In today’s competitive SaaS landscape, simply acquiring customers isn’t enough. The real key to sustainable growth and increased revenue lies in maximizing payment attachment – the adoption and usage of integrated payments by your existing customer base. This powerful concept moves beyond just selling software; it transforms your platform into the central hub for your customers’ financial operations, creating deeper value and unlocking significant revenue streams.
We recently had the privilege of sitting down with a panel of payments experts from Stax for a masterclass on this critical topic. Our host, Ray Lau, VP of Marketing, led an insightful discussion with Jeremy Krahl, SVP of Payment Partner Growth; Fred Nelson, VP of Sales Enablement; and Brandon Ewell, Partner Growth Manager. Their combined experience sheds light on why payment attachment isn’t just a buzzword, but a strategic imperative for modern SaaS businesses.
What Exactly is Payment Attachment, and Why Does it Matter So Much?
Ray Lau kicked off the discussion by defining payment attachment as “the adoption and usage of integrated payments by existing customers of a company.” Jeremy Krahl elaborated on its impact, cutting straight to the chase: “The answer is revenue typically.” He emphasized that a tightly integrated payment solution does far more than just process transactions; it creates a stickier product and lower churn, which directly increases your customer lifetime value.
Krahl highlighted the lucrative payment residual stream. This incremental revenue, generated from processing transactions through your platform, can be surprisingly substantial. He shared that successful partners often see this payment revenue “two or three or four times, even higher than what the SaaS fees are.” This means that the money you make from payments can easily overshadow your subscription revenue. Furthermore, Krahl pointed out that from an investment perspective, this embedded payment revenue is a key metric that many investors are looking at today.
Fred Nelson echoed this sentiment, underscoring that while ISVs naturally focus on their core SaaS solution, “payments is very much underrated and can often outweigh what they make on the SaaS revenue.” It’s a critical, often underestimated, component of a SaaS company’s financial health and valuation.
Driving Processing Volume Through Seamless Attachment
Integrated payments directly translate to increased processing volume. Jeremy Krahl explained the core idea: “what we’re talking about is what percentage of your overall customer volume going through your platform is attached to a payments delivery that you are supporting.”
By offering a fully integrated solution, you provide inherent value to your merchants, making it their preferred method. The convenience of automated reconciliation, faster payments, and the overall efficiency of an integrated point of sale perspective mean ”the tighter that integration is and the more value that’s in that integration, the higher that’s going to drive the volume through your integration solution.” More volume, as Krahl reminded us, means more revenue, stickier customers, and less churn.
The Crucial Role of Education and an Intentional Strategy
Payments, by nature, are complex. They involve intricate pricing structures, compliance regulations, and technical nuances that can be daunting. Fred Nelson pointed out that many of their partners struggle with this complexity, and even merchants themselves often don’t necessarily always understand the back end functionality of payment or how to maximize it.
This complexity means that a casual approach to selling payments won’t suffice. Jeremy Krahl stressed the importance of having an intentional focus on what your payment strategy is going to be. He warned against a common, and often fatal, mistake: “one of the largest mistakes that I see any given software provider make is not having an intentional payment sales strategy.” Simply assuming SaaS sellers can “bolt it on” is a recipe for missed opportunities, especially when customers start asking questions like, how the gateway delivery works, how reporting works, and what is interchange?
Brandon Ewell added that the ideal sales approach depends heavily on where your organization is in their payments journey. Companies new to payments might need more hands-on support from a payment partner like Stax, while more established organizations might have the luxury of dedicated payment sales teams. Regardless of the structure, the core need remains: your teams must be knowledgeable. As Fred Nelson put it, if your internal folks “can’t answer fundamental questions around what is interchange… it’s going to make it that much more difficult to attach payments up front.”
To gauge success, Nelson offered a clear benchmark: “If you have less than 30% payment attachment in your portfolio… then you’re probably not doing a good job of attaching payments and you need some help. He noted that top partners in the industry can see attachment rates in the 80-90% range, which is where every SaaS company should aspire to be.
The “End of Life” Campaign: A Powerful, Yet Delicate, Strategy
An insightful part of the discussion revolved around “end of life” campaigns – strategically phasing out older, less integrated payment options or software versions to drive adoption of a preferred, integrated payment solution. Jeremy Krahl described this as a combination of a carrot and stick approach. The “carrot” involves incentivizing early migration with enticing new functionality (e.g., advanced installment billing or recurring payments exclusively on the new platform), or even waived SaaS fees. The “stick” is the eventual announcement of the old product’s end of life, which, after incentives, might “force that over to your preferred gateway.”
Fred Nelson acknowledged the natural fear that a SaaS company may lose a lot of customers when contemplating such a move. However, he offered reassuring real-world experience: “even when we’ve seen radical moves to do that in a short period of time, we haven’t seen real life examples of massive amounts of attrition.” He emphasized that customers typically “want to stay with you” if your core solution remains valuable. The key, he advised, is a delicate approach, starting with education campaigns, combining them with incentives, and providing appropriate timelines.
Brandon Ewell highlighted a crucial aspect: “It really can benefit to give an added piece of value.” He suggested tying the transition to an overall software upgrade, like moving to “V2 of our software” with a better user interface and experience. This approach helps shift the merchant’s mindset, encouraging them to adopt the changes because they’re getting something out of it at the end of the day. Nelson also stressed the often-overlooked power of a personal touch, urging the use of phone calls and personal emails to address concerns and provide human assistance, especially when dealing with something as sensitive as payment transitions.
Measuring Success: Key Performance Indicators for Payment Attachment
To truly understand the impact of your payment attachment efforts, the experts outlined essential KPIs:
Payment Attachment Rate: As Jeremy Krahl noted, this is the foundational metric. If you’re below 50%, active measures are needed to improve.
Average Processed Volume per Customer: This directly measures the actual transaction volume flowing through your platform, indicating how much of your customers’ payment activity you’re capturing.
Revenue from Payments vs. SaaS: A crucial comparison that highlights the contribution of your embedded payments.
Activation Rate: How quickly new customers go live and start processing payments through your solution.
Revenue per Customer: Your total revenue generated per customer, considering both SaaS and payments.
Churn Rate and Stickiness: How payment attachment impacts customer retention. Krahl explained, if your average customer stayed for 22 months before payment attachment, and now it’s 26-30 months, that’s additional incremental revenue you’ve created just off of that payment attachment.
The Unseen Value of Pricing and Strategic Partnerships
The conversation also delved into pricing strategies, a nuanced area often mishandled by SaaS companies new to payments. Brandon Ewell pointed out a common pitfall: “software companies, when they first roll out the payments program, human nature is, let’s do an aggressive rate to get people on this platform. However… those rates aren’t revisited.” This can lead to leaving significant money on the table as the market and costs evolve. He stressed the importance of partnering with a payment company that will work with you and visit those go-to-market rates on a regular basis to ensure that you’re offering the most competitive rate out there for your merchants, but still be one that also protects your margins.
Jeremy Krahl echoed this, saying that “our most successful partners are those that have pricing programs and strategies that are at, or in some cases, above market rates.” He explained that constantly chasing the lowest price attracts low value customers and trains them to seek the next cheapest option. The real leverage comes from value: “If you have a level of integration and a level of value that they’ve created through their product integration that is so tight and valuable to the merchant that they don’t mind paying a little bit more for it.”
Fred Nelson added that many prominent SaaS providers still have a limited understanding of the payment ecosystem’s intricacies and what a truly market competitive rate should be. He urged SaaS companies to have candid conversations with their payment partners to ensure they are maximizing their opportunities without resorting to price gouging.
Conclusion: Your Fastest Path to Growth
This masterclass demonstrated that payment attachment is not just a feature, but a fundamental and often underestimated growth lever for SaaS companies. By strategically integrating payments, educating both internal teams and customers, leveraging targeted campaigns, rigorously measuring performance, and optimizing pricing in partnership with experts, SaaS businesses can unlock significant revenue potential.
As Ray Lau concluded, the goal is to “make payments-led growth the fastest path to growth for your SaaS company.” It’s about transforming your platform from just a software solution into an indispensable financial backbone for your customers, driving mutual success for years to come.
Watch the full webinar here:
