How to Streamline Your SaaS Clients’ Payments Underwriting Process—and Improve Adoption Rates

Offering payment processing services is a move that makes sense for a lot of SaaS companies, particularly if your software helps your customers run their business.

For example, if you have a project management app, then you can add payment features that allow people to use your software to take payments from their clients. Similarly, if you provide appointment scheduling solutions, then it’s worth offering payment tools so your users can leverage your solution to take upfront payments and deposits.

Adding payments to your suite of features and offerings enables you to provide more value to your users. They can take advantage of more features, which then encourages them to keep using your software.

Not to mention, payments serve as an additional (and highly lucrative) revenue stream for SaaS companies, so your business will also enjoy a healthier bottom line.

How exactly can you get your users started with payments? The first step is to find a partner that can provide the right payment technologies and services to your customers. From there, your users must go through an application and underwriting process that determines their eligibility to accept payments.

As a software provider, you can implement some best practices to make these processes as streamlined as possible, so your users can get up and running with payments ASAP.

Let’s explore them below.

Best Practice #1: Understand the Payments Funnel in SaaS

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To improve the payments experience of your users, you first need to understand the payments funnel within the context of SaaS companies. Richard Dunbar, Senior Director of Partner Success at Stax, says that there are two key components to this: payments attachment (top of the funnel) and payments processing (bottom of the funnel).

The former refers to the phase of the journey when users first enroll in payments, while the latter is when they actually start processing.

According to Richard, many SaaS companies and ISVs focus on the “attachment” part of the journey and expect users to just start processing.

But it doesn’t work that way.

To truly maximize your payments initiatives, you need to think of the payments funnel holistically and understand when and where to:

  • sign up users for payments; and
  • prompt them to use the feature and initiate transactions.

“This is what we call payment adjacency,” explains Richard. “It’s about knowing where in your app it makes sense to have payments-related activity. That could be during sign-up or it could be at the point when they need to send an invoice.”

He continues, “It’s not as simple as putting a signup button and expecting people to click it. You have to put your payment offerings in front of users when and where they have the inclination to do it.”

The right payments adjacent strategy depends on your software, as there are many ways to put payments in front of your users. For example, if you’re a point of sale or eCommerce platform, then it may be beneficial to have the payments conversation early. For other companies, the right time to introduce payments may be when a user is about to engage in payment-related activities like invoicing.

There are other methods to implement payment adjacency and the best course of action will vary based on your customer journeys and offerings

“We have some ISV partners where their software will ask the user about payments when they’re on the platform’s invoicing feature. Their system will say, ‘Hey, did you know that you can process payments through our software?’”

“Then it’ll give users the opportunity before they send the invoice to quickly sign up for payments so that they can embed the digital payment link straightaway.”

All this to say that offering payments isn’t just about building a feature and waiting for people to discover it. You need to be smart about timing and placements to ensure you’re presenting payments at the most optimal time.

Doing so will make it easier for users to see the value of the feature and they’re more likely to adopt it.

Best Practice #2: Familiarize Yourself with the Underwriting Process and Requirements

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Underwriting is an important part of getting your customers onboard payments. It involves submitting information from your users, analyzing their payments data, and assessing risk. It can be a time-consuming process without the right approach and a solid payments partner. Richard says you can make this step easier by familiarizing yourself with the underwriting process and requirements of your specific processor.

“Depending on the processor, the underwriting process and requirements are going to vary. But there are certain things that are consistent, and those are the things that SaaS providers and ISVs need to make sure they’re educated on.”

The Financial Crimes Enforcement Network (FinCEN), a government agency that analyzes financial transactions, requires payment processors to analyze merchant information and do enough due diligence to assess risk.

“You may already know some of those FinCEN requirements, depending on your type of application,” says Richard. “So instead of asking your users to give that info to you again, you can just say, ‘We already know this information, so we’re just going to send it through.’”

That way, you can unburden your users from having to dig around for data. This, in turn, helps them complete the application faster.

Best Practice #3: Leverage Data From Your Platform

You can further streamline the underwriting phase by putting what you already know about your customers to work. One common question that’s asked during the payments application process is how much credit card volume does the merchant process.

Ironically, many business owners don’t know the answer to that question.

“The reason they don’t is that a lot of them are doing this for the first time, so they have no idea. Or, they may work with a processor they’re unhappy with so they never push people to use credit cards, which means their figures are skewed,” remarks Richard.

If you’re offering payments through your software, you will be much better off using the data you already have, rather than asking your customers to provide it.

For instance, if your platform has invoicing capabilities, you can look at your user history to figure out their transaction volumes. From there, you can provide your payments partner with an informed estimate that they can use during the underwriting process and quickly enroll users into using the payments feature.

Best Practice #4: Customize Your Payments Application

Use the insights and info you glean from the above steps to design an efficient application and payment enrollment procedure for your users.

Once you know what information is necessary and what steps the processor will take to evaluate the merchant, you can customize your application to make it as simple as possible for the user to complete.

Accomplishing this is easy when you have the right payments partner. At Stax Connect, for example, we allow you to enroll merchants in 3 ways:

  • Full API enrollment. The process takes place within your app, giving your users a fully branded experience.
  • Hybrid API enrollment. The payment enrollment procedure begins on your platform, then customers are redirected to a white-labeled landing page where they can complete the application.
  • White-glove enrollment. This option lets you fill out the payments application form for your users.

Regardless of which option you choose, you have the ability to tailor the application process based on the info you need. You’re in control of what questions to include and how the application is formatted.

Best Practice #5: Be Upfront About Approval Estimates

So, your customers filled out the application and submitted it to the payments processor. What’s next?

Well, depending on your payments partner, users could breeze through the process… or it could take a while.

The key is to talk to your payments services provider and ask them about their approval times. For some processors, it could take about a week for a merchant to get approved.

But for best-in-class providers (like Stax Connect), the process takes just a couple of hours.

Whatever the case, be sure to communicate with your users. As Richard puts it, “It’s important to be upfront with the merchant and set clear expectations.”

If someone needs to accept credit cards ASAP and you’re working with a processor that has long lead times, then you need to let the customer know, so they can make an informed decision on whether or not to move forward.

That said, if you know that you’ll be working with people that want to get up and running right away (and these days, who isn’t?), see to it that your payments partner is able to deliver.

Final Words

Adding payments to your current SaaS offerings can create a win-win situation for you and your customers. Users get more out of your platform and can access more features, while your business sees higher revenues and lower churn.

Stax Connect offers a fully managed payments facilitation ecosystem for SaaS and ISVs. We make it easy to monetize payments thanks to our robust platform and tailored revenue-share models. Stax Connect can integrate with your software quickly so you can start offering payments on your schedule.

Learn More

Get in touch with us today and learn how we can facilitate payments for you and your users.