By 2024, industry experts expect SaaS to generate approximately $369.4 billion. Since 2019, this particular segment has been witnessing tremendous growth within a short timeframe. SaaS companies are able to avail opportunities from the latest technological advancements introduced. One such technology that has benefitted immensely this sector is payment processing. But there are some challenges faced that you need to be aware about and know how the right payment processing system can manage them.
Top challenges faced & solutions
- Payment reconciliation: Implementing appropriate payment processing system assists with reconciling funds and day-to-day payments with bank partners and processors. You should be aware of all mismatches and exceptions arising through alerts provided by your system. The payment processing system that you plan to install is to reconcile automatically funds and payments. Also every transaction needs to be monitored by the system to minimize errors. It should also analyze unauthorized transactions, save money, and simplify the entire payment process.
- User experience: The platform installed should provide you to control effectively user experience as desired. Most payment solutions developed these days can help brand user interface and white label. This way, your valuable customers get to see your company’s logo, but not of the processing company’s. It is sure to boost brand visibility and help retain customers. Since navigation becomes quick and easy, it boosts overall user experience.
- Electronic payments collection across borders: Several SaaS companies boast of having customers spread across the globe. Hence, the payment processing system to incorporate should accept multi-currencies. Also should also accommodate different types of payments methods. Doing so can help retain customers and increase revenue.
- Simple integration: Trying to integrate the payment processing solution within the existing platform can pose to be a major challenge. Payment processing solution integration should be seamless and easy, without IT resources and not resulting in issues. Moreover, the system selected is to be updated constantly on the latest technology and features.
- Secure payments: It is important for SaaS companies to ensure safety of their customers’ data and payments. Appropriate risk management tools should be in place to eliminate safe aspects concerning payments. Configurable alerts are to be offered by the secure system depending on multiple parameters. It should be triggered immediately by account and transactional activities. Besides this, ensure that the payment processing system selected is PCI Compliant. With well-established rules & regulations, it becomes possible to safeguard cardholder and credit card data when carrying out e-commerce transactions. The PCI Compliant payment processing system will help infuse a sense of security among your customers. Your business will appear to them to be more trustworthy. It will also prove to be beneficial as you negotiate with banks.
- Recognize exact revenue: SaaS involves a complex revenue business model. Experts believe that subscription-based businesses tend to experience difficulties concerning accurate accounting and revenue process. SaaS does follow standard accounting practices since their service is prolonged for a long time. Only on completion of the period that it is possible to recognize the incurred revenue. Other factors are also to be taken into consideration. It includes unexpected leaving of customers, their downgrading/upgrading plans, mistakes committed while managing data in high volumes. Such recurring issues can be taken care of with the implementation of appropriate measures. It is necessary to develop billing system associated with GAP and to align company practices with that of standard accounting. This helps obey law as well as offer accurate data to meet investment and accounting needs. Implementation of automation in the SaaS business is essential to manage data and complex tasks. Complex revenue recognition might exist. However, adopting appropriate systems and knowing the standard principles will help avoid financial woes.
- Pricing flexibility: Multiple challenges are often faced with flexible pricing. Being strategic can help optimize profitability and capture perceived value. Determining suitable price model does take some effort and time. Revenue recognition and pricing strategy is only made more complicated if multiple packages are offered with different prices. Customers are likely to get confused if there are different products with varying price structure. Custom prices only increase complications. Attracting high-value customers and enterprises is stated to be a viable strategy. However, most customers including small businesses will prefer customizing their demands based on their specific requirements. Introducing tiered pricing structure combined with fixed rates on lower tiers will be desired. Moreover, more flexibility is to be provided to custom options at higher levels. With custom levels being expensive, a good number of customers are likely to opt for lower-tier offerings. You can adopt ‘Hybrid pricing’ for your SaaS business. Include varying pricing structure to suit your business needs. It will allow including those features desired by your customer at a competitive price. This way, you may personalize your offerings, thereby increasing customer base and increased satisfaction.
Understanding common problems affecting your SaaS payment processing can help derive the best available solutions.
