The merchant services offered by an ISO have traditionally been considered an extra benefit by many software-as-a-service platforms.
Platforms offering merchant services have recently realized that these services can generate substantial revenue for themselves and third parties. The only way for them to do that is if they implement embedded or integrated payment logic. This is what will enable them to begin to monetize their payments as a bonus to all of the core services that they offer.
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How Is It Possible That a SaaS Platform Can Monetize Payments?
SaaS platforms need payment functionality because they can provide merchant services. This allows it to earn income by collecting its rightful share of payment and merchant service fees. In the traditional merchant services model, this money was usually paid to the ISO.
The platform is able to implement other mechanisms for monetization in addition to its core product/service, which is its primary revenue source. In addition to generating additional revenue streams from payments, these mechanisms encourage customers to utilize this platform’s merchant services.
Using Markup to Generate Monetization on Payments
Markups are the first and most common method of monetizing payments. Using its pricing policy, a SaaS platform can encourage merchants to process more transactions through its platform. Merchants with consolidated processing volumes above a certain threshold can receive a discount on processing services. As a result, merchants are motivated to consolidate their payments.
Using Pricing Plans to Generate Monetization on Payments
There are fees associated with every software-as-a-service platform. There are usually two or three different service plans available to its customers. Traditionally, an essential service, standard, and premium service. Therefore, users might select more advanced services if the platform offers payment logic.
Advanced Features of Monetization
In addition to basic payment processing, SaaS platforms can offer various advanced payment features. In addition to decline recycling, account updates, and chargeback management, there are other features of this type. To offer these advanced payment features, payment software companies and SaaS platforms can charge an additional fee.
Monetizing Merchant Funding Service
It is common for a merchant to receive funding within two business days of the transaction being processed. Transaction proceeds arrive on the merchant’s account on Wednesday or Thursday, for instance, if the transaction is processed on Monday.
Sometimes, merchants might require the funds before processing a transaction or the next day. The feature is handy for merchants who collect recurring payments every month.
There may be a possibility of the platform advancing some funds ahead of the billing date or speeding up the funding process, which would require an additional fee.
Monetizing Advanced Reporting and Customer Monitoring
The merchant may require additional information to perform daily or monthly fund reconciliations and profitability analyses. A limited number of cumbersome legacy reports provided this information in the past. Typically, processors provide these reports through ISOs, who manage payment relationships on their behalf. This functionality can now be provided directly by payment platforms for an additional fee, thanks to advances in payment technology.
Payment Monetization Strategy for Franchise Services
The primary source of revenue for any franchise business is franchising fees.
The platform can collect franchising fees directly from merchant proceeds if it services franchise businesses. Franchisors don’t need to collect franchising fees themselves in this case. Due to integrated payments and funding, SaaS platforms can deduct these fees from merchant deposits.
Payments Monetization Through Hardware/Terminal Leasing
Cable broadcasting companies often use the same payment hardware leasing model. A modest monthly fee is charged to customers who rent modems, decoders, and cable boxes. Once accumulated fees have been collected for a year, the cost of the hardware unit is typically covered. In this way, the provider converts all subsequent fees into net revenue.
Surcharges for Additional Gateway Usage
There is usually only one primary payment gateway associated with a software-as-a-service platform. Nevertheless, certain payment types may be preferred by some merchants over other gateways.
By charging fees to third-party payment gateway users, additional revenue streams from payments can be generated for SaaS platform gateway providers. For a fee, a SaaS platform can provide its sub-merchants with the option to process through other gateways.
Bonus: Payment Monetization Through Savings and Indirect Costs
We tend to think of payment monetization services as an opportunity to increase the number of revenue streams for platforms when we think about payment monetization. Nevertheless, every dollar saved is a dollar earned, as the proverb goes. In addition to helping you grow revenue, integrated payments help you reduce expenses. This allows you to devote more resources to your core product development.
Onboarding is easier and instantaneous with advanced payment technologies like UniPay Gateway. The process requires much less effort, time, and resources.
Please feel free to contact our experts if you would like more information.