Just a few decades ago, virtually all businesses lived by the “cash is king” motto. Today? Not so much.
According to the Federal Reserve, cash usage has dropped 2% year-over-year, and U.S. consumers are more likely to use credit or debit cards over cash. Many businesses, such as software or digital organizations, have adapted to these trends, taking payments via credit or debit, PayPal, bank transfers, and even newer payment methods like Bitcoin. By offering varied payment services, these companies are able to ensure continued business growth and customer satisfaction in the long run.
As a SaaS company providing payment services to your clients, having a fully in-house payment processing solution that’s on-brand and fully functional can be both time-consuming and costly. Not sure how to make integrated payments work without sacrificing quality or user experience? Today, we’re here to show you why outsourcing your transaction processing services might be the best solution for your business.
- Outsourcing transaction processing is a way for companies to let a dedicated payments service provider take care of the company’s payments infrastructure, while fully integrating it into the organization’s overall brand experience.
- Some of the benefits of outsourcing payments and transaction processing includes cost reduction, improved security, and streamlined workflows.
- Choose the right payment provider by ensuring they meet general guidelines such as offering seamless integrations, full scalability and flexibility, and transparency.
What is Payment Processing?
We’ve already spoken at length about payment processing and the difference between a payment gateway and a payment processor. But in a nutshell, payment processors are financial institutions like banks that handle a business’s transactions (both online and in-person). Most of these service providers offer the equipment for these payments, like a POS terminal.
Meanwhile, payment gateways are used for card-not-present (CNP) transactions like online transactions and are basically online POS terminals for companies. In short, these processing systems securely encrypt all transmitted data and ensure that your software company is able to safely, securely, and quickly complete your transactions.
What Does it Mean to Outsource Transaction Processing?
It’s not uncommon for SaaS companies to try to oversee their payment and transaction services fully in-house, especially if they offer integrated payments. Initially, it may seem like a cost-effective solution, and theoretically, it allows companies to provide a fully integrated experience for their consumers.
However, that’s not often the case: many companies struggle with ensuring their daily operations run smoothly while keeping up with their payment and data processing, leading to bottlenecks, customer dissatisfaction, and fewer profit margins.
Outsourcing transaction processing is a way for companies to let a dedicated payments service provider take care of the company’s payments infrastructure, while fully integrating it into the organization’s overall brand experience. By outsourcing transaction and payment processing services, companies can better manage their financial health and future while letting the experts do the work—freeing up valuable time to improve the user experience.
What transaction processing outsourcing entails
Depending on the payment processing provider you choose, there might be different forms of transaction processing outsourcing they provide. This could include order processing (like debit or credit card payments) and claims processing (such as data entry services for insurance or customer service claims). Most providers will also offer services like automated or recurring payments, multiple payment options, data management, and many other services.
As a general rule of thumb, you should be able to outsource all aspects of payment processing and find a payments partner that can offer a holistic, all-in-one system to integrate all aspects of receiving and sending payments. (But more on choosing the right partner later!)
Benefits of Outsourcing Payments Processing
For many companies, there isn’t a “watershed moment” that determines when they decide to start outsourcing; it’s often the slow realization of many factors which leads to the pivotal moment. If you’re on the fence about outsourcing your transaction processing, here are some of the main benefits SaaS companies have highlighted.
- Cost reduction: Probably the biggest advantage is that it’s significantly more cost-effective. Offering payment processing fully in-house requires having specialized software and hardware, alongside other operational expenses. By outsourcing, you’ll pay a fixed, all-in fee that includes all the support you’ll need, directly improving your cash flow.
- Improved security: Working with an industry-vetted third-party provider reduces the likelihood of fraud, as they’ll offer state-of-the-art security protocols to keep your data safe. This point ties into cost reductions, too.
- Streamlined workflows: By letting the experts handle your transaction processing, SaaS companies can focus on improving the user experience and daily operations. Additionally, streamlined payments can help provide a better customer experience and improved vendor relations.
By outsourcing your payments to a trusted payments facilitation ecosystem, you’ll be able to directly improve your business growth by not compromising on any part of your customer’s experience with your SaaS platform.
How To Choose the Right Payment Facilitator
Now that we’ve covered some of the advantages of outsourcing your processing, how do you find the perfect payment partner to team up with so you can start offering payments as part of your native package? While there’s no “one-size-fits-all” answer, here are some general guidelines you should keep in mind as you start browsing for your future payment service provider.
- Quick, seamless integration. A good payment provider will provide fast integrations, allowing you to have a fully-running payments ecosystem within weeks. That way, you won’t be out of commission for long (if at all!) while transitioning to an outsourced transaction processing provider.
They should also provide multiple options for payment enrollment, which is how users have been onboarded into your payments environment so they can start getting paid. Depending on your company resources, you may opt for full API, hybrid API, or white-glove enrollment, all of which have different benefits based on your needs.
- They’re fully scalable and flexible. No two SaaS companies are alike. Maybe you want to offer both card present and CNP payments. Or perhaps you want to automate fund settlements, but have no idea how quickly your volume or usage may increase. Whatever platform you use, make sure your provider offers developer tools so you can quickly enable payments using their API and your branding.
- They offer security and transparency. Make sure your future provider offers robust RISK management, for example by using an API that proactively limits risks and speeds up any chargeback processes. If their payments ecosystem is PCI compliant, you and your customers can have full peace of mind.
In addition to security, it’s important that you feel comfortable working with your future partner. From upfront pricing to a comprehensive overview of their services, your payments service provider should be fully transparent about your potential partnership, so you know exactly what you’re signing up for.
Finding your dream partner to outsource your transactions and payments may feel challenging, but it doesn’t have to be! Stax Connect takes care of every aspect of SaaS businesses’ payments infrastructure, allowing them to focus on offering the best user experience for their customer.
Our fully-managed payments ecosystem is completely scalable alongside a flexible payment processing API, so you can be up and running in as little as 30 days—no matter the platform. And with world-class customer support, industry-leading risk management protocols, and transparent pricing, we make it easy as 1-2-3 to offer your users a more streamlined and cohesive payment experience.
Ready to offer your SaaS users a frictionless payment onboarding experience? Contact us to discover our seamless payment facilitation ecosystems with Stax Connect.