10 payment processing challenges for SaaS companies

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The modern SaaS company faces many hurdles when it comes to payment processing – from management of failed transactions to cross-device functionality.

And since payment processing stands as the core functionality behind how they collect the revenue that drives their growing companies, this is one area they simply can’t afford to overlook.

The good news is – companies like GoCardless are striving to overcome these obstacles and make life easier for growing SaaS companies.

Let’s look at 10 of the most common payment processing challenges for SaaS, as well as some of the ways they’re being addressed.

  1. A need for automated systems (for fewer human errors)

Humans, are…well…humans. They make mistakes. But for growing SaaS companies, depending on a team of individuals for payment processing can be a dangerous business.

When it comes to payment processing, automated systems make life a lot less complicated, remove the stress and worry related to human error, and help catch and avoid failed payments. GoCardless allows SaaS companies to ‘set up and forget’ automated subscriptions to process transactions each month, retry failed payments, and send automated email notifications to customers.

  1. Secure payments & encryption

As a SaaS company begins to scale up and onboard more and more customers, they also need to securely handle a growing volume of payments in a way that’s compliant with laws and security regulations for consumers.

Even though early growth might be slow, it’s important for these companies to find a payment processing system that has RSA encryption and a high level of security. That way, when hockey stick growth finally does happen, secure payment processing is one less detail to worry about. Plus, using a payment processing system like GoCardless, you’re already authorised by the FCA and are Bacs approved. Importantly, using the GoCardless system means SaaS companies no longer need to store customer payment details on their side. GoCardless handles everything.

  1. Management of failed transactions

Failed transactions are major headaches for SaaS companies, and without a system in place to manage them and retry them, it can lead to angry customers and lost revenue. It’s important to note that over 70% of transactions will be successful on the second attempt, so it’s prudent to have an automatic method to retry them and make everyone’s life easier.

To overcome this obstacle, SaaS companies need a solution that has automatic email notifications, a back-end tracking system, and that doesn’t charge for failed payments.


  1. Acceptance of electronic payments across the UK & Eurozone

Finding a payment system that is versatile enough to accept bank to bank payments across the UK and Eurozone isn’t as easy as it sounds. Many providers exclude certain zones, or simply don’t have the ability to process payments from specific countries.

As businesses grow into new markets they need a payment solution that takes varied payment preferences into account. For example, Direct Debit is extremely popular in Germany, especially compared to credit cards. Direct Debit accounts for 5.4 billion annual transactions, while credit cards represent a mere 700 million. Almost every German has a bank account, while only 29 million have credit cards.

When SaaS companies find a payment system that can collect payments from a wider variety of countries, fewer customers are excluded–and they create more opportunities for sales, revenue, and building long-term customer relationships.

  1. Better user experience to boost customer satisfaction

Another one of the major payment challenges SaaS companies are facing is improving the overall user experience within this aspect to drive customer satisfaction and loyalty.

We know that as a whole, customer experience is the next frontier: Data from Gartner predicts that by as as soon as 2017, as many as 89% of businesses will compete mainly on customer experience. Therefore, many SaaS companies are seeking out payment solutions that provide a stronger customer experience across multiple devices that drive positive experiences–and help boost customer retention. Certain key features can make all the difference, such as having a quick and simple interface to enter payment details across all devices.

  1. Multiple integrations

Flexibility is extremely important, as a growing SaaS company needs a payment system that  works seamlessly with the business’s existing tools. A payment processing system with an open API is essential in most cases once the SaaS reaches an enterprise tier, as there will be a need to tie in new developer resources as the company grows.

For example, payment software that can integrate with subscription billing platforms such as Zuora, or with accounting packages such as Sage, Xero or Quickbooks, would be a major benefit to the workflow of any SaaS company. GoCardless offers the ability to connect the payments system to the rest of the business, providing a complete end-to-end view of the customer.

  1. Ability to whitelabel

Consistency is king for the SaaS company that’s trying to gain traction with its audience, so maintaining company branding across all elements of the customer experience is a major concern.

With this in mind, is the ability to whitelabel even its payment processing tool important? Absolutely. Control over payment pages and email notifications helps the company reinforce its own brand without having to take the backseat. GoCardless offers a white-label solution to its Pro customers so they can embed payment pages directly into their company website, maintaining their brand consistently throughout.

  1. Churn reduction

According to data from Kolsky, about 50% of customers naturally churn every five years. However, only 1 out of 26 unhappy customers complain; the rest simply find a new provider. For the SaaS company handling payment processing, this challenge is compounded by churn that happens unexpectedly when their customers’ credit cards expire or are cancelled–which happens to about 17% of cardholders each year.

Fortunately, companies like GoCardless are leveraging tools like Direct Debit that keep this from happening. With Direct Debit, churn from card expiry is no longer an issue, as payment is linked through the bank–not the card itself. A recent survey from YouGov showed that a large 77% of UK subscription customers are comfortable paying by Direct Debit, more so than any other payment method.

  1. Affordability of the payment platform

Flexible rates are important for a quickly growing SaaS company. While early stages might call for a lower price point and less functionality, the payment processing system needs to have a flexible pricing structure with different tiers that allow the tool to accommodate a growth at both the entry level and down the road at the enterprise stage.

  1. Reliable support

When the need for support arises, the last thing you want is to be left waiting for help. SaaS companies are looking for payment systems with reliable support resources (like helpful how-to articles for self-service and troubleshooting, so they can resolve some issues on their own) plus access to well-trained support staff to help field questions when they need them.

Payment Processing Challenges for SaaS: Help is Here

As you can see, there are some major concerns related to payment processing for SaaS leadership, but with the right tool that can grow alongside the business, all of these concerns become non-issues.

Want to learn more about how GoCardless can help your SaaS company overcome its payment processing issues? We’re here to help.  Sign up now here or contact one of our experts to see how our digital Direct Debit solution can help your business

This is a sponsored post by GoCardless

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1 comment

  1. Franz Josef Kaiser

    This post should be labeled as “paid content” … or just “advertising”. No matter how great the SaaS or their software is.

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