Payments has powered growth for some of the world’s largest SaaS platforms in recent years. Shopify may be the most notable example: The company saw 110% year-over-year growth in the first quarter of 2021, and their stock value has increased 5,700% since they went public in 2015.

The reasons Shopify and other leading SaaS companies chose to integrate payments into their platforms appear straightforward—they used their large user bases to create a readily monetizable new product line. But successfully launching payments and financial services—the kind that spur adoption at scale—requires considerable planning and strategy. This is especially the case for enterprise-scale SaaS businesses that must meet the day-to-day demands of supporting and improving complex core products.

Stripe has helped hundreds of leading SaaS and technology companies—including Shopify, Salesforce, and DocuSign—transform their businesses through embedded payment services. Drawing on this expertise, we have assembled this step-by-step guide on how to become a payment facilitator (payfac)—aimed specifically at product leaders at enterprise-scale SaaS companies. We lay out the essential stages involved in planning to launch payments and bringing them to market quickly and at scale. And we offer insights from some of our customers who have successfully become payfacs.

Learn how to become a payfac with five key steps:

1. Clarify your objectives.
   
2. Segment your customers.
   
3. Create an effective pricing strategy.
   
4. Build a go-to-market plan.
   
5. Expand beyond payments.
   

Step 1: Clarify your objectives

Payments can offer a more direct path to monetization than other new SaaS platform features, which could require months of coding and iteration. Focusing on monetization may be premature, however, at least in the initial stages of planning embedded payment and financial features. An important first step is to determine what payment features are going to solve for your users. How are they going to enhance the platform’s overall purpose and user experience?

We’ve found that there are four main reasons SaaS companies integrate payments into their platforms:

• Acquire new users: Payments capabilities can help differentiate the company’s offerings and enhance its value proposition.
  
• Stay competitive: SaaS platforms without electronic payments capabilities run the risk of being—or appearing—more limited.
  
• Improve retention: Payments have a uniquely sticky effect. Financial relationships create strong bonds between customers and platforms and can help minimize churn.
  
• Create new revenue streams: Once payments features see substantial uptake, they can expand revenue streams and open the door to additional financial services.
  

Case study: How Shopify put solving for its customers first

Shopify has become synonymous with platform growth in recent years—and providing robust and flexible online payment capabilities to its approximately one million merchant customers has been an important part of its success. The decision to invest in payfac-as-a-service was not initially motivated by revenue considerations, however. The company saw payments as a continuation of the process of solving for its users.

“When we collaborated to start Shopify payments with Stripe, which has been an insanely great partnership, it was because it was the next thing to solve, and it just made sense. It wasn’t because it was the next most profitable thing to do,” said Kaz Nejatian, vice president of Shopify Payments.

Step 2: Segment your customers

Knowing your customers is the cornerstone of any successful business. This is especially important—and potentially complex—for SaaS companies considering payfac-as-a-service. You may likely serve a diverse array of customers, from large enterprises to individuals on “freemium” plans.

Your customers are going to have different levels of interest in payments features and varying willingness to pay for them, depending on their size and the industries in which they operate. A large business customer, for example, will likely be more willing to pay a premium for payments features than an SMB or solopreneur.

Here are some of the ways you can segment your customers based on their payments priorities:

Size

• SMBs and entrepreneurs tend to value payments services that have easy sign-up processes, quick payouts, and the ability to integrate the logistical back end, such as shipping and accounting.
  
• Enterprise-scale companies will likely prioritize getting the data behind payments processing, such as network acceptance rates and fraud rates. They may also be interested in features that can support large processing volumes.
  

Sales volume

• Retail sellers tend to have larger transaction volumes, so being able to accept a variety of online and mobile payment methods at the point of sale, including credit cards and digital wallets, are likely to be priorities. They may also value analytics and integration with CRM systems.
  
• Service providers and B2B companies may have lower transaction volumes but will likely prioritize cash flow, a seamless quote-to-cash cycle, and in-person payments.
  

Your customers will likely fall into overlapping groups, depending on their size, sales, and the verticals in which they operate. Your best source of insights may be your customers. By surveying and interviewing them, you can learn about the issues they find the most challenging and the payments tools they consider the most attractive—and discover untapped market opportunities.

Case study: How Salesforce and DocuSign put payments at their users’ fingertips

SaaS companies that have successfully branched into payments did so by learning how financial tools can improve the experiences of their customers and attract new ones.

Salesforce partnered with Stripe in 2020 to provide businesses the ability to launch and run ecommerce operations as part of its Salesforce Commerce Cloud suite of services.

“Speed, conversion, and personalization are key to digital commerce success,” noted Adam Blitzer, Salesforce executive vice president and general manager of digital. “Our partnership with Stripe will enable our customers to deliver just that, boosting conversion rates with a fast and easy checkout experience powered by our out-of-the-box payment solution on the leading commerce platform, Salesforce Commerce Cloud.”

DocuSign partnered with Stripe to launch its embedded payments services in 2016. They saw how payfac-as-a-service could improve the customer experience by easing the payment friction points that often go along with finalizing agreements.

“We know there are multiple payment options available for almost all forms of purchases. And we wanted to make that same fast, easy, secure all-digital experience available whenever you electronically sign an agreement,” said Ron Hirson, DocuSign chief product officer.

Step 3: Create an effective pricing strategy

Once you have a strong prospective payfac model and the customer segment you want to target, the question becomes how to price it. Your pricing strategy should be aligned with your larger objectives. If your primary goal is acquiring new customers, for example, then you should avoid excessive charges that might put off prospective users. Your current enterprise customers, on the other hand, might be more open to paying premiums for payments features.

Fortunately, there are many models for pricing payments that can be market tested and adjusted.

• Mark up payments costs: You can charge for payments by marking up per-payment processing costs.
  
• Tiered plans: You can make payments part of differently priced plans, which can include flat fees along with marked-up per-payment costs. Additional payments-related services can be added as well, such as chargeback protection.
  
• Revenue share: You can enter a revenue-sharing agreement with your payfac.
  

Your anticipated transaction volumes should inform these strategies. In the early stages, modestly marking up payments costs could be a good way to gauge interest and spur adoption. Revenue sharing would be a more viable strategy if and when payments features see substantial uptake. Such agreements could make payment features more attractive since they would allow you to limit—or avoid entirely—passing charges on to your customers.

Here are some real-world pricing strategies used by Stripe clients:

• DocuSign offers integrated payments capabilities as part of its higher-tier Business Pro Plan. This is a good strategy when not all of your customer segments accept payments through your platform. It’s also an effective way to upsell existing customers to higher-tier plans.
  
• Squarespace combines the strategy of gating payments to a particular plan and marking up transactions. This is a good strategy to attract a range of company sizes across different stages of growth and varying degrees of willingness to pay.
  
• StyleSeat adds fees for advanced payments features such as chargeback protection or instant deposits. This is a good strategy if you have a relatively homogenous customer base.
  
• Thinkific offers integrated payments on all pricing plans and adds monetization via payment-processing fees.
  

Step 4: Build a go-to-market plan

Every product launch requires a well-crafted go-to-market (GTM) plan, and embedded payments and financial services are no exception. An effective GTM strategy requires coordination among internal teams, including product, finance, sales, and customer support. If your payments ambitions are large, you might want to consider a dedicated head of payments or even staffing up an entire team. A growing share of SaaS companies are taking this route, including Thinkific.

When it comes to marketing new payments and financial features, you should consider crafting clear value-proposition messaging. The work you’ve already done to define your objectives and understand your customers’ payments needs will inform these communications. Here’s an example of value-proposition messaging used by Intercom, a Stripe customer:

Marketing campaigns should be tailored to the larger objectives of the payment facilitator service. If customer acquisition is your primary goal, for example, then a broad campaign encompassing external and internal channels would make sense. A feature aimed primarily at improving customer experience and retention might warrant a campaign centered around owned channels, like company social media and email lists.

You might also want to consider a staged rollout. This will allow you both to test the effectiveness of your messaging and to ensure the payments feature functions as planned and can handle transaction volumes.

Here are some of the key steps in developing effective go-to-market strategies:

• Assemble the right team: Make sure product, finance, and sales teams fully understand the payments feature. You might also consider hiring a payments team.
  
• Pursue multichannel and targeted marketing campaigns: Tap owned and non-owned media channels. Educational materials like pitch decks, FAQs, and case studies can help sales teams in their outreach and serve as resources for customers.
  
• Consider a staged rollout: A staged rollout—involving beta testing with select groups of customers, for example—can ensure new features function as planned.
  
• Assess and revise: Once the feature goes live, assess metrics and iterate accordingly.
  

Step 5: Expand beyond payments

One of the more important and underappreciated benefits SaaS companies stand to gain by embedding payments services is stronger user trust and loyalty. Because payments relationships require sensitive information and user trust, they are inherently sticky and therefore act as a powerful counterweight to subscriber churn.

Once you successfully launch one payments feature, you may be uniquely positioned to offer additional financial services, such as point-of-sale financing and card issuing. Popular purchasing models like subscription and direct-to-consumer create opportunities to provide your customers with more flexible and robust payments services. Not only do these types of embedded financial services make customer relationships stronger, they can also significantly expand your revenue streams.

Here are some leading use cases for embedded financial services:

• Instant payouts: Such services expedite account-to-account payments in the B2B space, where payment delays can be a major challenge. They can also speed outgoing payments, such as B2C disbursements and payouts on ridesharing and homesharing platforms.
  
• Lending: Online financing options can be especially useful in reaching consumers with limited access to traditional credit products or businesses that lack large lines of credit.
  
• Card issuing: Platforms can enable customers to authorize and issue virtual or physical cards nearly instantly. Retailers could issue branded cards, for example, or businesses could provide employees or suppliers with spending cards.
  
• Banking-as-a-service: Platforms can offer banking services, such as deposit taking and account-to-account transfers, that were once only possible through brick-and-mortar banks.
  
• International expansion: Platforms can facilitate rapid expansion to new geographies by handling the complexities involved in cross-border payments processing and compliance.
  

You should approach additional embedded financial services in the same way as your initial payments offerings—by clarifying objectives, targeting customer segments, and crafting a go-to-market plan.

Let’s grow the internet economy together

The trendlines in the economy are clear. A majority of products and services sold by businesses globally today—55%—are either fully digital or partially digital, according to a recent survey of executives. This represents a nearly twofold increase from December 2019. By embedding payments capabilities into your platform, you can enable your company and customers to more fully participate in and reap the benefits of the digital economy.

However, you need the right partners to quickly bring to market payfac and financial tools that perform seamlessly, securely, and instantly. You may be inclined to build new payments features in house or to rely on your current payment providers, as has been the case with some larger SaaS enterprises.

For enterprises looking to differentiate their offering in a highly competitive and constantly changing market, Stripe offers a unified financial technology solution that allows you to adapt and innovate quickly.

• Launch new revenue streams with Stripe’s comprehensive solutions for subscription billing, multiparty payouts and reconciliation, and banking-as-a-service.
  
• Capture more business from more customers with a frictionless, localized checkout experience and tools to increase revenue and reduce fraud.
  
• Simplify payments across your value chain and reduce operational burden with Stripe’s intuitive APIs, prebuilt components, and best-in-class documentation.
  

Stripe is the proven payment facilitator partner to some of the largest and fastest-growing SaaS companies. We are the only payments provider to receive a top 5-out-of-5 score in the category of payments for platforms and marketplaces in the 2020 Forrester Wave Report. We earned top scores for global acquiring, reporting and reconciliation, fraud prevention, and third-party integrations. Some of the key elements of our suite of payment solutions include:

• Accelerated time to market: Launch in days, not weeks or months.
  
• Rapid global expansion: Move into foreign markets quickly, without taking on the risk and complications of cross-border routing, security, and compliance.
  
• Flexibility: Configure new payments features without constraining platform functionality, and make incremental improvements based on robust metrics.
  
• On-ramp to embedded financial services: Expand rapidly into financial services such as card issuing, financing, and treasury management.
  

The new payments stack

Stripe combines a payments platform with applications that make revenue data central to business operations. Enterprise companies use our software to both accept payments and manage their businesses online. Here are some of the specific products Stripe has built to enable SaaS companies to execute their payment plans at enterprise scale:

• Stripe Connect: A set of programmable APIs and tools that lets you facilitate electronic payments on your software platform, build a marketplace, and pay out sellers or service providers globally.
  
• Stripe Terminal: Unifies online and in-person payments with integrated POS payment and hardware.
  
• Stripe Billing: Helps your customers launch their own subscription businesses such as memberships, free-to-paid trials, and more.
  
• Stripe Capital: A lending API giving platforms easy access to fast, flexible financing that helps their customers grow their businesses.
  
• Stripe Treasury: Our simple banking-as-a-service API lets platforms offer their customers FDIC-insured accounts to hold funds, pay bills, earn interest, and manage cash flow.
  
• Stripe Issuing: A set of elegant APIs allowing platforms to create, manage, and distribute virtual or physical cards. You can authorize, create, and ship virtual cards in seconds and physical cards in just two days.
  

Other resources

This guide is part of a larger education series aimed at helping SaaS companies craft sound payments strategies. Here are some of the other resources available:

Introduction to monetizing payments for SaaS platforms: This guide covers the basics of payments monetization for platforms—from how to monetize payments for the first time to how to charge for other features and services. You’ll learn best practices for monetizing payments, different ways to experiment with pricing, and how Stripe can help.

Introduction to marketing and selling payments for SaaS platforms: This guide covers the basics of marketing, selling, and growing payments as a feature. We’ve distilled best practices across thousands of partners to help you launch faster and go to market more effectively. You’ll learn how SaaS businesses such as WooCommerce, Xero, and Intercom promote their payments offering and see examples of their marketing and sales collateral. We’ll also cover how Stripe can help.

Stripe Partner Program: This program is designed to help you build new experiences, launch faster, and reach more customers. You’ll have access to our in-house experts and a robust library of guides to help you grow from a SaaS company to a commerce platform.