Shopify. Mindbody. Etsy. What do these companies have in common?
Aside from providing excellent SaaS solutions to their users, Shopify, Mindbody, and Etsy are just a few examples of companies that have used payment processing to fuel (at least some of) their growth.
Consider Shopify, which has generated $1.2 billion from its merchant services in 2023. Yahoo! Finance reports: [emphasis added]:
“In the 2023 third quarter, Shopify’s subscription solutions revenue was $486 million, or 29% of the total $1.7 billion. Monthly recurring revenue was $141 million. However, these merchant clients present a much bigger opportunity for Shopify than monthly subscriptions.
In the third quarter, Shopify took in revenue of $1.2 billion from its merchant solutions segment. These are extra services on top of a subscription plan, and many merchants opt to work with Shopify just for these services. They are mostly transaction fees for payment processing, and Shopify’s services can integrate with a company’s existing website, so they don’t have to be on a Shopify subscription plan to work together.”
This tells us that payment processing services can be a significant revenue driver for SaaS companies, and it illustrates how payment solutions can fuel substantial growth for businesses.
In this article, we explore why payments-led growth can be a winning strategy for SaaS and what you can do to capitalize on users’ need for payment processing.
TL;DR
- Integrating payment processing into your SaaS platform adds a steady and scalable revenue stream, driving substantial financial growth. Plus, native payment features improve convenience and efficiency, offering a seamless experience that reinforces your brand identity and increases user satisfaction.
- Embedded payments provide valuable data on transaction volume, average transaction size, and payment frequency—all of which help you understand and better serve users.
- Choosing a robust payment partner like Stax Connect ensures comprehensive reporting, hands-on support, and the ability to make data-driven decisions confidently, enhancing overall business stability and growth.
Payments Add Another Revenue Stream to Your Business
First things first: revenue growth. Offering payment services within your platform enables you to earn revenue from every transaction processed, which adds a steady and scalable revenue stream.
Depending on your sub-merchants’ transaction volume, payments can account for a significant share of revenue and drive substantial financial growth. This can diversify your income sources and enhance overall business stability.
You Can Provide a Better User Experience
Having payment processing as one of your native features means users can get more value from your software. Instead of relying on a third-party payments provider or cobbling together different solutions, they can handle everything within a single platform, enhancing convenience and efficiency. And if you’re using a payments partner like Stax Connect, which lets you customize and white label your merchant services, your sub-merchants get a seamless experience that reinforces your brand identity and ultimately improves user satisfaction.
Big Time, a platform that helps professional service firms track and manage their projects, uses Stax Connect to power its billing and payment features. According to the team, this integration has significantly streamlined their payment processes and enhanced their service offerings.
“We were able to customize things to meet our clients’ needs and Stax was willing to help us get there,” says Jami Klotz, Senior Vice President of Product at Big Time.
Ultimately, having the ability to provide robust services leads to better acquisition and retention. After all, satisfied users are more likely to stay loyal to your platform and recommend it to others, driving growth and long-term success.
You Can Harness User Data
Software-embedded payment processing enables the software provider (i.e., you) to gain more data and insights about sub-merchants. You’ll have more visibility over things like transaction volume, average transaction size, and payment frequency, which then helps you better understand your users. Knowing these details can inform your product development roadmap and allow you come up with capabilities to serve people better.
Payment-centric data can also help you make strategic decisions for growth.
For example, if you see that a particular user segment gets the highest transaction volume (and thereby drives the most payment revenue), then you know it makes the most sense to focus on acquiring those types of customers.
Now, the ease with which you can extract these insights will depend on your payment partner. A provider like Stax Connect makes it easy to generate payment reports so you can confidently make data-driven decisions.
Just ask Shelterluv, a company that provides software for animal shelters and rescues. In addition to shelter management capabilities, Shelterluv lets organizations collect donations efficiently.
Sheltervluv switched to Stax Connect when its previous payments partner couldn’t meet the company’s expectations.
According to Shelterluv, not only is Stax Connect extremely easy to work with, it also provides better reports that shed light on the data Shelterluv needs.
“The [Stax] reporting will be simpler and more comprehensive. We also have a dedicated contact to resolve any issues that happen to arise,” the company says.
Additionally, Stax Connect can deliver more hands-on reporting and support to ensure you’re always informed.
Big Time CFO Peter Dedes appreciates this initiative, saying it’s a key differentiating factor for Stax Connect.
“They do a quality business review every quarter and keep me up to date on a lot of the numbers and metrics that are important,” he remarks.
This shows that having a reliable and insightful payments partner can significantly enhance your ability to harness user data, make strategic decisions, and drive business growth.
Final Words
Integrating payment processing into your SaaS platform creates a new revenue stream, provides valuable data insights, and drives overall business growth.
That being said, your merchant services are only as strong as your payments partner, so choosing the right provider is important.
This is where Stax Connect comes in.
Teaming up with us ensures that you benefit from seamless transactions, comprehensive reporting, and strategic decision-making, ultimately setting your company up for long-term success.
Learn more about Stax Connect.
Request QuoteQuick FAQs about Payment-led Growth
Q: What is payments-led growth in the context of SaaS companies?
Payments-led growth is a strategy where SaaS companies integrate payment processing into their platforms, allowing them to earn revenue from each transaction. This approach not only diversifies income streams but also enhances user experience by providing seamless payment solutions directly within the SaaS platform.
Q: How does integrating payment processing benefit SaaS platforms like Shopify and Etsy?
Integrating payment processing enables SaaS platforms to generate additional revenue through transaction fees. For example, Shopify earned $1.2 billion from its merchant solutions segment, which includes payment processing. These integrated solutions also improve user convenience, leading to higher customer satisfaction and retention.
Q: Why should SaaS companies consider embedded payment solutions?
Embedded payment solutions provide a streamlined experience for users, allowing them to manage transactions without third-party services. This integration can lead to higher user satisfaction, better brand identity reinforcement, and increased growth through improved user retention and acquisition.
Q: What are the key considerations when choosing a payment partner for a SaaS business?
Choosing a payment partner involves assessing their ability to provide comprehensive reporting, support, and customization options. A robust partner like Stax Connect offers hands-on support and data-driven insights, which are crucial for making strategic decisions and ensuring seamless transaction experiences.
Q: How can payment processing data enhance business growth strategies for SaaS companies?
Payment processing data offers valuable insights into transaction volumes, user behavior, and payment frequency. This data helps SaaS companies understand their users better, informing product development and marketing strategies to target high-value customer segments effectively.
Q: What role does user data play in enhancing SaaS offerings through integrated payments?
User data from integrated payment systems can help SaaS providers tailor their services to meet user needs more effectively. Understanding transaction patterns and user preferences allows companies to innovate and improve their offerings, ultimately leading to better customer satisfaction and increased growth.
Q: Can payment processing integration impact user acquisition and retention for SaaS businesses?
Yes, integrating payment processing can significantly impact user acquisition and retention by enhancing the overall user experience. A seamless and efficient payment process encourages users to stay loyal to the platform and recommend it to others, driving growth and long-term success.
Q: What are some examples of SaaS companies successfully using payments-led growth?
Companies like Shopify, Mindbody, and Etsy have successfully harnessed payments-led growth. Shopify, for instance, has leveraged its merchant solutions, including payment processing, to fuel substantial revenue growth, showcasing the potential of this strategy for other SaaS businesses.
