Choosing a PSP for SaaS Businesses | Key Factors to Consider

Did you know that choosing the right payment service provider (PSP) can make or break your SaaS business? Yet, with many options available, choice is sometimes difficult.

Let’s not forget that PSPs enable merchants to accept payments, including card payments, bank transfers, and direct debits. How? By providing a merchant account and a payment gateway and also connecting merchants with financial institutions. Interestingly, PSPs also play a vital role in the digitalization of the entire sector, which is needed as 89% of SMBs say their primary banks keep failing them due to a lack of B2B digitalization (according to a Capgemini report). 

This is particularly relevant for the SaaS business sector where collecting payments involves subscription-based models and recurring payments - with customers having the option to upgrade, downgrade, or cancel their billing plans. 

Thus, when choosing an online payment platform for SaaS to help process online transactions, one should consider essential factors, such as pricing, integration, compliance, security, scalability, and customer support - which, frankly, can be particularly hard in today’s competitive payment processing solutions environment expected to reach $146.45 billion by 2030.

So to help you find the right platform, let’s look at some key factors online businesses need to consider when choosing a PSP.

Recurring payments based on tokenization to ensure customer convenience and safety

With subscription payment models being a must for SaaS businesses (in their role of a steady stream of income and an invaluable way to attract loyal customers), one needs a reliable PSP to help them optimize the whole recurring payment process. One of the most powerful means to facilitate subscription-based payments is tokenization. Tokenization can be described as the process of replacing sensitive data with non-sensitive information.

Tokenization comes with numerous benefits, one of which is enhanced security, so ensure that the PSP you choose offers tokenization services. By replacing sensitive data and storing payment details not on the SaaS platform itself, merchants can reduce the risk of data breaches and fraud. Tokenization can also simplify PCI DSS compliance and billing management and reduce involuntary churn due to outdated payment information and other payment issues. Customers also benefit from such convenient payment methods as they don’t have to re-enter payment information while at the same time, they have the option to manage and upgrade their plans with ease.

Flexible usage-based billing to support different payments and customer cases

While subscription-based payments are essential for SaaS businesses, we shouldn't forget that usage-based billing methods remain pivotal to help businesses charge clients based on various metrics, such as the number of users and storage space. In fact, a Vista Point Advisors study showed that even a couple of years back, almost 40% of Fortune 5000 SaaS organizations employ usage-based billing. 

That’s why businesses should consider PSPs that can offer a wide range of payment methods and dynamic calculations based on usage. This should be accompanied by card-on-file policies, which is the practice of storing the cardholder’s details to bill them accordingly. Here integration is the key factor. To be more precise, if you are using an in-house CRM to manage usage-based billing, then your PSP should provide easy API and ongoing support with integration. If, on the other hand, you are using an external CRM, proper integration with the PSP is mandatory to enhance tokenization and card-on-file functionalities. A hint: PSPs that work with a partner like ACI Worldwide can offer such comprehensive and effective integration. 

Payment flexibility to boost global reach and ensure competitiveness 

When it comes to payments, having the flexibility of payment options to suit your customer base is also crucial. Why? Because that can increase customer satisfaction and help your SaaS business expand globally. 

Therefore, businesses should go beyond offering traditional payment methods and choose a provider that supports multiple currencies and versatile payment processing options that suit the changing preferences of today’s informed buyers from across the globe. This includes different debit and credit cards, stored-value (e.g., PayPal), digital wallets, and crypto. Of course, such processes should come alongside strict compliance with local regulations and tax considerations.

Optimized checkout to help reduce churn rates and increase sales

A bitter pill to swallow, but providing top products and services is not enough. Customers need seamless and positive experiences to stay with your SaaS business in the long term - with payment experiences playing a crucial role in ensuring such customer satisfaction and loyalty. Figures show that a smooth payment experience is vital to reduce churn rates and increase revenue. 

Therefore, make sure the PSP of your choice can optimize the entire checkout process. A reliable PSP should also provide a seamless interface across devices. With almost 6.8 billion mobile users and the digital payment sector poised to reach $180 billion by 2026, make sure that your website and checkout are mobile-friendly, intuitive, and safe. 

Advanced security to meet strict standards and build trust

Talking about security and compliance, especially in the financial sector, you need a reliable PSP to help reduce fraud, data breaches, and unauthorized access to systems and financial details. Alarmingly, a survey from last year showed that 70% of companies fell victim to fraud accounting for over $500,000.

These numbers speak for themselves: it’s clear that security is a top factor to consider when choosing a PSP. Make sure that the platform you choose employs top-notch and additional AI-driven security tools and adheres to the strictest standards and regulations to safeguard sensitive customer data. This covers PCI DSS Level 1 compliant technology, 3D Secure 2.0 protocols, encryption, and data protection policies.

Seamless integration to streamline operations, reduce time to market and boost scalability

Another crucial factor is integration. As mentioned above, integrations are pivotal for businesses seeking to maximize their operational efficiency. Yet, many established businesses are hesitant to change due to fear of burdensome integration. Thus, a reliable PSP for your SaaS business should offer ease of integration and use, intuitive UX, and an extensive array of integrations with popular CRM systems. Seamless integrations, in fact, decrease the need for time-consuming and costly personnel training sessions and manual operations and lead to fast time to market. 

On top of that, integrations can unleash scalability opportunities. Find a PSP that provides well-documented APIs, plugins, or SDKs that can be easily integrated into your existing system and programming languages to ensure scalability in the long term. After all, the scalability of the PSP's infrastructure is crucial to help you handle transaction volumes and spikes in traffic as your SaaS business grows. 

Transparent analytics and reporting to track payments and growth

And to scale effectively, it’s not a secret that one needs to be in control of their business data and consumer insights. That’s why a reliable PSP should also provide robust reporting and analytics capabilities to track performance, losses, and revenue. 

This should be offered via an intuitive and customizable dashboard that also provides live data. Access to such platforms helps reduce time when creating reports and improves data-driven decision-making on the way to success.

Excellent customer service to nurture partnerships and boost business growth

Last but not least, let’s talk about customer support as a key factor to consider when choosing a PSP. Having responsive support and different channels for assistance is essential. Interestingly, Gartner reports that 89% of ventures are expected to rival on one particular aspect: customer support experience. 

Thus, always weigh the significance of customer support in your decision-making process. Consider what PSPs offer: channels of communication (email, phone, chat options), opening times (24/7), availability of documentation, and customer-orientedness. Because wouldn't it be much nicer to speak to a real human than a chatbot with a cheesy name?

When to choose CatalystPay

As we can see, there are different factors to consider when choosing a PSP. We at CatalystPay offer fast integration, competitive tiered pricing, enhanced safety, boutique solutions, and ongoing support to help both new and established companies overcome payment processing challenges and achieve a higher profit margin.

So why don’t you take your SaaS business to new heights with CatalystPay’s cost-effective and personalized solutions? Contact us today and stay at the forefront of payment innovation!

Choosing the right PSP for your SaaS business is crucial. Explore key factors such as subscription, security, scalability, integration, and more.