What Every Isv And Saas Company Needs To Know When Switching To A New Payments Partner

Innovative ISVs and SaaS companies know that one of the best ways to provide value to merchants—while improving your bottom line—is to provide integrated payments.

For example, if you’re an invoicing software provider that lets SMBs manage their billing, then it makes sense to add payment processing tools to your platform. Doing so not only streamlines the payment process for your merchants but also opens up a new revenue stream for your company through transaction fees or value-added services.

That’s why it’s not uncommon for SaaS companies and ISVs to find payment partners (like Stax Connect) who can help them implement payment services. 

Of course, not all integrated payment providers are created equal. Sometimes, a partner may not be equipped to handle sub-merchants needs. Or, they might lack the flexibility to adapt to your evolving business.

If you find yourself in this situation and considering switching payment partners, this guide can help. We caught up with Stax Connect’s payment experts to shed some light on everything you need to know when switching to a new payments partner. 

Watch their discussion on demand below or read on to see the highlights of their conversation. 

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Why Saas and ISVs Look for a New Payments Partner

According to Tommy Avers, VP of ISV Sales at Stax, the most common reason companies switch payment partners is because they’re unhappy with the features or services of their current integrated payments provider. 

“A lot of times, they’re coming to us from a place of not being very successful in what they originally had sought out to do. So, that could be anything from a technical limitation to underwriting or risk concerns or having a tough time getting merchants through the enrollment process.”

Ricky Dunbar, Stax’s VP of Professional Services, agrees and adds that while the specifics can vary, the primary purpose for switching typically boils down to one of two things: the company is either running towards something (i.e., to get better features) or they’re running from something (i.e., to avoid pain points).

“It’s more often they’re running from than they’re running to,” he says. “It’s either something was oversold, or expectations weren’t set appropriately.”

That’s why Ricky emphasizes the importance of managing expectations. “It’s super important for both parties to be transparent about what they’re trying to accomplish and what those goals can be today versus what can be accomplished later.”

Signs It’s Time to Make the Switch

Is it time for you to flip the switch? Here are a few signs that you should consider a new payments partner for your SaaS or ISV business. 

The existing provider can’t support your business goals

Ultimately, the decision to move to a different payments partner comes down to whether or not a provider can effectively serve your company and sub-merchants. And the only way to determine that is to have clarity on your business goals. 

As Tommy points out, “It’s impossible not to know when the right time is if you don’t have clear objectives and goals set up for what success is defined by in your organization.”

So, regularly evaluate your business objectives and align them with the capabilities of your payment processing partner.

Already have those clear business objectives in place? Look at your vendors. If they inhibit growth for your platform or your core product is potentially at risk, these are clear signs to consider a different provider.

Sub-merchants are having a poor payments experience

Another tell-tale sign of having a sub-optimal payments partner is if your customers (i.e., sub-merchants) are having issues with integrated payments. Maybe they’re experiencing downtimes or facing difficulties with transaction processing, such as delays or high rejection rates. 

Whatever the case, these problems can significantly impact your reputation and the satisfaction of your software users. The last thing you want is for them to churn due to a poor payments experience. 

When is the Right Time to Switch Integrated Payment Partners?

Timing is another crucial consideration when switching to a new provider. For some SaaS companies, the right time to find a new vendor is determined by their product roadmap. Perhaps there are specific features or user experiences that your current payment solution cannot support. 

In some cases, it’s a matter of seasonality. 

As Tommy illustrates, an EdTech platform primarily operational during the school year should start searching for a new provider in the winter. This allows for initiating the migration process during the summer break, minimizing disruption. 

The bottom line is that the optimal time to switch payment partners hinges on a blend of strategic planning and practical circumstances. Whether driven by product development needs, customer experience improvements, or operational timing, the decision should be rooted in what best supports your company’s growth and aligns with your specific operational cycle.

Preparing to Make the Switch: Look at Your Contract

So, you’ve decided to make the switch, determined the best time to do it, and now you’re ready to start the process.

Before diving in, Tommy recommends closely examining your contract with your current vendor. 

“The first thing to consider is term length. Are you coming up on the end of that contract? And if you’re not, do you have any penalties for terminating the contract early?”

The second thing, he says, is to see if there are any data or customer migration clauses.

“Look out for terms like ‘portability of customers’ or ‘non-solicitation’ against customers you brought to that vendor.” 

When you’re in the clear, you can start planning the transition and ensure a seamless shift for your business and customers.

Best Practices to Make the Process Go Smoothly

Once you’ve engaged with a new payments partner, you can take several steps to get up and running efficiently. 

Leverage your existing payment knowledge and foundation (if available)

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If you’ve worked with another provider in the past, it may help to leverage that knowledge and even infrastructure when moving to a new provider. 

Karina Mills, Senior Manager of Solutions Engineering at Stax, says those who previously worked with other payments companies have a leg up both “on the payments experience side of things and the technical side.”

“There’s definitely a component where there’s reusable code. You don’t have to start from scratch if there’s already a foundation of what needs to be built,” explains Karina.

She continues, “I should add the caveat that sometimes the previous processing build was from a few years ago, so you may not have exactly the same team members—but hopefully they’re in there maintaining it. Assuming that’s the case, then the foundation is already there, as well as the knowledge and understanding of the technology and the code itself.”

Get clear on the features and functionality you need

Another important step is to dial in on the exact features you need and when. Work closely with your new provider and be transparent about your needs and expectations to ensure a smooth integration process that aligns with your company’s objectives.

“And once you’ve nailed down what features you’ve decided to build, things should flow from there. Is it one-time payments and tokenization? What did it look like in the previous processor? What does it look like in the new processor? And just build out all of your tickets,” says Karina.

“Have your developers look into the API documentation, figure out what exactly it’s going to take, and build out your project plan for implementation.”

Don’t overlook the operational aspects of making the switch

Karina cautions against rushing through the code or building process. 

“A lot of times, our partners will be ready to just build, build, build, and go straight into that move. They’ll switch over and not necessarily think of those different operational things that come later in the process.”

One common operational component, shares Karina, is managing two processors simultaneously while making the switch. 

“In some ways, you have to do that because you can’t force the merchants to move over immediately, and there’s not really an easy way to do a 100 percent cut-off date. But then, if you are supporting multiple payment processors, at what point will you stop supporting the previous?”

“And there are things like refunds if there are payments that a merchant has made in an old processor. Will they be able to refund those payments in the new software? Or will they go to their previous processor and manually make those refunds through a dashboard somewhere outside of the partner’s ecosystem?”

These are some things you should consider when planning the logistics to ensure a smooth transition for your team and your customers.

Organize your data

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Submitting merchant applications and migrating their data can be cumbersome, but they are part of the territory when you move to a new integrated payments partner. 

As Tommy puts it, “Anytime you’re switching from one vendor to another, that new vendor will need to go through underwriting and receive a filled-out merchant application to our terms and conditions.”

The good news is you can take steps to make this process a bit easier. 

Know what data you have on hand

“The vendors that are set up best for the merchant migration of the application are those with a lot of data on their merchants,” explains Tommy. 

“They have their EINs, address, the principal signer, etc. These are things we could pre-populate in the application for that cutover time to go through our underwriting.”

Ricky echoes this and adds that the first thing the Stax Connect team does is ask questions about what data the ISV has about their customers. 

“We want to determine how much of this we can reuse. We want to make the enrollment process as streamlined and frictionless as possible. That starts with reducing the amount of input or the amount of activity the merchant has to go through to ultimately get there.”

Work with an implementation manager

Another thing you could do is to work with an implementation manager who can facilitate the process. 

This is what Karina specializes in at Stax Connect. 

“We have APIs where the partner can build a tool that sends the information to start that application process and build in those automations,” she explains. 

“They could also build notifications to understand whether the merchant has been pending or approved and ready for payment processing. That tends to help not just in switching payment processors but in the overall payment implementation experience.”

Communicating to Sub-Merchants

Next up, ensure you have a communication plan in place. Consider the following best practices. 

Be clear and deliberate

The main people whom this change will impact are the sub-merchants. So, it’s immensely important to be on the same page as your customers. 

Ricky’s advice? “Be very clear and deliberate in your communication.” This is vital, especially when communicating:

  • the merchant’s responsibilities
  • the steps they take 
  • how the change will affect them 
  • key dates

Work with your support and marketing team

Map out the above ahead of time and craft a communication plan that outlines what channels you’ll be using and when your messages need to be sent. 

For best results, work with your marketing and support team, ensuring they’re fully aligned on the change.

 “If the team understands it, then they can communicate it effectively to the merchant and then the merchant is going to feel really good about the process,” says Ricky.

Find a Vendor That Can Guide You Through the Change

Implementing integrated payments is a smart play for ISVs and SaaS companies. But it’s all about finding a payment partner that aligns with your goals. If your current one isn’t cutting it, consider making a move.

Stax Connect stands out as an expert in this realm, offering the flexibility, support, and capabilities you need to succeed. 

If you’re ready to flip the switch, reach out to the Stax Connect team for guidance on making a seamless transition to a payment partner that truly supports your growth.