Some larger fintech payments businesses are buying smaller vertical SaaS businesses–as a form of distribution. They are acquiring customer bases to sell more of their payments services.
Investors and acquirers love to see a profitable payments offering in a SaaS business, when it makes sense.
This isn’t about taking monthly credit card payments from your SaaS customers. It’s about adding the ability for your SaaS customers to take credit card payments from their customers.
This is typically a B2B2C situation, such as a dental office that transacts business with its customers using credit cards.
Integrating complicated payments technology into traditional SaaS apps used to take months of complicated work.
Now these APIs are much simpler and faster for SaaS players to add payments features into their products. This integration takes weeks, in most cases.
Brian Abernethy is an expert in payments technologies, monetization strategies, and execution practices for B2B SaaS companies to integrate payments in their apps.
With a long history in the payments industry, Brian is the founder of Utopaya, where he works with early-stage SaaS leaders to optimize their strategy and minimize costs when adding payments features for their customers.
As Brian explained on the Practical Founders Podcast this week:
“Most software companies are looking to include some type of fintech offering. Payments is typically the first one of those. These software companies want to own a bigger portion of revenue, of course, and improve the customer experience.
“Recent consolidation in the fintech and payments industry has created new options for SaaS companies to monetize payments. The big payments providers are now much bigger and have moved upmarket, creating a gap in the market.
“Now there are new payments players that are designed for smaller SaaS companies, with purpose-built platforms, APIs, and more support for integrated software solutions.
“There are more compelling solutions for SaaS companies to launch truly white-labeled, profitable, and easier-to-implement payments solutions. The market data show that it positively changes the customer experience, so these smaller payment companies are winning share at a fast clip.”
So yet another complicated component of SaaS technology has been abstracted and managed more efficiently through modern APIs, allowing SaaS startups to integrate payments into their apps faster, with a more consistent user experience.
Brian explains the basics of payments monetization for SaaS founders, answering questions like these:
- When should SaaS companies consider monetizing payments, and when is it not a good fit?
- What are the first steps to adding a profitable payments offering to your SaaS product?
- How do investors and acquirers value payments offerings in a SaaS business?
Check out this podcast interview on the Practical Founders Podcast.
