cardholder data safe. 
  • With its Decline Minimizer feature, this payment processing tool updates expired card information on file automatically. This greatly reduces the number of declined payments for card-on-file transactions. 
  • Pricing information isn’t available on their website.

5. NMI

NMI doesn’t provide merchant services. Instead, it caters to ISOs, ISVs, and fintech companies that might be looking to facilitate payments for their customers.

  • It supports all major payment types and multiple currencies and provides several APIs and SDKs to help you enhance your platform’s capabilities.
  • It also ensures the safety of cardholders through the tokenization of transactions.
  • The solution also gives users access to detailed dashboards that provide useful insights into their transaction data, trends, and customer behavior.
  • The NMI solution is both OS- and device-agnostic so ISVs and SaaS companies aren’t restricted by their choice of devices, methods, or vendors.

Final Words

All of the above payment processing tools offer extremely attractive features for SaaS companies and ISVs that want to facilitate payments for their users. But when it comes to the biggest concerns of SaaS companies and ISVs—data security, price transparency, ease of use, and customer support—Stax Connect emerges as the favorite.

By allowing SaaS companies to set their own pricing structures and giving them access to direct interchange rates, Stax Connect helps their partners maximize the revenue opportunity that comes with owning their own payments experience. Our team is dedicated to their success and cares deeply about driving growth and helping our partners build a better, more value-driven product for their customers and software users.

Contact us today to learn how you can easily craft payment offerings on your platform that maximize value for your business and your users.

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Adyen Payments vs Stripe Connect

For independent software vendors and SaaS companies that are looking to integrate payments into their platforms, Adyen Payments and Stripe Connect may seem like viable solutions. 

While both offer some great features and functionality, there are some key differences between them that are worth considering. 

In this article, we’ll compare both of these solutions based on their features, benefits, pricing, and customer reviews so you can make an informed decision.

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  • Adyen offers a single platform that simplifies payment acceptance, processing, and settlement—both online and in-person—for businesses as well as marketplaces. Stripe Connect is a solution designed specifically for platforms and marketplaces that want to offer payment functionality to their users.
  • Both solutions support a variety of payment methods, offer several APIs for integrations, ensure security and compliance, manage risk, and have robust reporting features. On the flip side, both of these solutions are quite expensive and have a complicated pricing structure. User reviews on popular forums aren’t great either. 
  • ISVs and SaaS companies looking to facilitate payments may be better served by Stax Connect whose easy-to-use UI, excellent customer support, and robust integration capabilities can help them build a complete payments ecosystem from scratch in as little as 30 days. Plus, they can enjoy generous revenue-sharing programs and benefit from a custom pricing plan based on their unique needs. 

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Adyen Payments vs. Stripe Connect: An Overview

Founded in 2006, Adyen is a Dutch financial technology solution provider that enables businesses worldwide to accept electronic payments using a wide range of payment methods. The company also enjoys the status of an acquiring bank and provides an all-in-one payments platform for end-to-end payment processing, financial data reporting, and other financial products. 

Stripe Connect is a service offered by the Irish-American financial services provider Stripe, that helps platforms and marketplaces integrate payments into their offerings. The Stripe Connect API enables these marketplaces to own the payments experience—from onboarding sub-merchants to facilitating payouts and creating additional revenue streams—while Stripe manages payments KYC. 

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Adyen Payments: Features

Adyen calls itself a “financial technology platform for the modern era.” Essentially, it manages end-to-end payment processing including risk management, authentication, and issuing. The main features of Adyen Payments include:

  • A single platform that simplifies payment acceptance, processing, and settlement—both online and in-person—for businesses as well as marketplaces (like Uber or eBay). It supports a wide range of currencies and payment methods including credit cards and debit cards (Visa, Mastercard, Amex, etc.), digital wallets (PayPal, Apple Pay, etc.), buy now pay later, direct debits, and so on.
  • Adyen offers merchant accounts, point-of-sale (POS) systems for in-store payments, a payment gateway for online payments, and integrations for mobile or in-app payments. Its omnichannel payment solution (called Unified Commerce) collates customer info from all sales channels to give you a holistic view of shopper behavior.
  • Multiple pre-packaged plugins allow easy integration of the Adyen platform with your website, app, or business tools (e.g., billing, clienteling, or eCommerce software). That means you don’t need to spend time and resources on development. Instead, you can go to market faster by leveraging existing plugins for BigCommerce, Adobe Commerce, Salesforce, Microsoft Dynamics 365, etc.
  • The payment processor takes care of security and compliance with regulations like PCI DSS, GDPR, PSD2, etc., so you can focus on what matters most—running your business.
  • Adyen has complete control over the entire payment flow, which means businesses can benefit from better authorization rates and lower transaction fees through local processing—but without the hassle of managing multiple providers. 
  • The platform has a risk management feature called RevenueProtect with several tools for data analysis that help prevent chargebacks from payment fraud. These also run risk experiments, analyze customer behavior, and include 3D authentication.
  • Its in-depth reporting functionality displays data from all your sales channels to give you useful insights into channel performance, global payments, customer behavior, etc. 

Stripe Connect: Features

Stripe Connect is a solution designed specifically for platforms and marketplaces that want to offer payment functionality to their users. Its main features are:

  • Stripe’s hosted onboarding allows sub-merchants to launch their platforms faster without having to spend a lot of time and money on development. It supports 135+ currencies and multiple payment methods including credit cards, debit cards, digital wallets, ACH payments, direct debits, recurring billing, invoicing, payment links, and so on.
  • Sub-merchants can benefit from additional revenue streams by marking up transactions or participating in Stripe’s revenue-share program. They can also monetize Stripe’s other products like expense cards, financing, or money management accounts. 
  • Its pre-built, conversion-optimized verification flows allow sub-merchants to onboard users quickly while ensuring compliance with local regulations. Stripe takes care of identity verification, MATCH list checks, risk-based AML and KYC checks, sanctions screening, etc., and ensures compliance with regulations like PCI DSS, PSD2, etc.
  • Stripe’s global routing and payout engine enables sub-merchants to facilitate payouts quickly while minimizing operational overhead. They can route international payments instantly, split payments between multiple users, and specify markups on each transaction. 
  • Stripe Connect also comes with robust record-keeping capabilities so you can easily create custom reports, track and reconcile payments, issue refunds, generate tax forms, and so on. 

Adyen Payments vs. Stripe Connect: Pricing

Adyen has a complex pricing structure that consists of a fixed processing fee and a payment method fee for every transaction. These fees may vary by geography. For example, a Visa payment made in the US will have a fixed processing fee of $0.13 while the payment method fee will be the interchange fee. 

While there are no cancellation fees, setup fees, monthly fees, or integration fees, Adyen does have a minimum invoice criterion depending on the industry or business model. The pricing of Adyen for Platforms, which is their offering for platforms and marketplaces, isn’t mentioned on the website.

As for Stripe Connect, the pricing is based on usage and the capabilities you need. If you choose the Standard account—which lets your users directly accept payments—there are no platform-specific fees involved. 

However, if you choose the Express or the Custom account—which lets you customize the payments experience—you’ll incur $2 for every monthly active user, 0.25% of payout volume + $0.25 per payout, along with tax reporting fees. Stripe’s processing fees start from 2.9% + $0.30 and will vary based on currency. Extra fees will also apply for currency conversion. 

Adyen Payments vs. Stripe Connect: Reviews

Adyen has a rating of 1.5/5 on Trustpilot based on 142 reviews. Many customers have reported issues with their payments getting stuck and extremely poor customer service. The company isn’t accredited by the Better Business Bureau and has an F rating. 

Stripe has a rating of 3.2 based on 11749 reviews on Trustpilot with 50% of users rating the company 5 stars and 39% rating it 1 star. Some users have praised its onboarding process and support while some have complained about its lack of fraud protection, unresponsiveness, and account holds and terminations. The company is BBB accredited and has an A+ rating.

Final Verdict

There doesn’t seem to be a clear winner between Adyen Payments and Stripe Connect. Both have their pros and cons. However, while Adyen’s all-in-one platform caters to a variety of different businesses, Stripe Connect has been designed specifically for platforms and marketplaces that want to integrate payments. 

Even so, both solutions are quite expensive and have a complicated pricing structure. ISVs and SaaS companies looking to facilitate payments may be better served by our very own Stax Connect

With an easy-to-use UI, excellent customer support, and robust integration capabilities, Stax Connect can help you build a complete payments ecosystem from scratch in as little as 30 days. Plus, you can enjoy our generous revenue-sharing programs and benefit from a custom pricing plan based on your unique needs. No tiers, no upcharges. 

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From Stripe to Stax: How Shelterluv Made the Switch to a Fully Integrated Payments Platform

The easy-to-use, modern shelter software you’ve been looking for. Spend less time in front of the computer and more time with animals and people. That’s what you see (in big, bold font) when you land on the Shelterluv homepage. The other thing you see in the top banner on the website?

Shelterluv Stax Connect
Donations Raised Through Shelterpay: $15+ million (as of January 12, 2023).

That number represents the total value of donations raised through Shelterpay—Shelterluv’s fully integrated payment platform, powered by Stax, that makes it possible to use its mobile checkout and other key features.

This is the story of how a shelter SaaS company switched from Stripe to Stax, rapidly accelerating client onboarding and enrollment to their integration with Stax (50% in 2 weeks!) while helping animal shelters do what they do best—find new homes for their pets and raise money in donations.

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How the Shelterluv-Stax relationship began

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Shelterluv builds software that allows animal shelters and rescues to “manage every aspect of the rehoming process, from intakes to adoptions to community programs.” They pride themselves on ensuring this process is easy so shelters can “get out from behind the computer” and “spend more time with animals and people.”

Shelterluv aims to maximize the impact that it has in the non-profit world.

Its customers (merchants) are non-profit brick-and-mortar animal shelters and foster-based rescues, that care deeply about the work they do. They work in one of the most extreme industries imaginable—with front-line workers tasked to serve animals and people during their most difficult moments, to joy when an animal finds a new home.

These drastic swings of empathy to elation can happen all in one day, all while understaffed and underfunded.

Shelterluv was looking for a payment processing partner who cared as deeply about its mission (and that of its customers) as they do.

Shelterluv Stripe Connect Switching To Stax Connect

When it came to payments, Stripe helped get its payment processing, Shelterpay, up and running to streamline adoptions and capture more donations.

However, the integration did not meet their expectations, and Shelterluv decided to begin looking for a new solution.

They say timing is everything.

This could not be more true when it comes to the Shelterluv-Stax relationship.

Nothing fancy. No great backstory. Just great timing. Our sales rep, Paul Saad, reached out to Brandon Jones, Head of Engineering, on the Shelterluv development team, and from there, a true partnership began to form.


Seamless, Simple, and Comprehensive

After the in-depth interview and demo process with Stax Connect’s platform and team, Shelterluv began powering Shelterpay with Stax Connect’s white-labeled API.

As the all-customer email stated, “Once you complete Stax’s enrollment process, the transition to Stax will be seamless and automatic. The change will happen in the background, and you will be able to process transactions like normal without disruption.”

And added a link to learn more about the Shelterluv + Stax partnership.

Stax worked with Shelterluv to migrate their existing merchants through tokenization—one that their customers would not even notice from their end. The new integrated payments system was built to be as simple as completing a 5-10 minute application for customers switching processors. And they were off!

Right out of the gates, Shelterluv announced the switch by adding information to its help center that describes what the (new) Shelterpay was all about.

“Simpler, more comprehensive reporting + a dedicated contact”Shelterpay Features Powered By Stax

“The [Stax] reporting will be simpler and more comprehensive. We also have a dedicated contact to resolve any issues that happen to arise.”

Shelterluv set a goal of onboarding 1,000 customers to the new Shelterpay system (powered by Stax) by the end of 2022.

Within the first two weeks of launching, they were 50% of the way toward that goal.

In 2 weeks.

“I speak for everyone here at Shelterluv in sharing my deep appreciation for how responsive and collaborative the Stax team has been.” – Elena Battles, Director of Customer Experience


“We found what we were looking for”

When it was clear Shelterluv needed to make a payment process change, Elena Battles, Director of Customer Experience, was seeking a “true partner who would work together with us to meet the needs of our unique client base.”

“We found what we were looking for with Stax,” Elena shared. “Shelterluv provides the deep understanding and support of our customers; Stax provides the payments expertise. We’re grateful for the chance to make the work of our shelter and rescue customers a little easier every day—Stax plays a critical part in that seamless process.”

Shelterpay Success With Stax Connect

The feelings are mutual.

Thanks to the team at Shelterluv for being a champion—sharing its payment processing journey with its own customers and advocating for Stax Connect.

Shelterluv And Stax Connect Partnership

Integrated Payments Fueled by Payments-Led Growth with Stax Connect

Fuel your platform with the power of Payments-Led Growth: a significant, sustainable, and scalable business growth source. Stax Connect provides integrated payment solutions with payments expertise, flexible technology, and adoption expertise.

Contact us today to learn how you can easily craft payment offerings on your platform that maximize value for your business and your users.

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What is a Sub-Merchant? Best Practices Managing and Onboarding Your SaaS Users to Accept Payments

A good chunk of customers use online payment gateways to make payments. With cash payments declining, payment methods like credit cards, debit cards, and mobile wallets are gaining popularity among consumers as they offer unmatched ease and simplicity.

Furthermore, they enhance the customer experience, make the checkout process smoother, and ultimately boost revenue for merchants. Integrated payment processing services, therefore, present lucrative opportunities for SaaS companies, ISVs, and, most importantly—end customers.

This article will help players in the merchant services industry (e.g., payment service providers, resellers, merchants, etc.) learn about the concept of sub-merchants. We’ll also talk about some of the best practices for managing and onboarding sub-merchants onto your SaaS platform.

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  • Merchant customers of SaaS companies that want to offer users the ability to accept payments are known as “sub-merchants.” They may belong to many different industries, including retail, eCommerce, booking, ticketing and travel, fundraising, invoicing, on-demand services, and more.
  • To successfully manage and onboard sub-merchants, PayFacs must conduct due diligence upfront to assess their risk profiles and weed out any bad actors.
  • Automation can help speed up onboarding by validating data, minimizing errors, and boosting conversions. Also, partnering with a trusted payment partner can ensure PCI compliance and help PayFacs continuously monitor all sub-merchant activity.

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What Is a Sub-Merchant?

A SaaS company that wants to offer its users the ability to accept card payments, needs to first obtain a payment facilitator (PayFac) account from an acquirer. Using this account, the company can aggregate payments for its portfolio of merchants. These merchant customers of a PayFac are known as “sub-merchants.”

In other words, a PayFac helps businesses accept payments via multiple channels by onboarding them as sub-merchants. As these sub-merchants begin accepting payments from their customers, PayFac remains responsible for underwriting, monitoring payment transactions, onboarding new sub-merchants, and conducting reviews as and when needed.

The PayFac must also decide which types of sub-merchants they’re willing to onboard based on their risk appetite. Many card networks/card brands (e.g. Visa, Mastercard, Discover, American Express, etc.) and acquiring banks forbid processing transactions for sub-merchant accounts deemed high-risk.

That’s why some PayFacs may completely avoid risky sub-merchants who deal in counterfeit goods, follow dubious business practices, or have high rates of chargebacks. As such, sub-merchants with a criminal history, involvement in money laundering activity, or terror funding are naturally massive risk carriers.

Besides these, sub-merchants dealing in otherwise legal products, such as nutraceuticals and metaphysical goods, could also feature in the high-risk category. A sub-merchant must also comply with the Payment Card Industry Data Security Standard (PCI DSS) and have sound financial footing. Quite clearly, risk assessment is a huge part of a PayFac’s responsibility.

Types of Sub-Merchants

Following are some of the most common types of sub-merchants across industries:

  • eCommerce: Platforms like Shopify that enable other businesses to sell their goods online are some of the most popular sub-merchants.
  • Booking: Platforms that help to schedule appointments at doctors’ clinics, spas, restaurants, movie theatres, etc. (e.g. FareHarbor)
  • Retail: Marketplaces that facilitate the selling of physical goods, often used or refurbished, between users. (e.g. Tradesy)
  • Ticketing and travel: Platforms that sell airline tickets or accommodation, such as Airbnb.
  • Fundraising: Platforms that help non-profit organizations raise money for a cause. (e.g. Kindrid)
  • Invoicing: Platforms that help businesses create, store, and send invoices to their clients. (e.g. Xero)
  • On-demand services: Platforms that help customers looking for professional services like house-cleaning, repairs, plumbing, electricians, etc., find the right servicemen. This category also includes restaurant delivery and ride-sharing apps.
  • Others: Many new or hybrid services keep popping up every now and then. These include pharmacy delivery, online health, pet rentals, babysitting, etc.

Best Practices to Manage and Onboard Your Sub-Merchants

Now that we’ve covered what sub-merchants are, let’s take a look at some best practices that SaaS companies should follow to manage and onboard their sub-merchants successfully.

1. Conduct due diligence

The idea behind carefully sifting through sub-merchants is to onboard the right ones and leave out the ones that may be harmful to your business. For this, you need to have a fool-proof risk management procedure in place.

Several factors determine the risk levels of a sub-merchant. These could include the volume of transactions, the industry or sector the business operates in, the countries of operations, and the channels in use. As a PayFac, you must conduct due diligence to weigh these factors appropriately and assign risk levels to sub-merchants.

While the exact due diligence checks may vary from one sub-merchant to the next, certain rules and standards like Know Your Customer (KYC), Anti Money Laundering (AML), and Know Your Customer’s Customer (KYCC) are mandatory.

To perform KYC procedures on each sub-merchant, ensure the business exists and is functioning. Create and maintain a proper record of the company name, registered address, and tax identification number of the sub-merchant. Additionally, you may also collect information like sales turnover, ownership, and bank details. A proper KYC procedure can contribute significantly to transparency and risk mitigation.

2. Use automation to speed up onboarding

Slow onboarding is simply not an option in this age of breakneck speed and competition. Sub-merchants looking to scale their businesses can’t afford to lose customers because of pending application paperwork with a PayFac or acquirer. To speed up the merchant onboarding process, automation has a key role to play.

Automation eliminates the pitfalls and drudgery of manual onboarding. For starters, manual data entry tasks consume the maximum amount of time. These time-consuming processes, human errors, and administrative delays also put severe pressure on sub-merchants edging to get going. Slow manual processes also have implications on your costs as a PayFac.

With automation, you can validate data quickly, minimize errors, and boost sales conversions. It also simplifies underwriting and compliance checks (per the needs of acquirers) and keeps your processes safe and compliant. Furthermore, by automating data entry, you can free up your human resources to focus on more critical tasks like fraud detection.

3. Continuously monitor all activity

Your risk management shouldn’t just end at merchant onboarding. This must be a continuous process that actively monitors sudden or unexpected changes in sub-merchant business patterns. These could, for instance, include changes in the fundamental nature of business, the volume of transactions, or cross-border business operations.

Likewise, a spike in business activity or a sudden product change should also set off alarm bells for your monitoring team. Also, when sub-merchants offer new channels or go into newer segments, you may need to reassess their risk scores.

The fast-changing technology and compliance landscape make sub-merchant monitoring one of the most complex and challenging tasks. Businesses these days are always looking to reinvent themselves to stay relevant. This makes it difficult for PayFacs to keep tabs on their sub-merchants, as false positives are quite common.

4. Ensure PCI compliance

When it comes to managing sub-merchants on your SaaS platform, maintaining PCI compliance is a must. Any entity that accepts or processes card transactions must be PCI compliant to ensure the safety and security of sensitive cardholder/authentication data.

PCI compliance protects sub-merchants and their customers by minimizing the possibility of data breaches, identity theft, fraud, and attacks. As customers become increasingly aware of payment data privacy and security issues, SaaS companies that want to facilitate payments must ensure that their platform remains compliant.

5. Establish and maintain a relationship with a trusted payments partner

Traditionally, becoming a PayFac requires investing a significant amount of time, capital, and resources. But with Stax Connect, you can build an entire payments ecosystem from scratch in as little as 30 days. Leverage our long-standing relationship with the world’s leading sponsor bank and become a reliable partner for your sub-merchants who can start selling quickly, maintain low costs, and scale their businesses fast.

The Stax API can help you seamlessly integrate our payment solutions with your software or platform, so sub-merchants can accept various payment methods, including ACH processing, recurring billing, split payments, and invoicing. We also offer hardware like point-of-sale solutions and mobile card readers.

Our pre-built enrollment platform takes care of all FINCEN regulations, so sub-merchants don’t have to wait days to get approved. Instead, they can start taking payments within just 20 minutes of getting started. Furthermore, Stax streamlines risk management for you by validating and monitoring all sub-merchant transactions while ensuring PCI DSS security and tokenization.

Stax Connect’s settlement engine lets you choose your payout schedules to get paid automatically. Plus, our partner-centric dashboard gives you access to all sub-merchant activity, onboarding, and in-depth reporting from a single location.

As a Stax Connect partner, you’ll also get to benefit from our customized revenue-sharing programs and our sales and marketing support. We’ll give you access to direct interchange rates, so you can set your own pricing structure depending on the features and offerings you provide to sub-merchants. Contact us today to learn how you can create greater value for your SaaS business and your users.

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How to Outsource Transaction Processing Services

Just a few decades ago, virtually all businesses lived by the “cash is king” motto. Today? Not so much.

According to the Federal Reserve, cash usage has dropped 2% year-over-year, and U.S. consumers are more likely to use credit or debit cards over cash. Many businesses, such as software or digital organizations, have adapted to these trends, taking payments via credit or debit, PayPal, bank transfers, and even newer payment methods like Bitcoin. By offering varied payment services, these companies are able to ensure continued business growth and customer satisfaction in the long run.

As a SaaS company providing payment services to your clients, having a fully in-house payment processing solution that’s on-brand and fully functional can be both time-consuming and costly. Not sure how to make integrated payments work without sacrificing quality or user experience? Today, we’re here to show you why outsourcing your transaction processing services might be the best solution for your business.


  • Outsourcing transaction processing is a way for companies to let a dedicated payments service provider take care of the company’s payments infrastructure, while fully integrating it into the organization’s overall brand experience. 
  • Some of the benefits of outsourcing payments and transaction processing includes cost reduction, improved security, and streamlined workflows. 
  • Choose the right payment provider by ensuring they meet general guidelines such as offering seamless integrations, full scalability and flexibility, and transparency.

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What is Payment Processing?

We’ve already spoken at length about payment processing and the difference between a payment gateway and a payment processor. But in a nutshell, payment processors are financial institutions like banks that handle a business’s transactions (both online and in-person). Most of these service providers offer the equipment for these payments, like a POS terminal.

Meanwhile, payment gateways are used for card-not-present (CNP) transactions like online transactions and are basically online POS terminals for companies. In short, these processing systems securely encrypt all transmitted data and ensure that your software company is able to safely, securely, and quickly complete your transactions.

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What Does it Mean to Outsource Transaction Processing?

It’s not uncommon for SaaS companies to try to oversee their payment and transaction services fully in-house, especially if they offer integrated payments. Initially, it may seem like a cost-effective solution, and theoretically, it allows companies to provide a fully integrated experience for their consumers. 

However, that’s not often the case: many companies struggle with ensuring their daily operations run smoothly while keeping up with their payment and data processing, leading to bottlenecks, customer dissatisfaction, and fewer profit margins.

Outsourcing transaction processing is a way for companies to let a dedicated payments service provider take care of the company’s payments infrastructure, while fully integrating it into the organization’s overall brand experience. By outsourcing transaction and payment processing services, companies can better manage their financial health and future while letting the experts do the work—freeing up valuable time to improve the user experience.

What transaction processing outsourcing entails

Depending on the payment processing provider you choose, there might be different forms of transaction processing outsourcing they provide. This could include order processing (like debit or credit card payments) and claims processing (such as data entry services for insurance or customer service claims). Most providers will also offer services like automated or recurring payments, multiple payment options, data management, and many other services.

As a general rule of thumb, you should be able to outsource all aspects of payment processing and find a payments partner that can offer a holistic, all-in-one system to integrate all aspects of receiving and sending payments. (But more on choosing the right partner later!)

Benefits of Outsourcing Payments Processing

For many companies, there isn’t a “watershed moment” that determines when they decide to start outsourcing; it’s often the slow realization of many factors which leads to the pivotal moment. If you’re on the fence about outsourcing your transaction processing, here are some of the main benefits SaaS companies have highlighted.

  • Cost reduction: Probably the biggest advantage is that it’s significantly more cost-effective. Offering payment processing fully in-house requires having specialized software and hardware, alongside other operational expenses. By outsourcing, you’ll pay a fixed, all-in fee that includes all the support you’ll need, directly improving your cash flow.
  • Improved security: Working with an industry-vetted third-party provider reduces the likelihood of fraud, as they’ll offer state-of-the-art security protocols to keep your data safe. This point ties into cost reductions, too.
  • Streamlined workflows: By letting the experts handle your transaction processing, SaaS companies can focus on improving the user experience and daily operations. Additionally, streamlined payments can help provide a better customer experience and improved vendor relations.

By outsourcing your payments to a trusted payments facilitation ecosystem, you’ll be able to directly improve your business growth by not compromising on any part of your customer’s experience with your SaaS platform.

How To Choose the Right Payment Facilitator

Now that we’ve covered some of the advantages of outsourcing your processing, how do you find the perfect payment partner to team up with so you can start offering payments as part of your native package? While there’s no “one-size-fits-all” answer, here are some general guidelines you should keep in mind as you start browsing for your future payment service provider.

  • Quick, seamless integration. A good payment provider will provide fast integrations, allowing you to have a fully-running payments ecosystem within weeks. That way, you won’t be out of commission for long (if at all!) while transitioning to an outsourced transaction processing provider.

They should also provide multiple options for payment enrollment, which is how users have been onboarded into your payments environment so they can start getting paid. Depending on your company resources, you may opt for full API, hybrid API, or white-glove enrollment, all of which have different benefits based on your needs.

  • They’re fully scalable and flexible. No two SaaS companies are alike. Maybe you want to offer both card present and CNP payments. Or perhaps you want to automate fund settlements, but have no idea how quickly your volume or usage may increase. Whatever platform you use, make sure your provider offers developer tools so you can quickly enable payments using their API and your branding.
  • They offer security and transparency. Make sure your future provider offers robust RISK management, for example by using an API that proactively limits risks and speeds up any chargeback processes. If their payments ecosystem is PCI compliant, you and your customers can have full peace of mind.

In addition to security, it’s important that you feel comfortable working with your future partner. From upfront pricing to a comprehensive overview of their services, your payments service provider should be fully transparent about your potential partnership, so you know exactly what you’re signing up for.

Wrapping Up

Finding your dream partner to outsource your transactions and payments may feel challenging, but it doesn’t have to be! Stax Connect takes care of every aspect of SaaS businesses’ payments infrastructure, allowing them to focus on offering the best user experience for their customer.

Our fully-managed payments ecosystem is completely scalable alongside a flexible payment processing API, so you can be up and running in as little as 30 days—no matter the platform. And with world-class customer support, industry-leading risk management protocols, and transparent pricing, we make it easy as 1-2-3 to offer your users a more streamlined and cohesive payment experience.

Ready to offer your SaaS users a frictionless payment onboarding experience? Contact us to discover our seamless payment facilitation ecosystems with Stax Connect.

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Payment Facilitator vs Payment Processor: 6 Key Differences

Every month, the average U.S. consumer makes 68 card transactions. It’s also estimated that approximately 108.6 million card transactions take place in the U.S. each day. Clearly, debit and credit card payments have boomed significantly over the past decades, yet most people have little understanding of the intricacies that make up the payment industry.

Today, it’s practically a given that companies need to accept virtual or digital payments, which usually require partnering with a payment provider. Depending on your business model, you may not be certain what kind of services you might need, especially when it comes to payment gateways, processors, and facilitators. 

If you’re a software company looking to offer payment services to your customers, we’re here to clue you in on what payment facilitators and payment processors are, and everything else you need to know about them. By the end of this guide, you’ll have a clear understanding of what a payment facilitator vs payment processor is.


    • Payment processors offer the functionality for merchants to start accepting payments and route them through banks and card networks. 
    • Payment facilitators are essentially service providers for merchant accounts. By opting for a payment facilitator, these companies can group all their services, including payments and invoicing, under one platform.
    • While there is some overlap between a payment processor and a PayFac, there are also some important differences you should be aware of, such as higher fees with payment processors, longer onboarding, and different contractual relationships between stakeholders. That’s why payment processors are usually best for eCommerce or physical businesses since they generally don’t offer payment services among their offerings.

What’s a Payment Processor?

While there are some similarities between payment processors and payment gateways, they’re not exactly the same. Payment processors are banks or financial companies that take care of card transactions. When a customer uses their credit or debit card, phone, or NFC card to make a payment, the payment processor encrypts and sends all the information between the acquiring bank (the merchant’s bank account), the issuing bank, and the POS terminal.

In short, processors ensure that all information is securely encrypted, approve or deny the transaction, and make sure that funds are withdrawn and deposited correctly. They can be used for in-person and online sales.

Meanwhile, a payment gateway is needed for card-not-present (CNP) transactions, like when customers make a purchase on an eCommerce site. No matter the payment method—bank transfer, credit card, or PayPal—a payment gateway is necessary to encrypt and route all the information via a secure connection. Basically, a payment gateway is simply an online POS terminal.

So to sum it all up: payment processors offer the functionality for merchants to start accepting payments and route them through banks and card networks.

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What’s a Payment Facilitator?

A payment facilitator, or PayFac, is essentially a service provider for merchant accounts. If you’re a SaaS company that wants to offer your customers the ability to pay or get paid via your platform—in other words, an integrated payments provider—you’ll need a payments facilitator.

Let’s say you run a company called GoFood!, a platform that connects home chefs to hungry customers. Obviously, you’d want the chefs to get paid for the meals they make and deliver. If you partner with a PayFac, they would provide the businesses with a method of accepting payments from customers via the GoFood! platform.

In this example, the PayFac model makes payment acceptance more seamless and provides the home chefs (or sub-merchants), with the ability to get paid via the payment processor the PayFac uses. Basically, a PayFac is the middleman or payment aggregator, bringing together sub-merchants under GoFood!, the master merchant, and then completing the debit or credit card processing.

It’s important to note that PayFacs generally tend to do more than just process payments for sub-merchant accounts: they onboard, monitor, underwrite, and support them. This makes it easier for the sub-merchants to apply and get onboarded into the master merchant’s payment ecosystem quickly, meaning they can start getting paid faster.

PayFacs are often used by software platforms or SaaS companies offering a range of solutions to customers. This could be anything from HR to digital marketing to healthcare services. By opting for a payment facilitator, these companies can group all their services, including payments and invoicing, under one platform—leading to significant savings when it comes to time and resources!

There are two main options when it comes to choosing a PayFac: a payment service provider (PSP) or an independent sales organization (ISO). That said, some organizations, like Stax, don’t differentiate between the two.

Basically, the payment facilitator model helps smaller businesses and merchants work with just one company that takes care of all their business needs, including payments.

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Payment Facilitators vs. Payment Processors: 6 Key Differences

While there is some overlap between a payment processor and a PayFac, there are also some important differences you should be aware of (although this isn’t a fully exhaustive list!) Here are the top 6 differences:

The electronic payment cycle

Payment processors directly connect the cardholder’s bank, or the issuing bank, to the acquiring bank, or the merchant account provider. This means the transactions are automatically deposited into the acquiring bank and can usually be retrieved at the end of the business day.

Sub-merchants using a SaaS platform that utilizes a PayFac often receive their earnings on a regular basis, like weekly. This is because most payment facilitators aggregate the payments and pay them out at fixed intervals instead of directly after receiving payment through their payment processor.


As mentioned earlier, payment facilitators are responsible for ensuring compliance, risk management, and generally providing payment support. It’s up to the PayFac to be fully PCI DSS compliant, meaning there’s nothing for SaaS companies or sub-merchants to worry about.

Payment processors must meet PCI DSS standards, but it’s still not a legal requirement to offer all Anti-Money Laundering (AML) requirements and proper due diligence. This could mean that companies using a payment processor need to have an additional security expert on their team, or work with another partner to ensure full compliance. Essentially, the onus of staying compliant lies on the payment processor and their partners, and with constant updates to card networks and the digital payment landscape, this could prove to be challenging.


PayFacs ensure that all sub-merchants are fully onboarded into the SaaS company’s payments ecosystem. Through payment enrollment, a PayFac signs up all sub-merchants under the master account (or software company) and speeds up the process by quickly evaluating the sub-merchant using an underwriting tool. Since the PayFac already has a relationship with the payment processor and the SaaS company, approval takes as little as a few hours.

With payment processors, the merchant has to apply for a merchant ID and then sign with a sponsor bank. Payment processors are best used for individual merchant accounts, as the onboarding process takes up to two weeks and won’t be done via your own software platform, but rather directly with the processor.

Payment methods

Payment facilitators integrate payment processing directly into your platform. For example, Stax Connect uses coding languages like Javascript or Python to integrate payment capabilities right into your platform using the Stax RESTful API. This means whether you want to take mobile payments, card present or CNP transactions, or hosted payments, it’s a piece of cake.

Payment processors, when combined with a payment gateway, can take both card present and CNP transactions, but generally don’t offer a branded or integrated experience, and may offer fewer payment methods.


Payment facilitators often come with transparent and upfront flat-rate pricing. Plus, you’ll start earning more compared to a payment processor since payment processors have to split the revenue with the acquiring bank.

PayFacs may also be able to negotiate lower fees if they work exclusively with one payment processor, further improving your cash flow. All these possibilities can make a substantial difference in the long run when it comes to network fees.

The (contractual) role between the parties

With a PayFac solution, software platforms can directly open a merchant bank account, receive a merchant ID (MID), and immediately begin to aggregate payments for sub-merchants. Because the sub-merchants are under the software platform and the PayFac is facilitating the relationship, these sub-merchants don’t need a unique MID. The PayFac is also responsible for taking care of the different contracts between clients, including the payment processor, software platform, and any users.

Basically, a payment facilitator allows SaaS companies to focus more on providing a great user experience for their customers, with integrated payments being just one part of it.

Meanwhile, payment processors focus on directly connecting a business to its consumers, making it quick and easy to start accepting payments. Payment processors form contractual relationships between their own company and the merchant, not the consumers. This kind of relationship is usually best for eCommerce or physical businesses since they generally don’t offer payment services among their offerings.

Wrapping up on payment facilitator vs payment processor 

If you’re a SaaS business that wants to provide embedded payment processing for your customers, Stax Connect can help.

We offer a fully-managed payments facilitation ecosystem, so you can integrate a fully on-brand payment solution for your customers using our API and start getting paid in as little as 30 days. Plus, we provide the latest security standards and full PCI compliance, alongside dedicated access to our support team and partner success manager. And the best part? All with transparent, up-front pricing. Because with Stax Connect, we make sure you’re set up for success.

Contact us today to learn more about Stax Connect and start monetizing payments.

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FAQs about Payment Facilitator vs Payment Processor

Q: What is a payment processor?

A payment processor is a bank or financial company that handles credit or debit card transactions. It securely encrypts information, approves or denies the transaction, and ensures that funds are withdrawn and deposited correctly. Payment processors are used for both online and in-person sales.

Q: What is a payment facilitator?

A payment facilitator or PayFac is a service provider for merchant accounts, particularly for Software-as-a-Service (SaaS) companies. PayFacs enable businesses to offer customers the ability to pay or receive payments via their platform. They also provide services such as onboarding, monitoring, underwriting, and supporting sub-merchants.

Q: What is the difference between a payment processor and a payment facilitator?

The key differences between a payment processor and a PayFac include the electronic payment cycle, compliance, onboarding process, payment methods, fees, and contractual relationships between parties. While payment processors connect the cardholder’s bank to the acquiring bank, PayFacs aggregate payments and pay them out at fixed intervals. PayFacs are also responsible for ensuring compliance, risk management, and providing payment support.

Q: What are the advantages of using a payment facilitator?

PayFacs offer the advantage of grouping all services, including payments and invoicing, under one platform, leading to significant savings in time and resources. They also offer transparent and upfront flat-rate pricing, which can improve cash flow for businesses.

Q: Who should use a payment processor?

Payment processors are typically best for eCommerce or physical businesses, as they focus on directly connecting a business to its consumers and making it easy to accept payments.

Q: What are the benefits of using a payment processor?

Payment processors offer functionality for merchants to accept payments and route them through banks and card networks. They ensure secure encryption of information and proper deposit and withdrawal of funds.

Q: How does a PayFac make payment acceptance more seamless?

PayFacs onboard, monitor, underwrite, and support sub-merchants, making it easier for them to apply and get onboarded into the master merchant’s payment ecosystem quickly. This allows them to start getting paid faster.

Q: What is the role of a payment processor in an eCommerce transaction?

In an eCommerce transaction, a payment processor encrypts and sends all the information between the acquiring bank, the issuing bank, and the Point of Sale (POS) terminal, ensuring secure and correct payment processing.

Q: What is the role of a PayFac in a SaaS platform?

PayFacs ensure that all sub-merchants are fully onboarded into the SaaS company’s payments ecosystem. They also take care of compliance, risk management, and payment support for the sub-merchants.

Q: Who should use a payment facilitator?

SaaS companies and software platforms that offer a range of solutions to customers benefit from using a payment facilitator. This arrangement allows them to provide an integrated payment experience for their customers, improving user experience and efficiency.


How to Sell Merchant Services Over The Phone

An effective sales strategy is a staple of any merchant services provider or vendor. Many touchpoints make up the merchant services sales cycle. Therefore, a strategy has to be comprehensive across all touchpoints to maximize leads and close sales.

In our digitally influenced world, online aspects of the sales cycle are often considered the number one focus, especially in the software services business. However, while it is a must, an online presence alone does not secure all possible sales.

Customers all respond differently. SEO, digital marketing, social engagement, and more traditional methods, like phone sales, hold equal value. Leads are valuable. A holistic strategy boosts conversation rates.

In this article, we’ll focus on how merchant service providers can use phone selling as a channel to reach customers. 

If you’re wondering how to sell merchant services over the phone, the following tips will come in handy. 


  • An online presence alone does not secure all possible sales. SEO, digital marketing, social engagement, and more traditional methods, like phone sales, hold equal value.
  • Phone calls help sales agents increase conversions, introduce services, and get instant feedback.
  • Selling credit card processing services by phone leverages existing relationships to upsell your services.

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Why Sell Merchant Services Over The Phone?

Phone sales is a tried, tested, and proven approach that’s been around for decades. Of course, it has changed significantly. The phone sales style of the past is not the advised method of today. But it is still hugely effective.

Earlier in 2022, Hubspot found fascinating statistics in support of the traditional cold call. 82% of buyers still accept meetings from cold calls. 57% of chief-level business leaders prefer sales calls. And most businesses predict that the old sales call is here to stay. At least for the next 12 months.

Benefits of Selling Services Over the Phone

When used correctly, cold- or warm-sales calls help your sales agents to sign up new merchant accounts. It allows you to introduce your product or service personally. And it will enable you to gauge customer interest and get feedback instantly.

Phone calls today are best used as a complementary sales tactic alongside other efforts which bring brand awareness. Get your brand in front of prospects enough, and the barrier of a cold call is removed. Brand recognition gets your salespeople in the door to secure meetings or convert sales.

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4 Steps to Develop a Phone Sales Strategy

Business success requires planning. Your sales strategy is your action plan to generate revenue and convert leads and referrals into customers. Winging the process or glossing over the details leaves your strategy open to losing sales. Step number one is then apparent.

Define your overall sales strategy

Sales and marketing are complementary, and they should be intertwined, not siloed. This means that all marketing efforts need to be factored into the sales process.

Do you have online lead-generation campaigns? What is the next touchpoint of those leads? Are they added to an email campaign? Are in-person meetings needed to close sales? When is it appropriate to transfer online engagement into the real world?

Identify your audience

You should know who you’re targeting if you’re already marketing online. But if the entire process is new, this is what you want to understand about your audience:

  • What type of business buys your service?
  • What is the job title of your prospects? Is it the business owner, or are they in a specialized department?
  • What size is their company?
  • Where are they located?
  • What are their pain points, and how do you solve them?

Establish what you want to achieve

Know your goals before you make calls. Whether it’s a meeting, conversion, or building brand awareness, you need to measure against a goal. This will help you measure ROI and improve your strategy over time.

Track your progress

Record keeping helps to ensure no lead slips through the cracks. CRMs or other systems let you capture all communications and contact information, like emails and phone numbers. This begins when they first become a lead and continues to the close. With this, you can automate many processes and set reminders for follow-up tasks.

What To Say To Prospects

Once your salespeople have their leads, they need a sales pitch optimized for results. Sales-y calls are out of vogue. Your communication style must be conversational. That means making a script that’s a bit off-script.

Ask open questions

For example, calls that begin with “How’ve you been?” have higher conversion rates. But this does not get a yes or no answer. If prospects give you information about how they’ve actually been, even if it’s busy, this is an opportunity to begin to build a relationship.

If a prospect says they’ve been busy with a project, you could ask about it. Is it the good, fun kind of busy, or frustrating busy? The longer you keep prospects on the phone, the more likely they will convert.

Set an agenda

Once you’ve built some rapport, set your agenda and stick to it. “I know you follow us online/downloaded our e-book/registered your interest in our XXX. We’re just following up/contacting you about XXX, I want to know a bit more about your/your company’s needs, and then we can talk about XXX.”

Stating the reason for your call, setting an agenda, and sticking to it, leads to high success rates.

Discuss pricing

Discussing pricing on the first call boosts sales. What’s more, it helps you qualify and disqualify clients. There’s no point chasing a small business that doesn’t have the means to buy your services.

Refer to common connections

It may not always be possible, but if you have any connections in common, refer to them. You could check for this by searching for your prospect on LinkedIn. Mention any shared links early in the call to build your reputation. This can boost conversion results by 70%.

Follow up

Reliability is essential to building a reputation and closing sales. According to a study by CallHippo, 40% of leads aren’t followed up on after the first call. However, it takes up to six phone calls to convert a prospect into a customer. Tenacious sales reps build better relationships.

What Not to Say to Prospects

Never ask, “Is now a bad time?” This reduces your chance of converting by 40%. Similarly, never try to build rapport on a negative topic. Say, for example, the weather is atrocious. Try to find a positive, rather than commiserating together that the weather sucks. You want to lift the energy of the conversation.

Don’t bad-mouth peers in the industry, even if the prospect says something about your competitor. You could instead say, “Oh, no. I’m sorry to hear that. We have XYZ in place to ensure that (fill in how you ensure your business avoids whatever their issue was).”

Enhancing Your Service for Better Sales

Credit card processing services are a valuable product addition in the merchant services industry. With a SaaS solution like Stax Connect, software companies can provide payment processing services to their users. Control and security stay on your website or app. But as a reseller, residual credit card processing sales go to your business.

The best merchant services offer:

Card payments

eCommerce sites can accept credit card payments provided by your business via Stax API.

Point-of-sale solutions

Adding a point-of-sale system (POS) to the payment gateway allows your clients to accept credit cards, debit cards, and other payment solutions, including:

What’s more, Stax Connect has surcharging capabilities. This means customers can lower their payment processing fees. Either they pass the fees on to consumers, or they can offer cash discounts.

Credit card processing

Through Stax Connect, software providers can enhance their merchant processing functionality.

Payment processing integrations

Designing your payment processing solution is high-risk and hard work. It would help if you had full PCI and security compliance that can only come from an established payment processor. Stax Connect offers the following:

  • Fast integration
  • Deep insights
  • Monetization
  • Enrollment tools
  • Activity and residual reporting
  • Customer support team enablement
  • Bank sponsorships
  • Enrollment solutions
  • Risk management
  • Payment processing APIs and SDKs.

Beyond software, Stax Connect also integrates with POS terminals and mobile reader hardware to accept swipe, dip, and EMV payments. We are a registered ISO merchant services provider.

Selling Over the Phone: The Bottom Line

In today’s digital world, phone sales are often overlooked in favor of online methods. But they’re still hugely effective when done correctly. They are, in fact, still an essential part of the sales cycle.

Phone sales are perfect for merchant services providers introducing credit card processing services. In this case, most leads will already be contacts. Phone calls can then focus on upselling existing clients. This is a much easier task than cold-calling.

Remember, a well-executed phone sales strategy complements your efforts to increase brand awareness and reach new or existing customers. By building personal, over-the-phone relationships with customers, you create loyalty and customer advocates that will last long after the sale is made.

Even if they don’t buy on the first call, the impression of a phone call lasts longer than any impression online.

Lastly, recognize that an effective sales strategy starts with having a solid product. That’s why it’s best to team up with a credible payment partner like Stax Connect if you are looking to sell merchant services. Contact us to learn more about how we can work together so you can sell merchant services more effectively.

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