The Stripe professional services team interviewed 14 successful platforms that launched a payments business with Stripe to uncover their best practices for designing, building, and growing payments. We’ve also combined these lessons learned with our hands-on experience working with thousands of businesses integrating payments for the first time, organizing these tips into key themes to help you embed payments:
- Establishing your primary business objective for payments
- Defining your pricing and go-to-market strategy
- Staffing your payments business
- Empowering your sales teams to sell payments
- Managing payments risk
- Defining success for your payments business
Establishing your primary business objective for payments
Before you apply any best practices, you must first understand how and why you want to launch a payments business. Start by answering these two foundational questions:
1. Why are you embedding payments?
Your motivations for building a payments business will depend on the unique demands facing your business and the needs of your existing and prospective customers. In general, we’ve found that platforms’ payments goals largely fall into one of three categories:
- Differentiate your platform: Many platforms have used payments to differentiate their software from competitors and increase adoption among potential customers. For example, Classy Pay, powered by Stripe, has helped Classy increase adoption rates with nonprofits of all sizes by offering embedded payment processing for more streamlined fundraising efforts.
- Increase customer retention: Platforms have also added payments to deepen their relationships with existing customers and improve retention. For example, Lightspeed launched Lightspeed Payments to help 115,000 retail and restaurant locations around the world accept payments online and in person and manage their financial operations.
- Drive new lines of revenue: Other businesses have created new revenue streams and increased the lifetime value of their customers by monetizing payments and financial services. For example, after partnering with Stripe to launch a payments platform for small- and medium-sized businesses, Weave’s payments customers have grown 13% month over month and its processing volume has grown at an average of 37% month over month.
Whatever your goals may be, clarifying and aligning behind the relevant key performance indicators (KPIs) can help your payments team track its progress and stay accountable.
2. How will you integrate payments?
To control the end-to-end payments experience, some platforms initially consider becoming a full-fledged payment facilitator. They soon discover that this path requires handling customer onboarding, underwriting, dispute management, compliance, support, customer dashboards, reporting, and much more.
Because of the engineering resources, cost, and payments expertise as well as the security, legal, compliance, and risk considerations required to become a payment facilitator, many platforms work with payments providers instead, building off their existing APIs and infrastructure to offer payments services and solutions. This approach can often accelerate time to market and reduce costs and exposure. Successful platforms work with payment providers that offer flexible solutions to give them greater control over their payments experience, allowing them to start, scale, and grow their payments business over time. This lets platforms maximize their monetization opportunity while minimizing the complexity of launching and managing a payments business.
Defining your pricing and go-to-market strategy
Once you understand the “why” behind your payments business and have a plan to integrate payments features, you can start to focus on your go-to-market strategy. Think of marketing your payments offering just as you would any other new feature on your platform. You first want to define your audience and messaging, create a cohesive brand and product experience, and use distribution channels to get your message in front of the right audience.
While there are many aspects of a go-to-market strategy, we asked platforms about two specific pieces: how to create the right messaging to resonate with their target audience and how to price their payments offering.
Platforms point to four key elements when creating the right messaging
Platforms must deeply understand how embedded payments supports their value proposition. Understanding your customers’ pain points not only helps you build the right payments offering but also helps you craft a product story that will resonate.
[You] need to have a compelling story on why businesses should use [your] payments service. That story changes depending on the end-customer needs, industry vertical, and the stickiness of your SaaS solution.”
After interviewing platforms about their product positioning and value proposition, we learned that the right product story includes the following four elements:
- Focuses on a specific customer need
- Targets a well-defined subset of customers, rather than trying to accommodate everyone
- Adapts to different industries and business sizes
- Explains why your integrated payment solution is truly differentiated to meet that need
60% of software platforms adopted a balanced pricing model to maximize revenue
You generally have a few options when deciding how to monetize payments: You can cite the value-add of payments to increase the price of your software, or you can charge customers separately to accept online payments.
Among the platforms we interviewed, the majority continued to charge a recurring fee for access to their software in addition to a separate payment processing fee. The others either focused entirely on charging for access to their software or for access to payments.
- 20% of platforms we interviewed monetized their software, while payments was a small bonus: This approach offers users an understandable up-front cost for access to the platform and all its core features, including payments. Payments features are often automatically enabled for all customers with no dedicated sales discussion.
- 60% followed a balanced approach by monetizing both software and payments: The most popular approach was for platforms to monetize both their software and their payments capabilities. For example, one platform charged a monthly fee for their software in addition to a flat 2.9% + $0.30 per card transaction.
- 20% monetized payments, while software was offered at a discounted rate or at no extra cost: Some platforms decided to offer their software for free but heavily monetize their payments capabilities. For example, a platform could charge a flat 2.9% + $0.30 per card transaction in addition to a 4% processing fee. The success of this approach relies on customers’ payment volume—while there may be a significant upside in tying your revenue to the success of your customers, your revenue can also be negatively impacted if customers have a slower month.
Staffing your payments business
Platforms recognize that building a payments business requires a different set of skills from building a software business. Many intentionally establish payments teams beforehand, embedding them within their larger organizations and integrating them into existing business practices.
The platforms we interviewed enlisted sponsors at every level of the organization, rather than relying solely on a head of payments. These sponsors advocated for the payments business across engineering, risk, sales, product, marketing, and support and increased everyone’s understanding of payments.
Whether your payments team divides its time across other parts of the business or is focused solely on payments, the team should be organized around four discrete functions:
Building a payments product
Your product team will not only be responsible for building and integrating payments into your platform, but it will also scale and maintain the payments product over time. To meet customers’ needs and differentiate the platform’s core software, this team of product managers, designers, software developers, and data analysts will shape the payments product’s roadmap, implementation, and user experience. We recommend hiring the following roles:
- Payments product manager
- Product and UX designers
- A data analyst
Operationalizing the payments business
Payments can be one of the most sensitive aspects of your customers’ business. It’s important to build a deep operations bench to support your customers as they onboard, for example, and ensure compliance with risk, legal, and regulatory obligations. This operations team will keep the organization ahead of the various rules surrounding payments, including underwriting, risk scoring, and fraud mitigation standards; Know Your Customer (KYC) requirements; PCI compliance; payment facilitator compliance; and tax obligations.
We recommend hiring the following roles:
- Program manager
- Sales team
- Customer support team
- Legal counsel
- Fraud manager
- Compliance manager
- Accounting and finance manager
Launching and commercializing payments
Once your product has been built and your operational systems are in place, a go-to-market team can monetize, launch, and scale your payments business. The makeup of your go-to-market function will depend on your particular acquisition model. If you plan to encourage customers to sign up online, you’ll likely lean more heavily on a marketing team. However, if you use a white-glove approach to identify and onboard new customers, building a knowledgeable payments sales team is important. By maintaining a constant feedback loop between your customers and internal teams, this go-to-market team will also help kickstart experience improvements and inspire new product innovations. Specific roles to hire include:
- Monetization manager
- Product marketing manager
- Sales team
Scaling the payments business internationally
This team will be key as you look to expand your product—and payments offering—internationally. This area needs special attention and dedicated resources, as the platforms we interviewed agreed that they struggle with expansion:
[We] need support on cross-border and international payments advice as well as how we serve merchants in new, specific geo markets.”
In addition to a host of extra regulation and compliance requirements as you enter new regions, the way customers prefer to pay for goods or services online varies based on where they are located. If you don’t create a relevant, familiar payment experience, you could cut off entire countries from your addressable market.
Companies of all sizes and from around the world use Stripe to accept multiple payment methods and simplify global operations. Stripe handles international regulatory and compliance complexity for platforms as they scale and is actively adding new payment methods with the goal of enabling businesses to accept any payment method in the world with a single integration.
We recommend dedicating the following roles specifically to global expansion:
- Sales team
- Customer support team
- Legal counsel
- Fraud manager
- Compliance manager
Empowering your sales teams to sell payments
Lean on your sales team to source new business and close deals that include your payments solution. This is more than just incorporating your payment features into the sales narrative—you also want to ensure that the sales team is well trained on the functionality, has the right sales materials, and understands how payments-related goals connect to team priorities and incentives.
Successful platforms cross-train 100% of their sales team
Sales should be familiar with the basic features and understand the benefits and how to position them to potential customers. They should also be prepared to answer common questions and handle any objections.
You might consider introducing the role of a “payment resident expert.” This could either be a full-time employee whose sole function is to educate sales on payments, or it could be an external payments consultant. Either way, the goal is to offer sales a dedicated resource for payments knowledge.
This investment can have real benefits. For example, one platform we interviewed focused on training their sales team to sell payments and software. They started with a 10- to 15-person group that shadowed the sales teams on all new deals for six months and hired two payments consultants for the sales team to share best practices. The result was a significant increase in payment volume over a six-month period.
Platforms dedicated 8% of their sales staff to selling payments
The platforms we interviewed dedicated, on average, 8% of their sales staff to selling payments.
The most popular model was having sales members who were fully dedicated to payments, such as a team of 5–15 people focused on a prioritized subset of customers to foster deeper relationships. One platform we interviewed hired nine payments sales members and eight customer success team members to specifically serve large users.
Managing payments risk
All online businesses have to manage risk. In fact, there are many different types of risk, from reputational risk (like how your brand is perceived) to operational risk (like downtime).
However, when platforms add payment facilitation to their offerings, they face additional complex types of risk due to their three-party business model (consisting of the platform, the sellers or service providers that take payments through the software platform, and the cardholders that pay those sellers or service providers). This added level of risk introduces even more complexity to a payments business, with multiple platforms we interviewed saying they need “better advice for risk and how to manage it.”
The three most common types of risk that platforms face include:
- Credit risk: Credit risk tends to manifest as sellers who have every intention of fulfilling goods or services orders but lack the financial resources to do so, who accumulate more refunds and chargebacks than they can financially cover, and who potentially exit the business. Cardholders can request a chargeback since the goods or services weren’t fulfilled. You would owe money to those customers because, generally speaking, platforms that facilitate payments agree to be liable for their sellers’ activity.
- Fraud risk: Platforms also have to manage risk involving fraudulent sellers. For example, you could have the same person acting as a fraudulent seller and a fraudulent cardholder, where that one person has access to stolen card information, signs up for an account on your platform, and pays themselves with the stolen card. Or, you could have a fraudulent seller and a good cardholder, where a seller deceives a cardholder into giving them money (like selling goods they don’t intend to deliver).
- Account takeovers: Having a good seller and a good cardholder isn’t enough to completely eliminate payments risks. Platforms also need to manage account takeovers, where a malicious third party gains access to a seller’s account credentials and steals their funds.
For additional best practices on how to mitigate these types of risk, read our dedicated guide on risk management for platforms.
Defining success for your payments business
Turning on payments is not a “set it and forget it” strategy. You’ll need to continuously monitor the health of your payments business to understand what is working well and identify areas of improvement. Some metrics that our partners commonly track include:
- Payments volume
- Payments users
- Monthly active users
- Payments volume per active user
- New payments sign-ups
- Revenue from payments
- Long-term value of your payments customers vs. your non-payments (software only) customers
- Percentage of total customers that are payments customers
How Stripe can help
Platforms of all sizes—from new startups to public companies—use Stripe Connect to quickly and easily integrate payments and offer financial services. Connect enables platforms to onboard customers, accept payments, pay out to third parties, and monetize payments. You can quickly and easily launch a payments solution, collect a portion of each transaction, and configure payments pricing for your customers. You can also monetize a variety of products, such as invoicing, subscription billing, or in-person payments. With a single integration, Stripe makes it easy to expand your platform internationally and reach customers in new countries.
Stripe Connect is flexible and fully integrated, so you can monetize payments and create new revenue streams by offering the following solutions to your customers:
- Online payments: Enable your customers to accept payments in minutes. They can easily integrate hosted checkout pages or build customizable flows tailored to their business needs while easily localizing their payments experience to increase conversion abroad.
- Monetization: Turn payments and related services into a revenue stream. Easily earn a revenue share on payments, or set and control fees for customer transactions.
- Dashboards: Offer your customers payments dashboards so they can run their business seamlessly. Choose from a range of dashboard options, including Stripe’s hosted Dashboard with powerful reporting, querying, and payments management or embeddable dashboard UIs for a more integrated customer experience. Or use Stripe APIs to build custom dashboards and reporting workflows directly into your platform.
- Risk management: Protect your business and your customers’ business with Stripe’s fraud and risk solutions. Radar provides tools to manage transaction fraud risk, and Stripe’s end-to-end risk management solution includes ongoing monitoring and mitigation and risk-of-loss protection for credit and fraud risk.
You can also offer your users access to all of Stripe’s features—enabling point-of-sale payments, sending invoices, spending with payment cards, accessing business financing, collecting sales taxes, and more.
- Point-of-sale payments: Help your customers expand into the physical world by enabling their own in-person checkout. Stripe Terminal allows them to manage their online and offline sales in one place with a single integration, simplifying reporting and reconciliation.
- Subscriptions: Allow your customers to experiment with new business models by offering flexible subscription and billing plans with Stripe Billing. They can iterate on pricing—testing one-time, recurring, usage-based, or tiered subscriptions—and offer promotions and trial periods. They can also reduce churn with smart retry logic and easily expand globally, accepting any supported payment method.
- Recurring and one-time invoices: Help your customers get paid faster with integrated invoices. They can send recurring invoices for subscriptions or one-off invoices with built-in support for credit and debit cards, customizing them to match their brand and applying inclusive or exclusive tax rates for different locales.
- Payments cards: Create, distribute, and customize virtual and physical credit cards for your customers with Stripe Issuing. You can design branded cards, set dynamic spending controls, and enable your customers to fund the cards with their own bank accounts.
- Reporting and analytics: From out-of-the-box summaries to customizable reports, Stripe Sigma offers a range of reporting options that you can integrate into your own platform. You can pull data from the Stripe API and add it directly into your own reporting features, or point customers to the Stripe Dashboard for payments-specific data.
If you’re considering building your payments business with Stripe, our professional services team can help you navigate the best path to launch. To build a foundation for your payments program, we can co-develop a product strategy and business plan, defining your resourcing needs, functionality requirements, and monetization approach. Through regular reviews, our consultants will work with your team to integrate payments, covering everything from experience mapping and customer migration to data ingestion and financial reporting. To bring your new payments product to market, we’ll help you craft your marketing strategy, plan a phased rollout, and equip your internal teams with the necessary resources and processes to support the launch.
Get in touch with our team to learn more about how you can launch your payments business.