What makes a company choose one SaaS payment processing provider over another?
In my conversations with software developers and technical founders over the years, I’ve heard how complicated these tech stack choices are to make.
For example, at FastSpring, we have a lot of data about online shopping carts. We know that conversion rates for SaaS and software companies will vary by 30% or more just based on the checkout experience.
But we wanted to hear directly from technical founders and software developers about what you look for in a SaaS payment processing service.
Is it the interface? Conversion optimization options? Integrations? The API documentation?
We asked a group of SaaS founders and software engineers what they look for, and we heard a wide variety of answers, including:
- Subscription management
- Payment methods
- Fraud detection and prevention
- PCI compliance
- Currency conversion
- VAT and sales tax
Here are ten questions that came up over and over again in our conversations:
Evaluation Checklist: 10 Questions for SaaS Payment Processing
1. Is it PCI compliant?
If you’re taking payments, your customer’s financial and personal data is one of your top concerns. And one of the cornerstones of any solution’s security measures should be PCI DSS compliance.
According to the 2020 Verizon Payment Security Report, less than 28% of the companies surveyed were fully compliant with the Payment Card Industry Data Security Standards (PCI DSS) — a number that continues to drop each year.
How do you know whether your credit card processor is fully PCI compliant? Lee Grant, CEO of Wrangu, recommends asking about their encryption methods.
“Tokenization is one of these standards that completely removes card data, offering an extra layer of protection. Furthermore, more secure gateways reduce risk and, as a result, can achieve cheaper processing costs.”
2. How does the provider protect against payment fraud?
Beyond protecting customer data, your company can be at risk when taking money online. SaaS companies may not be the most likely target when it comes to payment fraud, but it does happen.
“What measures does it impose to assure it’s safe from scams, phishing, and other digital hacks, which can scare customers away?” David Levi, founder of Cryptoner suggests asking. He also recommends asking a company what kinds of resources it has in place to fix transaction problems. Consider asking what their average response time is to a cybersecurity threat.
“These are just some of the questions you need to consider when evaluating a payment service solution as these are the same questions your customers will surely ask you,” Levi says.
3. Does it accept a wide variety of payment options?
If you’re not offering a wide variety of payment options, you might be missing out on easy growth. Whether it’s checking out via PayPal, ACH or SEPA debits, or paying with a credit card, customers have their preferred payment method, and at least some will leave your site and buy from a competitor if you don’t accept it.
Don’t forget about things like coupons and promotions, custom invoices, offering refunds — the things you’ll need for optimal customer relations and to optimize conversions.
When evaluating billing systems, you’ll want to see the full list of payment options they can accept, including a list of currencies.
“It’s imperative that you have access to a wide range of payment options that will allow you to facilitate financial transactions worldwide and accept payments in multiple currencies, as well,” advises Eden Cheng, co-founder of PeopleFinderFree.
To offer a great customer checkout experience, look for payment localization features, including currency conversion, cross-border tax management, and localized payment processing.
4. Are you clear on the costs?
Make sure you know exactly what you’re going to pay to use a SaaS payment processing solution. Processing payments is inherently complicated. There are unique fees associated with different types of transactions. For example, it’s more expensive to process a credit card than run an ACH transaction. But, it’s important to watch out for hidden fees, like merchant account or gateway setup fees.
“Many processors will have a fixed fee per transaction along with a percentage of the transaction itself,” Rahul Mohanachandran, co-founder of Kasera explains. “Also, make sure you check for these fees for higher volume as it should get cheaper per transaction.”
5. Is it highly customizable?
In addition to the payment options and billing localization, make sure that the provider is set up to handle all of your existing offerings. Does it offer recurring billing as well as one-time payments? Do you offer usage-based or other advanced membership plans?
“When you have different payment systems, you’ll need a payment solutions provider that can cover all of them,” says Alina Clark, co-founder & marketing director of CocoDoc. “Being able to customize payment systems to your business process is crucial for business efficiency.”
(For more, check out our in-depth comparison of 5 recurring billing platforms.)
6. Does it offer dunning management?
Cedric Dussud, a co-founder of Narrator, recommends searching for a company that offers dunning management to retry cards after a failed transaction and send reminder notifications to delinquent accounts. If you sell subscription plans, dunning management is a must to reduce subscription churn.
“It’s annoying to do this,” Dussud admits, so find a company that will do it for you.
(Check out our interview with Cedric about why your data doesn’t make sense.)
7. Is it user-friendly for both employees and customers?
Technical founders talked a lot about ease-of-use, speaking about both the front-end and back-end components.
“Your employees need to easily navigate the system to check for problematic transactions, chargebacks, refunds, etc. As for the customers, it’s important that the system be easy to navigate to avoid abandoned carts and sudden exits from the business funnel,” explains Lawmatics Founder and CEO Matt Spiegel.
It’s difficult to know just how user-friendly a system is going to be unless you’re able to try out all of the features and integrate the system with your data and existing tech stack. To this end, look for solutions that offer free extended trials.
8. How robust is the API?
“Given the level of developer time required to set up your payment solution, finding a provider that gives a very robust and well-documented API is essential,” explains the co-founder of Fox-Listed, an online marketplace for auto parts in Australia.
A robust API will have documented extensions and webhooks that will enable you to easily integrate with your existing commerce store, CRM, and more.
9. Will it easily integrate with your website?
Alongside having a robust API, the payment system needs to easily integrate with your existing website. Eric McGee Senior Network Engineer, TRGDatacenters. reiterates how important this is:
“You need to choose a payment gateway system that easily integrates into your commerce website. Otherwise, the payment process becomes slow, which lowers the quality of your website’s user experience. Go for a platform whose integration instructions are clear, simple, and straightforward, and whose customer service is easily accessible when you need assistance with the payment system.”
Note: FastSpring offers two types of checkouts, giving you a choice about which experience works better for your specific customers.
10. Will it scale with you?
“Measure your own company’s potential for growth against the growth of the payment processing network that you are evaluating,” advises Austin Dowse, CEO of Aimvein.
This is a good time to bring out the growth plan and consider what products and membership offerings you’re looking to add over the next five to ten years. Even if you’re not ready to offer an enterprise plan at the moment, is that in your future? Consider also what new markets you want to break into, whether it’s breaking into B2B sales or new countries or regions.
As Dowse explains, “It is important that your payment processor can adapt and grow at the same pace as your company does.”
FastSpring Offers SaaS Payment Processing — and Much More
FastSpring is the #1 full-stack commerce solution for growth-stage SaaS and software companies worldwide. We offer world-class SaaS payment processing, and we also help you manage sales taxes, VAT, currencies, payment methods, compliance, and more.
We’re here when you need a solution that includes:
- Global payment processing with check-out localization and cross-border tax management.
- Flexible subscription management, including free trials, monthly, annual paid plans, proration, and discount management, and more.
- SaaS B2B sales management like digital invoicing, interactive quotes, and CRM integration.
Learn more about how FastSpring can help you grow your business in new markets worldwide.