For SaaS (Software as a Service) businesses that are looking for payment processors, there’s no shortage of options in the marketplace.

A simple payment gateway or eCommerce payment processor is relatively simple to set up and integrate with your website. But there are a lot of things that a standard payment processor doesn’t do.

As subscription-based businesses, SaaS companies have several unique needs when it comes to payment processing that regular eCommerce merchants do not. This is why SaaS businesses should do their research and select a payment processor that can meet these demands and optimize payment and billing management.

In this post, we’re going to cover the basics of SaaS payment processing and what to consider when choosing and implementing a SaaS payment solution for your business.


  • A SaaS payment processor is a service provider that focuses on providing the tools that SaaS companies need to manage payments and subscriptions accurately.
  • Using a SaaS-specific payment processing solution makes billing easier and more reliable.
  • SaaS payment processing simplifies your recurring payments by offering a fully-customizable billing solution that automatically processes card payments at the intervals you’ve chosen.

Stax Green Icon

Join the Payments-Led Growth Movement

Sign up to keep up-to-date with the latest trends in payments, vertical SaaS, and technology from industry experts.

What Is SaaS Payment Processing?

First off, let’s define payment processing. A payment processor acts as a mediator between your business and your customer by managing transactions and ensuring that revenue is cleared and deposited in your merchant account.

Payment processors are often confused with payment gateways. However, they play different roles within the payment experience:

  • The payment gateway approves or declines a transaction and transmits sensitive data to the payment processor.
  • The payment processor relays this information to the issuing bank and the acquiring bank to move the necessary funds.

Every company accepting payments from customers requires a payment processor to manage this workflow. However, the business model used by SaaS companies requires a more specialized set of payment processing services than regular eCommerce merchants.

This includes recurring billing systems, subscription management, and supporting multiple pricing plans or tiers. In sum, a SaaS payment processor is a service provider that focuses on providing the tools that SaaS companies need to manage payments and subscriptions accurately.

What are the Benefits of SaaS Payment Processing? 

Here are the advantages of using a SaaS-specific payment processing solution. 

It makes SaaS billing easier and more reliable

Using a regular eCommerce payment processor may work for startup SaaS companies in the short-term. But as you gain subscribers and include additional pricing models, you need a solution that can scale alongside you and optimize your recurring billing model as your business grows. SaaS payment processors are tailored to these demands and are designed to evolve alongside your services.

It improves customer experience

Customer retention is the name of the game for a SaaS company to become profitable, yet almost 40% of consumers will ultimately cancel any subscription they subscribe to.

Once a subscription has begun, retention hinges on offering the best possible user experience. If a customer wants to upgrade their pricing plan or change their chosen payment option, it’s within your interest to make this process as seamless as possible.

A full-fledged SaaS payment solution will also offer a subscription management system that enables customers to easily update and change their plan, allowing you to offer frictionless subscription billing.

It simplifies accounting and reconciliation

Subscription-based companies like SaaS businesses face some of the most complex accounting rules due to the way their revenue is recognized.

Because a SaaS service cannot be redeemed all in one go (a 12-month subscription plan takes 12 months to be fully “used”), merchants need to defer this revenue until a point where the service can be considered finalized.

With the assistance of SaaS payment processing platform, you can reconcile your revenue automatically for thousands of subscriptions and eliminate manual processing.

It allows you to automate recurring billing easily

Manually invoicing your customers at regular intervals is a time-consuming exercise, especially chasing up late payments that can affect your cashflow.

SaaS payment processing simplifies your recurring payments by offering a fully-customizable billing solution that automatically processes card payments at the intervals you’ve chosen. This way, you no longer have to worry about missed payments or keeping track of changes that customers make to their subscription plans.

It integrates with your existing software infrastructure

Most SaaS payment processors offer an open API to allow for seamless integration with your website and existing business tools. This ensures that you can manage online payments efficiently and reduce the number of conversions you lose at the checkout due to necessary redirects or refreshes.

It helps protect your customer’s sensitive data

In order to set up recurring payments, customers have to provide card details for you to keep on file and charge on a recurring basis. But storing credit card information means a lot more liability for your business in the event of fraud or a data breach.

Choosing a SaaS payment processor that is fully PCI-compliant and offers security techniques such as payment tokenization ensures that customer data is kept as safe as possible.

Challenges of SaaS Payment Processing

While using a SaaS payment processor offers a wide range of benefits, there are a few limitations that SaaS businesses need to be aware of:

Limited payment methods

Because many SaaS payment solutions are focused on recurring billing and card on file functionalities, the number of payment options available is more limited. For example, most SaaS payment processors don’t support cryptocurrencies or Buy Now, Pay Later programs such as Afterpay.

While this gives your customers less flexibility, ACH, e-wallets, and debit/credit cards are the most-widely used options. One way to make up for this limitation is to choose a provider who can guarantee next-day or even same-day payouts of funds into your merchant account. This ensures that the payment methods you do have are fast and reliable.

Learn More

Difficulties with integration can make it hard to keep track of your subscriptions

It’s not unusual for businesses to operate more than one payment processor for different parts of their business. For example, you might have one system to manage recurring billing for a standalone subscription product, and another for subscriptions which offer multiple pricing plans.

But as your business grows, it’s difficult to get an overview of what is happening with different products—especially if your systems don’t integrate seamlessly.

Instead of wasting time managing multiple systems, be sure to choose a SaaS payment processor that can scale alongside your business and manage the entirety of the customer lifecycle. This avoids technical issues and keeps everything in one place for easier integration with your CRM system.

High churn rate

Subscription commerce is a highly competitive environment, and keeping hold of customers can feel like an impossible task. While signing up a customer can seem like a victory, they can easily downgrade or cancel their plan later, no matter how seamless the user experience is.

However, it’s worth bearing in mind that involuntary churn makes up between 20-40% of all customer churn at a business. For subscription-based companies, this number tends to be on the upper end. Why? Because recurring billing involves a higher risk of failed payments due to expired or canceled credit cards.

Make sure your SaaS payment solution offers advanced dunning management, including transaction retries and reminder notifications for customers to update their payment details.

High fees and transaction costs

One of the biggest drawbacks of SaaS payment processing is that pricing isn’t always transparent. Most solutions will charge a transaction fee of between 3-4% per transaction, though this can differ depending on the payment method.

While a provider might appear good value on the surface, there are a variety of extra costs and hidden fees that can catch you unawares. Some payment processors require setup fees, or charge extra for services such as chargebacks or processing foreign currencies. In practice, this means you can end up spending far more on SaaS payment processing than necessary.

Instead of navigating a long list of fees, consider choosing a payment provider (like Stax) that charges a fixed monthly fee for a set of services. This way, you always know exactly what you’re paying for.

What Should You Look For in a Payment Processor? 5 Tips to Consider

Not all SaaS payment processing providers are created equal. Here are some pointers to ensure you find the right one for you. 

Select a stable partner with a track record of success 

Partner with a SaaS payment processor who has a reliable record of positive testimonials. If there are any negative reviews, look for any patterns that could indicate recurring problems that aren’t being addressed. Most importantly, check to see whether the provider has replied and offered solutions; this is a sign of good customer service.

Make security a top priority

Make sure they’re PCI compliant. Compliance with the Payment Card Industry Data Security Standards (PCI DSS) is especially important for businesses that use recurring billing, as strict rules are placed on how customer payment data must be stored and encrypted to avoid data breaches. Choosing a PCI compliant payment solution ensures that your business has all the bases covered should the worst happen

Also, select a provider that offers fraud prevention measures and security safeguards. In addition to PCI compliance, there are a variety of other tools available to combat eCommerce payment fraud. Measures such as payment tokenization and chargeback management are important features in a prospective SaaS payment processor.

Find a provider that can scale with you

Choose a service provider that can grow with your company. Selecting a payment processor that can scale seamlessly alongside your business’s transaction volumes ensures that you won’t have the disruption of switching between systems, either due to transaction limits or growing fees.

Look at the solution’s customization capabilities 

The ability to adjust your transaction flow, billing options, and even brand your payment gateway are all valuable additions that help you to deliver a more seamless payment experience for your customers.

Best SaaS Payment Processing Solutions

Now that we’ve covered the fundamentals of SaaS payment processing, let’s look at the top players in the market. 

Stax Connect

Stax Connect is a full-fledged, subscription-based SaaS payment solution that offers scalable pricing plans and a full suite of subscription management capabilities, including recurring billing, stored payments, digital invoicing, and more. Thanks to its flat monthly fee, it’s easy for merchants using Stax Connect to keep track of payment processing costs and not worry about extra costs piling up.

Price: Plans start at $99 plus interchange fees


  • Full-fledged recurring billing system
  • Easy to understand pricing
  • Same-day payout capabilities
  • Extensive data analytics


  • Support is limited to the United States
  • Doesn’t support high-risk merchants


Stripe is easily one of the go-to options for SaaS businesses looking for a global payment solution. Accepting a wide variety of payment methods and foreign currencies, Stripe is a great fit for merchants who are planning on expanding internationally and/or want to offer customers as much flexibility as possible.

Price:  2.9% + 0.30c per online transaction (no monthly fees)


  • A global payment network (accepts over 135 currencies)
  • Straightforward pricing
  • Accepts a wide variety of payment options


  • Requires a lot of developer experience to integrate properly
  • Limited real-time reporting


Easily one of the most recognized online payment options, Paypal is accepted nationwide and minimizes hassle for your customers. They offer both fixed and variable amount subscriptions, which covers the bases for most SaaS offerings. Their intuitive system makes Paypal easy to use, even for businesses that are new to ecommerce payment processing.

Price:   2.59% + $0.49 per card charge (no monthly fees)


  • Very easy to set up
  • Well-known and trusted by consumers
  • Available worldwide in 200+ countries


  • Limited protection against chargebacks
  • Lots of hidden fees for recurring billing


Chargebee’s effective invoicing system makes it a great payment processor for businesses who are managing a large volume of subscriptions across several pricing plans. Discount management capabilities also make it easy to coordinate marketing and sales initiatives in response to customer churn metrics.

Price: $0 for the $100k of revenue, then $249 and up


  • Easy to set up multiple subscription plans
  • Great UI experience
  • Integrates with a variety of other systems


  • One of the more expensive options.
  • Customer service is slow to resolve issues.
  • Customization is complicated to implement.

Final Words

Effective payment processing and subscription management is the backbone of any successful SaaS business. If you cannot receive payments seamlessly or see how different subscription plans are performing, it will be a major challenge to reduce customer churn and remove lengthy, manual processes from your workflow.

Selecting a cost-effective, technology-led SaaS payment processor is the key to streamlining your Saas company and offering a superior payment experience. Set yourself apart from the competition by choosing a best-in-class payment processor like Stax Connect. Talk to us to learn more!

Request a Quote