SaaS Payment Monetization: Why Give Away Your Payment Revenue?
Your SaaS customers already process payments. Learn how embedded and white-label payments can create recurring revenue, improve retention and expand your platform.
Presented by Allen Kopelman, CEO — Nationwide Payment Systems-Host of B2B Vault: The Biz2Biz Podcast
AI Overview
SaaS companies can turn payment processing into a strategic revenue opportunity instead of sending customers to outside processors. It focuses on the idea that many software platforms already support workflows connected to payments, including invoices, subscriptions, orders, customer management, and billing, but may not be earning from the actual payment volume their customers generate.
The main point is that embedded payments and white-label payment solutions can help SaaS companies keep more of the payment experience inside their own platform. This can create recurring revenue, improve customer retention, strengthen the customer experience, increase product stickiness, and support long-term business value.
It also explains that SaaS companies do not always need to become full Payment Facilitators to monetize payments. Instead, they can work with payment partners that provide infrastructure, APIs, webhooks, underwriting, risk management, ACH, B2B payment support, Level 2 and Level 3 processing, Smart Invoicing, and merchant support.
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If you run a SaaS platform, your customers may already be processing millions of dollars through your software.
They create invoices.
They take orders.
They manage customers.
They sell products.
They collect subscriptions.
They send payment requests.
Then, when it comes time to actually collect the money, your software sends it somewhere else.
Maybe you tell them:
“Connect your Stripe account.”
Or:
“Connect your existing payment processor.”
That may be easy.
But it can also mean you are giving away one of the most valuable recurring-revenue opportunities connected to your software platform.
If your customers are already accepting payments, the question SaaS companies should be asking is:
Why aren't we participating in the payment revenue?
Payments can be more than a feature. They can become:
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A recurring revenue stream
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A retention tool
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A customer-experience advantage
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A source of additional financial services
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A way to make your software harder to replace
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A strategic part of your platform
For many SaaS companies, payments may be one of the most valuable features they are not monetizing.
The Traditional SaaS Payment Model
A typical software company builds a great product. The platform may manage:
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Customers
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Orders
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Inventory
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Scheduling
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Invoices
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Subscriptions
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Accounting data
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Projects
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Vendors
Then someone asks: “How will customers accept payments?”
The quickest solution is often to integrate a third-party payment provider and send the merchant there to establish an account.
From a development perspective, that may solve the immediate problem.
But strategically, something important just happened.
Your customer now has a payment relationship outside your company. Someone else controls:
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Merchant pricing
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Merchant onboarding
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Payment support
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Underwriting
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Payment economics
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Merchant communication
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Much of the payment relationship
And someone else may be earning the recurring payment revenue generated by merchants using your software.
Payments Are Recurring Revenue
SaaS companies understand recurring revenue better than almost anyone.
Monthly subscriptions are valuable because the customer continues generating revenue month after month.
Payment processing can work similarly.
Consider a SaaS platform with 1,000 customers.
If each customer processes $50,000 per month, the platform is facilitating $50 million per month in payment volume. That is $600 million per year.
If the software company simply sends those merchants to another payment company, it may receive little or no economic benefit from that payment volume.
But with the right embedded-payment or white-label strategy, payments may become another recurring revenue stream.
Your Customers Are Creating Payment Revenue Anyway
This is an important point.
The payment-processing revenue already exists.
Your customers are already paying someone to accept credit cards, debit cards, and ACH.
The question is: Who benefits from that payment activity?
If the customer leaves your application and creates an account directly with a third-party processor, the processor owns most of that economic relationship.
If payments are embedded into your software through a strategic payment partnership, your SaaS company may be able to participate in that revenue.
Instead of sending revenue away from your ecosystem, payments become part of it.
What Are Embedded Payments?
Embedded payments integrate payment acceptance directly into the software experience.
Rather than treating payments as an unrelated product, payment functionality becomes part of what the software does.
For example, a customer using your SaaS platform could:
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Create an invoice.
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Send it to their customer.
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Accept payment.
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Track payment status.
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Reconcile the transaction.
...without leaving your platform.
The payment experience feels like part of your software.
That is substantially different from simply placing a link to an outside processor in your settings menu.
Embedded Payments vs. A Payment Integration
| Basic Payment Integration | Embedded Payment Strategy |
| A software platform integrates with a third-party processor. | Payments become part of the software company's product strategy. |
| The merchant establishes an account directly with that processor. | The SaaS company participates in merchant onboarding and payment branding. |
| The processor controls the relationship. | The SaaS company participates in pricing strategy, support, and revenue. |
| The SaaS company primarily provides technical connectivity. | Creates significantly more strategic value, financial products, and data. |
Do You Have to Become a PayFac?
No.
This is one of the biggest misconceptions among SaaS founders.
When they hear “Monetize payments,” they sometimes assume they must become a full Payment Facilitator.
Becoming a PayFac can involve significant:
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Compliance
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Risk
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Technology
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Underwriting
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Monitoring
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Operational responsibility
That may make sense for some very large software companies.
But it is not necessarily required simply to participate in payments.
There are other partnership models that allow software companies to embed or white-label payment capabilities while working with payment specialists for acquiring, underwriting, and payment infrastructure.
Nationwide Payment Systems can work with SaaS and software companies to determine which model makes sense for their platform.
The NPSONE Developer and White-Label Opportunity
NPSONE gives software companies access to payment infrastructure that can be incorporated into their platform.
Through APIs and webhooks, SaaS companies can create payment experiences that fit their existing software.
Depending on the application, this can include capabilities involving:
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Credit cards
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Debit cards
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ACH
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Invoicing
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Recurring payments
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Payment links
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Hosted payments
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B2B payments
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Commercial cards
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Level 2 and Level 3 processing
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Alternative payment capabilities
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Additional embedded financial services
Instead of building an entire payment infrastructure from scratch, developers can integrate payment capabilities into the software they already have.
ACH Should Be Part of the SaaS Payment Conversation
Many SaaS payment integrations are designed primarily around credit cards.
That may be fine if the software's users collect relatively small consumer transactions.
But it can become expensive for B2B platforms.
Imagine your software serves:
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Manufacturers
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Distributors
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Wholesalers
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Equipment companies
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Contractors
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Suppliers
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Professional-service companies
These merchants may regularly issue invoices for $10,000, $25,000, $50,000, or more.
A payment architecture designed around percentage-based credit-card processing alone may not be the best solution.
Giving those merchants access to ACH and cards can create a much stronger payment product.
B2B SaaS Needs a Different Payment Strategy
A software company serving restaurants has different payment requirements from one serving industrial distributors.
B2B software may need:
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ACH
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High-ticket card processing
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Commercial cards
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Purchasing cards
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Virtual cards
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Level 2 data
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Level 3 data
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Invoice payments
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Deposits
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Partial payments
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Recurring billing
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ERP connections
This is where choosing payment infrastructure based solely on developer familiarity can become limiting.
Your payment solution should fit the customers your software actually serves.
Level 2 and Level 3 Can Matter to Your Customers
If your SaaS platform serves B2B merchants, payment optimization can become another competitive advantage.
Commercial, corporate, purchasing, and government cards can require additional transaction information.
Level 2 and Level 3 data can include:
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Invoice number
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Purchase-order number
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Tax amount
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Product description
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Quantity
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Unit price
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Freight
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Line-item information
For qualifying transactions, transmitting appropriate enhanced data may improve interchange qualification.
That can make your embedded payment product more valuable than a simple generic card-processing integration.
Payments Can Increase Customer Retention
Every SaaS company worries about churn.
The more essential your software becomes to the customer's operation, the harder it is to replace.
If your platform handles:
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Operations
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Customer data
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Invoices
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Recurring billing
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Payments
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Reconciliation
the customer has more of its business workflow connected to your application.
That can increase stickiness.
Payments are not simply a monetization opportunity—they can become a retention strategy.
The Payment Experience Becomes Your Customer Experience
Customers do not necessarily care which company operates the backend payment infrastructure. They care about whether it works.
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If payment onboarding is confusing, they blame your software.
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If checkout is difficult, they blame your software.
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If a payment fails and nobody can explain why, they blame your software.
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If support is poor, they blame your software.
Once payments become part of the product, payment support matters.
This is one of the areas where Nationwide Payment Systems takes a different approach. We believe merchants should be able to reach knowledgeable people who understand payment processing.
Merchant Underwriting Matters
Software developers frequently think of payments as an API problem:
Connect the API → Send the transaction → Get the response → Done.
But merchant acquiring involves much more. Businesses still need underwriting, which may include review of:
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Business type
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Ownership
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Products
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Website
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Processing volume
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Average ticket
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Chargeback exposure
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Financial information
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Compliance
This becomes even more important when your SaaS platform serves specialized or higher-risk verticals.
A payment partner that understands underwriting can allow the software company to focus on software rather than trying to become a payment-risk department.
What Happens When Your SaaS Serves High-Risk Merchants?
This is an overlooked issue.
Suppose your software serves a broad market. Eventually, you may attract merchants in industries such as:
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CBD and hemp
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Supplements
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Telemedicine
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Tobacco
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Firearms
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Adult
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Subscription businesses
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Other higher-risk categories
A payment provider designed primarily for low-risk merchants may decline those customers or terminate them later.
That creates a poor software experience.
Working with a payment company that has access to multiple acquiring relationships and understands specialized underwriting can expand the range of merchants your platform can serve.
Don't Wait Until You Have 10,000 Customers
One of the worst times to rethink your payment architecture is after thousands of merchants are already using it.
The payment decision you make when you have 10 customers may become very expensive when you have 10,000.
Before choosing a payment infrastructure, ask:
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Can it scale?
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Can we monetize it?
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Can we negotiate economics as volume grows?
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Can we support ACH?
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Can we support B2B payments?
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Can we support specialized merchants?
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Can we integrate additional financial services?
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What happens if we need to migrate merchants later?
The easiest solution today is not necessarily the best architecture for the company you are trying to build.
Ask Who Owns the Merchant Relationship
This is one of the most important questions SaaS companies can ask.
When a merchant signs up: Whose merchant is it?
Is the merchant primarily your customer? Or has your application simply introduced the merchant to another payment company?
Think about:
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Merchant relationship
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Branding
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Support
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Pricing
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Data
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Revenue
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Portability
You should understand these issues before building the integration.
Ask Who Controls Merchant Pricing
Payments create economics through the difference between underlying payment costs and what merchants pay. The structure varies significantly by payment program.
SaaS companies should understand:
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Who establishes pricing?
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Can the SaaS platform influence pricing?
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Does pricing change by merchant?
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Can larger merchants receive custom pricing?
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Can pricing accommodate B2B transactions?
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Does the software company participate economically?
A one-size-fits-all payment price may be easy to advertise but not necessarily appropriate for every merchant.
Ask What Happens as Volume Grows
Imagine your software launches with $500,000 per month in payment volume. Two years later, your customers process $50 million per month.
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Are the economics exactly the same?
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Can you renegotiate?
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Can merchant pricing become more competitive?
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Does the software company participate in the increased value it created?
These questions matter.
How Much Payment Revenue Could Your SaaS Be Giving Away?
Here's a simple exercise. Add up all the payment volume generated by businesses using your software.
For example:
500 merchants × $40,000 monthly volume = $20 million per month ($240 million per year).
Now ask: What is our company earning from those payments?
If the answer is “Nothing,” you should probably take a closer look at your payment strategy.
Payments Can Create an Additional Company Valuation Story
SaaS valuations are heavily influenced by recurring revenue.
Payments can potentially add another recurring revenue stream tied directly to customer activity.
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As customers grow, payment revenue may grow.
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As the SaaS platform adds merchants, payment volume may grow.
That can create an economic model where the platform participates in customer success. For founders planning long-term growth or an eventual acquisition, embedded-payment revenue can become strategically important.
Payments Can Open the Door to Embedded Finance
Once payment relationships are integrated into a software ecosystem, additional financial products may become possible.
Depending on the platform and partnerships, future opportunities could include:
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Buy Now, Pay Later
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Business financing
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Working-capital products
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Payroll
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Banking-related products
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Faster payments
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Alternative payment methods
This is why the bigger conversation is not just “Which processor should we integrate?”
It is: “What financial-services ecosystem should our platform create?”
Start With Payments
You do not need to launch every embedded-finance product at once.
Payments are often the logical starting point.
Your customers are already making and receiving payments. The payment data already flows through their business.
Embedding payment acceptance into your SaaS platform can create the foundation for future financial products.
White-Label Payments Can Strengthen Your Brand
When merchants leave your software and interact with an unrelated payment company, some of the experience leaves your brand.
A white-label strategy can help keep more of that interaction connected to your application. The software company remains at the center of the customer relationship while payment infrastructure operates behind the scenes.
That can make your platform feel more complete.
The Goal Is Not Simply to Add Another Revenue Stream
Payments should improve the product. The ideal strategy creates value for everyone.
The Merchant Gets:
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Convenient payment acceptance
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Competitive processing options
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ACH
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Better integration
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Payment support
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Potential B2B optimization
The SaaS Company Gets:
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Payment revenue opportunity
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Greater customer retention
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Better product differentiation
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More control over the customer experience
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Additional embedded-finance opportunities
The Customer Paying the Merchant Gets:
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An easier payment experience
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More payment choices
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Faster checkout
That is a much stronger model than simply adding a payment button because your competitors have one.
Stripe Can Be Great — But You Should Understand the Business Decision
Stripe became enormously popular with developers for good reasons. It made payment integration straightforward and helped simplify the developer experience.
For some SaaS companies, that may still be the right solution.
The question is not: “Is Stripe good or bad?”
The strategic question is: “Is sending our merchants directly to another payment provider the best long-term payment model for our SaaS business?”
Those are very different questions.
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A developer may choose an API because it can be implemented quickly.
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A CEO should also be thinking about revenue, customer ownership, support, risk, merchant pricing, payment options, scalability, and long-term enterprise value.
The payment architecture should satisfy both.
15 Questions Every SaaS Company Should Ask Before Choosing a Payment Partner
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Who owns the merchant relationship?
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Can our company participate in payment revenue?
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Who determines merchant pricing?
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Can merchants receive custom pricing?
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Can we support ACH?
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Can we process high-ticket payments?
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Do you support Level 2 and Level 3?
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Can payment onboarding be white-labeled?
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Who handles merchant underwriting?
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Who handles chargebacks and risk?
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Who provides merchant support?
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Can you support higher-risk industries?
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What happens if we eventually need to migrate merchants?
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What APIs and webhooks are available?
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What additional embedded financial products can we offer later?
If your payment provider cannot give you clear answers, keep asking questions.
Why Work With Nationwide Payment Systems?
Nationwide Payment Systems has been working in merchant services for decades. We understand both sides of the payment equation: Technology and acquiring.
NPSONE provides payment infrastructure for software companies that want to integrate payment functionality using APIs and webhooks.
But we also understand:
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Merchant underwriting
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B2B payments
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High-risk industries
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ACH
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Level 2 and Level 3
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Large-ticket transactions
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Smart Invoicing
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Merchant support
That combination can be valuable to SaaS and ISV companies that want more than a generic checkout integration.
Build Payment Revenue Into Your SaaS Business
Your software customers are already processing payments. Your platform may already be generating millions—or hundreds of millions—of dollars of payment volume.
The question is: Who is benefiting from it?
If payments are simply being handed off to another provider, you may be giving away:
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Recurring revenue
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Customer relationships
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Product differentiation
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Embedded-finance opportunities
Payments should not be an afterthought. They should be part of your SaaS business strategy.
