In 2015, the number of marketing technology companies increased from 947 to 1875 – that’s a massive growth of 98% in just 12 months! What’s more, global SaaS revenues are projected to reach $106 billion in 2016, an increase of 21% from 2015 spending levels.
But while we witness the growth of SaaS, one of the things they all have in common is that they operate under a subscription based model and will need to choose a solution which helps them process online payments.
But what’s the best tool to start accepting payments online for your SaaS startup? In this blog post we’ll explain what you need to look for in your online payments solution.
Probably the most important feature you’ll need to look into when choosing your online payments solution, is it’s ability to offer recurring billing.
After all, SaaS businesses rely on a subscription model to generate monthly recurring revenue (MRR) and you’ll want a solution which enables you to automatically charge users.
Ideally from a usability standpoint, you want to set up a system, which pulls your customer’s payment data every time a subscription payment is due. However what this requires is the ability to store that data for repeat purchases, which brings us to our next point…
In order to process credit card payments online and to have the ability to save your customer’s payment data for repeat purchases – your business needs to comply with the latest security standards set by the PCI-DSS council. PCI-DSS is in place to meet industry standard levels of security when storing, processing, and transmitting cardholder information
However setting up your own infrastructure to comply with these high-security standards is a long and costly process, which is why you want to choose an online payments solution who’s PCI certified.
What this means in practise is that your online payments provider is responsible for handling cardholder information, with the data stored on their servers and not yours.
Since the actual cardholder is with the online payments provider, they will serve you a token which has no value to substitute the data on their servers. This enables you to easily comply with PCI requirements, and also save payment details (in the form of a token) for future purchases.
You’ll also want to look into what safety measure and monitoring tools are in place by default to detect and help fraud.
Ease of integration
Ideally you’ll want a solution that’s easy to integrate into your website but also that’s easy to create subscriptions with, which is done through an API.
But before deciding which online payments solution to go with, have look at their API for the following:
- Does the API make sense to you? So that when you’re reading through it, you know what each parameter is meant to do.
- Is the documentation easy to read and navigate through? i.e. not as a PDF file!
- Does the API support your language of choice? Either through libraries or wrappers
- Does it use a modern interface type? i.e. REST, which is easier to integrate
In addition to the items above, you should have a look at how easy it is to create a subscription and how many API calls are required.
As with anything you buy, keep an eye out on the pricing of your online payments solution.
In most cases, you’ll be charged a percentage fee of the amount paid by the customer plus a fixed fee per transaction. Meaning that you only pay based on your usage. However, some online payment providers also include a monthly fee on top of it, regardless of whether or not you’re processing.
To make life easier for you, look for a solution with a simple pricing offer that is straightforward and easy to understand.
You’ll want to keep an eye out for chargeback fees as they can be quite costly for your SaaS startup.
Although you won’t be able to get completely avoid chargebacks. There are ways which can substantially reduce them, which you can read more about in this blog post: How To Reduce Chargebacks For Your Subscription Business
Customers will have different needs for your product, some will require all the features you offer, while others just need the essentials. In any case you’ll have different pricing plans to reflect the features you’re offering.
But people’s preferences change and some will either want to upgrade or downgrade plans, which is why you want to make that process as easy as possible for your customers.
For that purpose, you’ll want to keep an eye out for a solution that offers the possibility to upgrade and downgrade with pro-rata. This way, no matter at which point in time your customers change to a different plan, you can make sure, they get to use the new plan immediately while being credited for the amount of time they have not used up in their old subscription.
Additionally, you’ll also want to give people the opportunity to take your premium product for a test-ride by offering a free trial – which again should be an easy process for you to set up with your online payments solution.
Reach a global audience
For the whole world to use your product, you’ll want to have an online payments system in place that lets people buy from around the world – after all, the internet has no borders.
By choosing an online payments solution which enables you to accept payments in multiple currencies you’re able to seamlessly scale your SaaS business internationally.
Another benefit is that you’re able to deliver a better experience and decrease abandonment rates by 13% when you have local currencies available.
What about you? What are the most important things you look for in an online payments provider?