The challenges of SaaS payment processing – and their solutions


Stripe Billing lets you bill and manage customers however you want – from simple recurring billing to usage-based billing and sales-negotiated contracts.

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  1. Introduction
  2. What is SaaS payment processing?
  3. What does SaaS payment processing involve?
  4. SaaS payment processing challenges and solutions
    1. Invoicing and billing
    2. Global scale
    3. Security
    4. Involuntary churn
    5. Revenue analytics
  5. What to look for in SaaS billing software

As the software-as-a-service (SaaS) industry booms, SaaS companies of all sizes are faced with common challenges related to processing payments. From invoicing to managing subscription plans to complying with local tax laws and payment regulations, SaaS payment processing is more complicated than collecting one-off payments.

The global SaaS market is projected to grow from US$240.61 billion in 2022 to US$374.48 billion in 2026, according to a report by The Business Research Company, creating increased demand for consolidated payment solutions that effectively manage these challenges. As SaaS businesses scale and expand into new markets, an effective SaaS billing software that handles the entire billing, payment and subscription journey is important. Your payments platform should make it easy to maintain steady revenue streams and reduce churn without any additional coding.

Whether you've already experienced SaaS billing issues or want to preemptively prepare for them, here's what you need to know about the challenges of SaaS payment processing and which solutions are available.

What's in this article?

  • What is SaaS payment processing?
  • What does SaaS payment processing involve?
  • SaaS payment processing challenges and solutions
  • What to look for in SaaS billing software

What is SaaS payment processing?

SaaS payment processing refers to the way companies accept and process payments. While ecommerce sales consist of one-off online payments, SaaS businesses often employ a subscription model, making recurring billing and subscription management high priorities.

What does SaaS payment processing involve?

Collecting payments for a SaaS product goes beyond simple monetary transactions. With a subscription-based business, each customer must be sent an invoice based on their specific plan and offered an easy way to make their payment. The entire subscription life cycle must be accounted for, giving customers the option to upgrade, downgrade, pause, renew or cancel their plans at any time. It's not scalable for SaaS companies to manually tackle invoicing, billing and managing subscriptions, which is where SaaS payment processing comes in.

Building a new billing system in-house is expensive, and it can be costly and confusing to use different software services to handle each billing and payment task. But a unified payment processor will tackle all of the above, as well as help you gain customer insights based on the data available from each transaction.

SaaS payment processing challenges and solutions

Processing payments for SaaS companies can be complicated, in large part because many SaaS products are based on a recurring subscription model and require more consistent management than one-off purchases. Here are some common challenges SaaS businesses face and solutions to help navigate them.

Invoicing and billing

Invoicing and billing can be headaches for subscription-based businesses because there are more factors at play compared to one-off sales models. Customers will be on different subscription plans, owe different amounts and submit their payments at different times. Additional factors, such as trial periods and subscription discounts, complicate invoicing even further. At the same time, every business's recurring billing works differently, so template-style payment pages and subscription billing components result in more coding work for your team.

A good SaaS billing software will be able to invoice and collect payments from recurring customers seamlessly, regardless of their subscription details. It will also give SaaS businesses the ability to set their own unique subscription plans and recurring payment schedules without putting engineering time and energy into adapting their payment processing system.

Global scale

In order to grow a SaaS business, you need the infrastructure to scale globally. When it comes to processing payments, that means allowing customers to go through the payment process in different languages, accepting payment in different currencies and accepting multiple payment methods. For instance, credit cards and digital wallets are the most popular payment methods for online purchases in the United States, while German customers prefer online payments such as PayPal or Amazon Pay. Your payment processor should ensure that you're complying with local regulations for electronic payment services when accepting different currencies, including the updated Payment Services Directive (PSD2) and the Strong Customer Authentication (SCA) in Europe.

Platforms built specifically for global customers, such as Stripe Payments, will account for varying payment preferences across the globe and reduce compliance burdens, helping capture more global revenue and making the process of expanding to foreign markets smoother.


Ensuring you have a secure system for processing payments is especially important for recurring transactions. SaaS businesses are responsible for storing customer data safely, as well as using encryption and tokenisation tools to protect customers' credit card data. SaaS billing software should secure sensitive information automatically and take measures to prevent fraud when accepting payments, so you and your customers don't have to think twice about data safety.

Involuntary churn

The rate at which your customers cancel their subscriptions, commonly referred to as churn, will probably never reach zero – but it's still important to keep that number as low as possible. After all, studies show that acquiring new clients is five times more expensive than keeping an existing customer.

Involuntary churn, which occurs when the payment process fails and a customer's subscription is cancelled, can be avoided with a SaaS billing system that streamlines the user experience and alerts customers when there is an issue with their payment. Compared to cobbling together multiple third-party billing and revenue management tools, a solution that handles every aspect of the payment and subscription journey in one platform – such as Stripe's SaaS solutions – can help reduce involuntary churn.

Revenue analytics

As a SaaS business grows, accrual accounting and revenue reports become much larger tasks. When it comes to financial reports, it's extremely time-consuming to crunch the numbers without software designed specifically for that purpose. A growing customer base also means an increase in available data that can offer insights into new business opportunities and uncover any problems customers face during the payment process.

An all-encompassing SaaS payment processing platform will include revenue management so every transaction is automatically accounted for. Stripe Revenue Recognition, for example, can keep track of upgrades, downgrades, refunds and disputes, giving you a quick, comprehensive look at your business.

What to look for in SaaS billing software

An efficient SaaS payment processing system should take the stress out of billing. By consolidating tools for billing, payments, subscription management and revenue management, a unified solution will save you time and money every month. Here's what to look for in SaaS billing software.

  • Billing
    SaaS businesses would never get paid without invoicing and billing, so billing software must handle these fundamental tasks quickly and easily. Flexible billing logic allows you to decide what type of billing method works best for your business – whether that's a flat-rate subscription or usage-based billing, which charges customers based on how much of your service they use.

  • Payments
    Accepting various payment methods, detecting fraudulent charges before they go through, and complying with Payment Card Industry (PCI) security standards are all basic requirements for a SaaS billing software.

  • Revenue management
    As your business scales, using a system that automates revenue management will help you maintain a comprehensive view of your business's financial performance – and improve profits.

  • Subscription management
    Subscription management includes all the variables involved in operating and maintaining subscriptions, many of which are tricky to automate – from managing free trials to fielding and processing refunds.

  • Localisation
    Global businesses need a payment processor that can adapt to the language and currency of customers in different countries while ensuring every transaction complies with local payment regulations.

  • VAT and sales tax
    Keeping track of VAT and sales tax compliance across the globe can be a full-time job and overlooking them can lead to financial penalties. A billing system that monitors your transactions and uses a customer's location to calculate and collect the right amount of tax is important.

A unified SaaS payment solution will incorporate all of these features, enabling your business to increase efficiency, reduce errors and grow recurring revenue without extra engineering time.

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