Category: Blog

Breaking Down PCI DSS 4.0 Requirements: How SaaS Platforms Can Achieve Compliance by the March 2025 Deadline

Posted on October 15, 2024 by finao-admin - Blog, Industry Insights

Credit card theft and misuse are growing in both volume and sophistication. Recent reports suggest that cases of credit card fraud have doubled in volume in the last five years.

In response to the shifting nature of e-commerce, the Payment Card Industry Security Standards Council (PCI SSC) announced the PCI Data Security Standard (DSS) 4.0 in March 2022.

The council gave businesses a three-year deadline to prepare for and implement the new standard. As March 2025 grows closer, SaaS platforms must comply with a raft of new PCI DSS 4.0 requirements or face stiff consequences.

What is PCI DSS 4.0?

PCI DSS 4.0 is the latest iteration of the Payment Card Industry Data Security Standard, an updated set of requirements businesses must follow when handling credit card information.

The standard aims to protect customers’ payment data from theft and fraud and ensures businesses that accept, process, store, or transmit credit card information maintain a safe, secure environment.

How does PCI DSS 4.0 affect SaaS providers?

The new PCI DSS 4.0 requirements include changes that directly impact SaaS providers. Let’s break down some of the reasons below.

Expanded scope: The PCI DSS 3.2.1 provided rulings for payment processors. However, the 4.0 version has broadened its scope to include any SaaS providers that store, process, or transmit cardholder data. Even if you don’t directly process payments, you must comply with the new standards. Within the expanded scope, additional cardholder PII info is required.

More robust password requirements: Access to cardholder data environments (CDEs) now requires multi-factor authentication. These changes affect both remote and onsite teams. Password complexity requirements have also become more stringent.

You can read more about the different authentication options in this SSC supplement.

Stronger security controls: While much depends on your type of business and the volume of transactions you process, mechanisms like DMARC, SPF, and DKIM are required to protect against phishing attacks as part of the PCI DSS assessment. Additionally, businesses must commit to testing their security systems more frequently.

Risk assessment: The new standard also mandates that SaaS providers must perform regular risk assessments and proactively identify potential vulnerabilities. What’s more, the new regulations also require businesses to outline and apply security controls to mitigate or remedy adverse findings of these risk assessments.

Customization: While the core 12 PCI DSS requirements are non-negotiable, there is room for a more customized approach to suit the needs of their specific risk environment.

Implications for SaaS providers

Meeting the new PCI DSS 4.0 standards will have several implications for SaaS businesses. Some of the topline impacts include:

Increased compliance costs: Meeting these new requirements means many SaaS providers will need to invest in new tech, personnel, and processes. These investments will result in a rise in compliance costs for many businesses.
More security monitoring: The standards’ increased emphasis on monitoring and assessing risks means SaaS teams will need to budget for more time on security processes.
Workflow adjustments: Stronger authentication and security controls could cause disruptions in existing workflow processes for many SaaS providers.
User experience: On the user side, some SaaS end users might face extra steps when paying for products. However, disruptions should be minimal and more than justifiable when weighted against security benefits.
Third-party risk management: SaaS providers must also ensure their third-party vendors or partners comply with PCI DSS 4.0. That means tighter contractual agreements, more ongoing monitoring, and enhanced due diligence in vendor selection and assessments.

What happens if SaaS businesses don’t comply with PCI DSS 4.0?

Non-compliance with PCI DSS 4.0 is not an option. Some of the penalties and adverse effects that could result from ignoring the March 2025 deadline are detailed below.

Fines: SaaS companies that fail to comply with PCI DSS 4.0 could face stiff monthly fines of between $5,000 and $10,000. The precise amount depends on various factors, such as non-compliance severity, business size, and any holdups in remedying the situations.

Business disruptions: Failure to comply with the new standards can lead to catastrophic payment processing bans for SaaS businesses. Additionally, non-adherence could result in companies being placed on the MATCH List or Terminated Merchant File (TMF) and even the potential loss of contracts needed to continue accepting card payments.

Legal liabilities: Failure to comply could open up SaaS businesses to lawsuits from affected parties, defense costs, and settlements. Additionally, it could increase the likelihood of audits from bodies such as the FTC, which could result in additional financial penalties.

Data breaches: The new regulations were designed to reduce the likelihood and effect of data breaches. Organizations that do not meet these standards run the risk of expensive and reputation-shredding data breaches and loss of trust among their users.

Lost access to payment processing: While this downside is limited to the worst infractions, SaaS companies that do not comply with PCI DSS 4.0 could lose access to payment processing, which would constitute an existential risk.

Additionally, merchants operating under software platforms that fail to comply with PCI DSS 4.0 face significant financial, operational, and reputational risks similar to those outlined above.

How can SaaS providers prepare for the March 2025 deadline?

With the March 2025 deadline on the horizon, SaaS teams need to take action before it’s too late. Here are some actions that can ensure you’re ready.

Look at the PCI DSS 4.0 requirements and compare them to your current security practices. Identify what you must do to improve your security with these new standards.
Perform a comprehensive risk assessment to pinpoint your vulnerabilities and shortlist tasks for remediation.
Right now, PCI DSS 4.0 standards are thought of as best practices. However, implementing them now will ensure you’re ready for March 2025.
Update your security policies, procedures, and practices to align with PCI DSS 4.0.
Ensure that any third-party vendors and partners are compliant.
Ask a Qualified Security Assessor to audit your current setup and make recommendations toward compliance.

How Payabli Can Help?

Partnering with an experienced and reputable payment service provider like Payabli can help you navigate the complexities of PCI DSS 4.0 compliance. Here is how we can support your business.

Payabli handles the storage, processing, and transmission of cardholder data. SaaS businesses can significantly reduce their exposure to PCI DSS 4.0 compliance standards and broader security risks by allowing us to manage their payments.
Payabli replaces sensitive cardholder data with tokens, adding an extra security layer and mitigating data breaches.
Our payment processing infrastructure is already PCI DSS 4.0 compliant as well as featuring encryption, firewalls, intrusion detection, and regular security audits. We stay up to date on emerging security threats, best practices, and regulatory changes, allowing SaaS providers to remain compliant with PCI DSS 4.0.
Finally, and perhaps most importantly, we have a team of payment experts with deep experience in implementing and maintaining PCI DSS 4.0 compliance. Payabli can provide personalized guidance on how your SaaS organization can meet PCI DSS 4.0 standards, helping you understand and interpret the requirements and outline areas for improvement.

Through a mix of security document preparation, self-assessment questionnaires, and audit support, we’ll ensure your SaaS business meets PCI DSS 4.0 standards and avoids fines, security breaches, and loss of payment processing associated with non-compliance. In addition, we offer ongoing PCI support, helping to ease the burden of managing and maintaining compliance. This not only protects your SaaS business but also enhances your end-user customer experience by safeguarding their sensitive data.

Reach out today to see how we can help.

Payment Rails: What Are They, Their Evolution, and How They Work

Posted on August 28, 2024 by finao-admin - Blog, Industry Insights

Commerce has evolved over millennia, and today, online businesses depend on electronic transactions to drive their operations. Customers expect the convenience of instant payments, which, while seeming magical, rely on complex systems behind the scenes. This article will explain what payment rails are, why they are important, and how they work to move money securely.

What Are Payment Rails?

Let’s start from the beginning – what exactly are payment rails? As the name implies, payment rails are similar to the physical rails that trains run on to transport goods over land. But instead of carrying physical items, payment rails transport money and data. Payment rails are the infrastructure and technology platforms that enable the movement of funds between payer and payee, facilitating transactions in the financial ecosystem. Think of them as the “tracks” on which payment information travels, similar to how physical railroads move goods and people.

These exchanges can happen between banks, businesses, and individuals. As such, they have become a crucial component of the financial ecosystem.

A Brief History of Payment Rails (1950-2010s)

You could argue that payment rails started with the first checks. These paper documents were like early versions of electronic payments and allowed customers to pay merchants without having the legal tender on hand. But it wasn’t until computers and electronic networks came along that payment rails took off.

In 1958, Bank of America introduced the first general-purpose credit card, the “BankAmericard,” marking the start of “card rails” and shifting payments from cash and checks to a credit-based system. This innovation evolved when BankAmericard became Visa in 1976, creating a global network that enabled cross-border payments and connected millions of merchants and cardholders.

About ten years after the launch of the BankAmericard, Automatic Clearing Houses (ACH) were introduced. ACH was developed as a solution to the growing need for efficient processing of large volumes of paper checks and electronic payments. The ACH network provided a way to move money between bank accounts electronically, facilitating transactions like direct deposit of payroll and automatic bill payments.

In 1978, SWIFT (Society for Worldwide Interbank Financial Telecommunication) revolutionized international finance by providing a standardized, secure messaging system for cross-border transactions. Before SWIFT, international payments were slow, costly, and error-prone due to the lack of a common protocol.

Then came the Internet, which completely transformed the payments landscape once again. The rise of the Internet in the late 1990s and early 2000s led to the emergence of Peer-to-Peer (P2P) networks, with PayPal being one of the most prominent examples. PayPal allows people to send and receive money digitally, bypassing traditional banks and payment methods.

Even traditional payment methods like checks have adapted to the digital age. With the advent of mobile banking, checks have received a modern update through mobile deposit features. Now, instead of visiting a bank or ATM to deposit a check, people can simply snap a photo of it with their smartphone and deposit it from anywhere.

In recent years, the development of real-time payments (RTP) has been a significant milestone in the U.S. payments landscape. Launched in 2017 by The Clearing House, RTP enables instantaneous transfers of funds between bank accounts, 24/7/365. Unlike traditional payment methods that could take days to process, RTP allows recipients to access funds immediately, even on weekends and holidays.

New payment technologies continue to evolve, with innovations like blockchain, digital wallets, contactless payments, biometric authentication, and AI pushing the boundaries of what’s possible. These advancements make transactions faster, safer, and more seamless, as the payments industry adapts to growing consumer expectations and technological capabilities in a digital-first world.

How Payment Rails Work

Payments can be categorized as push, pull, or a combination of both. Push payments offer control and are ideal for instant transfers, while pull payments are convenient for recurring bills and purchases. Systems like ACH provide versatile solutions for various business and personal finance needs.

Push Payments: In a push payment, the payer initiates the transaction by sending money directly to the recipient. A great example of this is Real-Time Payments (RTP). With RTP, the payer actively “pushes” funds from their bank account to the recipient’s account. This type of payment is usually instant, and the recipient has immediate access to the funds, even on weekends or holidays.
Pull Payments: On the other hand, pull payments work the opposite way. Here, the recipient or merchant initiates the transaction by requesting funds from the payer’s account. Credit cards are a common example of pull payments. When you make a purchase with a credit card, the merchant requests the amount owed from your credit card issuer, which then pulls the funds from your line of credit to pay the merchant.
Combination of Push and Pull: Some payment systems can operate as either a push or pull, or even a combination of both, depending on how they’re used. ACH (Automated Clearing House) is a great example of this flexibility. ACH can function as a push payment when you, for instance, initiate a direct deposit to pay your employees—sending money from your account to theirs. It can also work as a pull payment when a utility company automatically withdraws your bill payment from your account each month.

The Formula for Processing Payments

While different payment rails might use slightly different methods, most follow a similar process. Here are the main steps:

Initiation: The payment process starts when the payer authorizes the transfer of funds. That could mean swiping a debit card, signing a check, initiating a recurring payment, or logging into an online bank account and entering payment details.
Payment Creation: Once the payer approves the payment, a financial message with relevant transaction data is generated. It includes the amount to be paid, account numbers, and other information required to complete the transfer.
Processing: The payment message enters the payment network, which could be a card network like Visa or Mastercard or an ACH network. Here, a series of steps and checks ensure the transaction is valid and authorized.
Confirmation: This step occurs as soon as funds are guaranteed and the transaction is authorized. Confirmation messages are returned to the payer, payee, and other relevant parties, serving as proof that the payment went through.
Settlement & Reconciliation: Finally, the actual transfer of money occurs. This settlement process can happen instantly or not, depending on the type of payment rail. Once settled, accounts are reconciled and updated accordingly.

Types of Payment Rails

Now that we know what payment rails are, let’s look at the different types. We can group payment rails based on how they handle transactions, how fast they work, or what technology they use. Here are some of the leading payment rail systems in use today:

Automatic Clearing Houses (ACH)

ACH is a system that processes electronic payments in batches. It’s mainly used for direct paycheck deposits and automatic bill payments. In the US, ACH is overseen by NACHA (National Automated Clearing House Association).

One of the great things about ACH is that it’s affordable and perfect for recurring payments. If your paycheck gets deposited straight into your bank account every month, that’s probably through ACH. If you’re in the SaaS business and deal with ACH, check out our blog to learn more about ACH and ACH returns, how they work, and why they’re important.

Card Networks

Card networks like Visa, Mastercard, American Express, and Discover manage the infrastructure for secure and efficient card transactions. The process starts when a purchase is initiated, with transaction data sent through the network connecting the merchant’s bank (acquirer) and the cardholder’s bank (issuer). The issuer authorizes the transaction, verifying funds or credit, and once approved, the transaction is processed, transferring funds from the cardholder’s account to the merchant’s account.

Card Acceptance

Merchants can accept credit and debit cards as payment for invoices, goods, and services, expanding their customer base and streamlining their payment processes. Card payments can be processed online, by mail, over the phone, or using a physical point-of-sale device. Card details can also be stored for recurring payments, ensuring seamless transactions for subscription-based services or repeat purchases.

Additionally, merchants can leverage digital wallets to facilitate card payments, enhancing convenience for customers. Digital wallets enhance the security of card transactions by tokenizing and protecting card information. When a card is stored in a wallet, it is converted into a temporary virtual card at the time of purchase. This tokenization process ensures that the actual card details are never exposed during the transaction, reducing the risk of fraud.

Card Issuance

Card issuance allows individuals to obtain cards for making payments in person, online, or via mail/telephone orders. These cards come in various forms—credit, debit, prepaid, and gift cards—each serving different financial needs. Issued cards can be either virtual or physical, offering flexibility in how they are used. Additionally, cardholders benefit from purchase protection features, such as the ability to dispute unauthorized transactions, ensuring a fair and secure payment experience.

Interac

Since 1984, Interac has been Canada’s predominant payment network, linking financial institutions to process debit card payments at point-of-sale terminals and online. It also enables peer-to-peer money transfers through Interac e-Transfer, allowing account holders to send money using only an email address or mobile number, with SMS payments becoming particularly popular.

Domestic Wires

Domestic wires are a type of payment rail used to transfer money quickly and securely, typically for large-ticket items or transactions within a country. These transfers are instantaneous, making them ideal for situations where speed is crucial, such as high-value purchases or urgent payments. By leveraging established financial networks, domestic wires ensure that funds move efficiently between accounts, providing a reliable option for significant financial transactions.

Real-Time Payments and FedNow

This system, introduced by The Clearing House in 2017, revolutionizes payment processing by enabling real-time transactions with immediate fund availability, even on weekends and holidays. When a payer initiates a transaction through their bank’s online platform or app, funds are instantly transferred via the RTP network, allowing the recipient immediate access. Unlike traditional methods, RTP transactions are final and irrevocable, providing instant confirmation to both parties.

RTP Push and Requests for Payment

RTPs are initiated as a “push” of funds, meaning the payer actively sends money to the recipient, with no way to directly “pull” or debit funds from a payer’s account. Instead, businesses use a “Request for Payment” (RFP), which the payer must approve to process the payment. This method enhances security by ensuring payments require the payer’s explicit consent. RTPs provide instant access to funds, even on weekends.

FedNow

FedNow, an upcoming real-time payment service from the Federal Reserve, aims to enable instant transactions between banks 24/7/365. It will expand real-time payment access across the financial system, especially for smaller banks and credit unions, enhancing speed, efficiency, and accessibility for U.S. payments.

Payment Rails for SaaS Platforms

At Payabli, we like to say, “If you’re a software company, you’re a payment company.”

Every business, including SaaS companies, must handle payments and manage their entire lifecycle, from initiation to settlement. This includes processing sales, subscriptions, and paying bills for services like internet and vendors. By allowing users to manage these inflows and outflows in one place, you empower them to grow their business efficiently through your platform. Partnering with Payabli offers secure, fast, and convenient tools to support this growth. Here are some benefits:

Compliance & Security

In fintech and banking, navigating financial regulations and data security standards can be complex. Payment rails streamline compliance by transmitting payments through regulated networks that adhere to strict standards. Payabli complies with PCI Security Standards to ensure cardholder data is protected and NACHA standards to safeguard ACH transactions. This ensures that all sensitive payments are securely handled and compliant with all relevant regulations.

Speed

Payments once took weeks, causing delays and frustration. Now, payment rails enable transfers within hours or minutes. Time-sensitive SaaS companies benefit from faster settlements, improving cash flow visibility and decision-making. APIs offer instant payment requests, eliminating the wait for paper checks, while real-time status updates provide near-instant notifications when payments are funded or paid.

Customer Experience

The modern consumer and business expect fast, convenient online payment experiences with multiple options, from cards to mobile wallets. Payment rails help SaaS platforms meet these expectations by enabling payments through credit cards, debit cards, ACH transfers, and mobile wallets like Apple Pay or Google Pay. They also allow for easy payment processing via hosted payment pages or embedded checkout solutions. The result is improved customer satisfaction, loyalty, and increased referrals.

The Future of Payment Rails

Predicting the future of payment technology is challenging, but payment rails are likely to evolve in three key areas. First, payment rails change with technology; the rise of the Internet brought systems like PayPal and Stripe, and blockchain could lead to more decentralized rails. Second, AI can enhance payment processing by improving fraud detection and making transactions safer. Lastly, payment rails will increasingly integrate with other services like accounting, billing, and identity verification, creating a more holistic financial experience.

Get Started With Payabli

If you’re running a SaaS or platform business, the time is now to integrate compliant payment capabilities that help you scale globally. If you don’t, you risk falling behind your competitors.

Payabli offers the next-generation payments infrastructure to help software companies quickly embed world-class payments into their platform. We cover all aspects of payments: Pay In, Pay Out, and Pay Ops (we call these the 3Ps).

Book a demo with Payabli today to see how you can enable fast, secure payment acceptance through global payment rails with just a few lines of code.

Top 5 Considerations for SaaS Platforms Seeking a New Embedded Payments Provider

Posted on July 26, 2024 by finao-admin - Blog, Payabli

Embedded payments is a highly strategic and critical focus for modern software platforms. Companies like Toast, Mindbody, and ServiceTitan wrote the playbook on seamlessly integrating payment functionalities within their product to enhance user experience and drive massive revenue. As technology evolves, so do the options for embedded payment providers. Unlike the early SaaS pioneers that had to cobble together multiple legacy payment partners to execute their payments strategy, more modern superior solutions have emerged to help software companies quickly and easily embed and monetize payments. Selecting the right provider is a crucial decision, with implications for your SaaS business’s profitability, security, and customer satisfaction. With numerous factors at play, careful consideration is essential to ensure a smooth transition and continued success in the competitive landscape of SaaS.

In this blog, we will cover the top 5 considerations SaaS platforms should consider when deciding which embedded payments provider to partner with. Check out our free checklist at the end to keep these considerations handy during your decision process.

1. Integration Flexibility

One key consideration is the integration flexibility that the payment provider offers you and your platform. When choosing your next embedded payments provider, you’ll want optionality and a partner that can meet you where you are in your payments journey. If you have full company buy-in and are aggressively resourcing for your Payments Integration and In-House Payments Business, you’ll want a partner that offers robust APIs and dev tools coupled with expert solution engineering. If you’re in a bind with your existing provider and are looking to make a switch but are strapped for resources, you’ll want a partner that can provide tools, and support a crawl, walk, run approach. Maybe you’re focused on providing an Embedded Payables solution to your customers, but wouldn’t it be nice if you could monetize Payment Acceptance with the same provider in the future?

Here are a few questions your SaaS organization should consider around integration flexibility:

Does the payment provider offer flexibility with API-based integrations or pre-built integration paths and their respective benefits and limitations?
Do they accommodate any existing business operations, infrastructure, or workflows your SaaS platform currently operates on and provide the optionality to integrate seamlessly?
Do they give you the choice of a self-service or guided implementation process? On either path, you’ll want to seek an embedded payments provider that offers open lines of communication during the integration process to field any real-time questions or concerns that arise.

2. Scalability and Performance

When considering a new embedded payments provider for your SaaS platform, scalability and performance should be top of mind. Here are a few things to consider when thinking about scalability and performance measures with your next payment partner:

Do they address the scalability challenges associated with rapid growth, change management, and increased transaction volumes? Working with a payment provider that helps you navigate change from your existing provider while keeping your business operational is crucial. You want to work with a provider that understands the potential hiccups that may occur within this process.
Do they explore the opportunities to enhance revenue within your existing business portfolio? For example, are they practicing things like cost analysis around payments? Are they performing residual analysis to optimize your portfolio for key payment components like payables and receivables?
How long does it take to enable your sub-merchants from start to finish? For example, seeking a provider that helps streamline client acquisition with key features such as bulk boarding, and automated underwriting to get your customers boarded and transacting as quickly and efficiently as possible.
Do they offer a robust infrastructure capable of handling peak loads, and advanced & efficient boarding capabilities for your customers? Consider the reliability of key payment performance measures such as uptime, transaction speed, and bandwidth to ensure uninterrupted services.

3. Security and Compliance

As a SaaS platform considering a new payment provider, prioritizing top-notch security and compliance features is essential to safeguard your operations and customer data. So, what makes a provider secure and compliant? And how can you confidently choose a provider that will securely manage and process payments on behalf of your clients?

Consider the following:

Does your payment provider abide by the rules and regulations established by the PCI Council and possess the relevant industry certifications verifying this? Do they educate and work with you to better understand the compliance rules and regulations? For example, do they engage around questionnaires and work with your end users to get all the information they need or do they leave them to your organization to handle independently?
Do they provide advanced risk monitoring, and fraud prevention tools, and educate you on them and exactly what they mean for your business?
What tools and resources are provided to you around the underwriting process to ensure legitimate businesses are the only ones that process transactions through your platform? How are they ensuring bad actors are not at play?

These measures ensure a secure and compliant payment environment, protecting both your SaaS business and its customers from potential risks.

4. Customer Support

Customer support is crucial for SaaS platforms choosing a new embedded payments provider because it ensures smooth implementation, onboarding, and ongoing management of payment processes. Working with a payment provider that offers reliable support helps address technical issues quickly, minimizes downtime, and assists with integration challenges. Strong customer support enhances user experience, fosters trust, and allows your SaaS platform to focus on its core business activities.

Here are some key questions and considerations around customer support:

Can the payment provider offer top-level support consistently? Are they assessing your needs from the initial phases during pre-integration and do they take a guided approach offering you the support and solutions your platform needs post-integration?
If your team lacks the bandwidth or expertise in payments, does the payment provider offer designated individuals available to your team to assist in streamlining your platform’s payment processes, ensuring consistency and reliability? Their expertise can mitigate errors, reduce delays, and enhance the overall efficiency of financial operations.
What tools, technology, and resources does the payment provider offer to support your needs?

5. Cost and Pricing Transparency

You’ll want to work with a payment partner who guides you through the right cost and pricing structures that are easily understood and help drive revenue for your SaaS business. Here are a few key areas to consider when it comes to cost and pricing transparency:

Does the payment provider offer the payment expertise to educate you on the complexities of cost and pricing models for your payments business? Pricing with payments can be custom to your industry – does the payment provider guide you to price competitively to your specific SaaS market?
What level of exposure do you get to the true cost of transactions and how willing is your provider to engage with you on this topic? Are they walking you through key pricing and cost measures including transaction fees, or interchange rates, and ensuring you are optimizing your portfolio’s revenue potential?
What tools, tech, and resources are you being offered? How can your payment provider work with your specific business model, and help you save money with things like surcharging, service fees, and convenience fees?

Conclusion

Choosing the right embedded payments provider is a pivotal decision for modern SaaS companies. This decision significantly impacts your business’s efficiency, security, and customer satisfaction. By carefully evaluating key factors, you can ensure a seamless integration process and maintain a competitive edge in the SaaS landscape while scaling and monetizing your payments business.

Download our free checklist to keep these considerations in mind.

Looking to learn more? Schedule a demo with one of our experts today.

Fueling the Future: A Note from Our Founders on Our Series A Raise

Posted on July 2, 2024 by finao-admin - Blog, Payabli

It’s been a week since we announced our Series A led by QED Investors with participation from our existing investors TTV Capital, Fika Ventures, and Bling Capital. We’ve been floored by the outpouring of kindness and support from our partners, customers, team members and even competitors! While Will summed it up perfectly in his LinkedIn Post “We Haven’t Won Yet”, this is a big milestone for the company and we wanted to share some thoughts on this experience and what this means for the future of Payabli.

Otra Noche en Miami (Another Night in Miami)

When Will and I met in Miami nearly 15 years ago on a humid August night, before going out on the town, it would have been impossible to predict how our entrepreneurial journey would unfold. Who knew going salsa dancing at a Colombian club in downtown Miami would lead to a 15-year friendship and culminate in us founding Payabli. However, “connect the dots backwards” as Steve Jobs would say, and it all makes sense.

Will had already founded and was growing Revopay at the time. He was intrigued by my experience leading National Sales at Seamless and would constantly pepper me with sales strategy questions and would repeatedly tell me “Jo you have to start a business… you’re made to be an entrepreneur.” I knew from early on that if I did start a business I’d want to have Will as a partner. Our lives continued to dovetail with me heading back to LA for Business School at USC and Will moving back to LA to reunite with his Brother and Co-Founder Mike who was based in LA and co-leading Revo from the West Coast. My time at ServiceTitan was invaluable – not only did I get to help scale a category-leading vertical SaaS company, but it would ultimately lead to the inspiration to found Payabli. The success of ServiceTitan Payments illustrated for us that there was a tectonic shift of trillions of dollars of commerce migrating off of legacy ISOs and Processors and becoming embedded within vertical SaaS Platforms. Companies like Mindbody, Toast, and ServiceTitan were early to make payments a core part of their business model, but having to cobble together a fragmented payment infrastructure of legacy gateways and processors to execute a modern payments strategy was capital-intensive, time-consuming, and painful. There had to be a better way.

We founded Payabli to build what we believed the next generation of ServiceTitans’ would need. The Roofrs, BuildOps, and CurbWastes of the world were going to want a modern unified API and Infrastructure stack to quickly and easily embed and monetize payments. They’d want to have significant influence and control over not only the payment experience but also their Payments business. They needed tools to set pricing and customize boarding flows, understand how their merchant portfolio was growing and how they could maximize their payment margin, as well as transparency into merchant settlements and exceptions like returns and disputes. The platform would need to be “Developer First” with world-class documentation and dev tooling to give convenience and simplicity to the Developer Community. They’d need omni-channel capabilities to monetize their sub-merchant’s money acceptance. They’d also need diverse products to monetize their sub-merchants’ payment issuance to vendors, sub-contractors, and employees. They’d want a flexible platform and program that scaled with their business over time. They would want to work with a team that they could trust, that understood how important customer experience was, and that knows payments are the lifeblood of their business, making it critical to get them right. Helpful advisors that wouldn’t keep them in the dark on payments but constantly educate them on how the business worked and brought forth new ideas and innovations to enhance their integration over time. They’d need and want Payabli.

Trust the Process

We bootstrapped the business to $50K in MRR. The early customers that believed in us, we will forever be indebted to and are so grateful for them giving us a shot. We didn’t intend to raise Venture but we had some opportunities with large prospects that loved our technology and team but were skittish on taking a bet on a small unproven company. We figured if we had some institutional credibility behind us it would alleviate these objections and allow us to close bigger and bigger deals. We raised our Seed Round in mid-2022 led by Fika Ventures, with TTV Capital and Bling Capital as Co-Investors. We lucked out with our Seed Investors as each firm is composed of amazing people and bring their unique value to Payabli. As suspected, the institutional credibility helped earn the trust of new and larger customers, but also each of our investors rolled up their sleeves and were invaluable in sending us prospects, introducing us to new backend providers, and recruiting excellent talent. Over the last two years, it’s been a privilege working with and becoming friends with our amazing Seed Investors.

Coming off a successful 2023, and anticipating a big Q1, we began to prep for our Series A in January of this year. We were fortunate that we had been nurturing relationships with investors over the better part of a year and had garnered some significant interest from several firms. Given the positive experience we had with our Seed Investors we wanted to ensure our Series A investor would be equally as accretive and also have a positive impact on our culture.

We met Laura Bock at Money2020 and began to build a relationship with her and the QED Team. In our initial meeting, we could tell that Laura and QED were deeply curious about embedded payments and looking for the right company to back. Following the meeting, we were impressed by how much time they spent with us, really seeking to understand the overall Embedded Payments landscape and the unique nature of Payabli’s unified 3P offering. Each meeting was met with better and tougher questions as well as unique insights and points of view that QED had amassed given their research on the space. At the end of March, we let QED and a handful of other funds know we were going to raise and that kicked off a whirlwind fundraising process that would culminate in multiple terms sheets from incredible investors including QED within two weeks.

We recognize it’s a very difficult time to be raising capital and we are in a very fortunate position. We are extremely grateful to all of the investors who got to know us throughout this process and those who believed in Payabli enough to ask to invest. We ultimately chose to go with QED for the following reasons:

Reputation in Fintech: QED invests exclusively in Fintech and has a stellar reputation and global footprint. Nigel and Frank were Fintech pioneers having built Capital One into the powerhouse it is today, and have backed multiple category-leading businesses like Credit Karma, Nubank, and Remitly.
Partner Fit: Laura stayed engaged with us for many months and as we got to meet her and more of the team including Shruti we observed them “getting it” more and more. They asked better / tougher questions, brought us new intel, and gave us helpful feedback on our positioning and strategy. They also saw the value we bring in unifying the 3Ps and appeared to be all in on our thesis. They remained steadfast in their conviction for investing in Payabli and every month nudge us to remind us of their interest. The fundraising process felt like a glimpse of how it would be to work with Laura and QED, they were engaged and thoughtful, as well as easy to work with and fair throughout the negotiation process.
Founder Love: We spoke with six or seven references from QED and also did quite a bit of back channeling. Time and again the Founders were extremely complimentary of QED and Laura specifically. One founder told us flat out “ You’d be crazy not to go with QED”. Founder Love was a big determinant and hearing some of our peers who were building extraordinary companies sing QEDs praises left a big impression on us.

Thank you to the entire QED Team for believing in Payabli and joining us on this exciting new chapter in our journey.

So, What’s Next?…

When we raised this round we still had about 1.5 years of runway left and had doubled revenue in a quarter. We decided to raise opportunistically to further accelerate growth, build more, and enhance our product. Here’s how we intend to use the funds.

We’re dreaming big at Payabli. We like to say we’re building the AWS of Payments where whatever payment experience a developer wants to build Payabli has myriad solutions to offer them. We’ve already built a lot of product, however, we want to continue to innovate and bring to market cutting-edge new products while maintaining reliability and scalability. We are investing heavily in more engineers and engineering leadership to ensure we’re consistently shipping new and better product. We are excited to unveil numerous new features and products coming out in the second half of 2024.

The funds will help accelerate further growth. Payabli has grown to nearly 8 figures in revenue and over a billion dollars activated processing volume off of pure cold outbound prospecting and referrals. We’re just starting to get our marketing motion in place and will be investing heavily in new marketing channels as well as further building out our small but mighty sales team. As our Product Owner Adrian Rosario likes to say “Payabli’s been all steak, no sizzle.” Well, we’re bringing the sizzle to Payabli this year.

While you’ll see more active marketing and more prominent brand awareness, we won’t turn our back on what got us here, providing great technology coupled with white-glove support and trusted advisory to our partners. We’re hiring additional Success and Operations team members to support our growing list of Partners and Sub-Merchants. We’re also bringing on more Solutions Engineers, Technical Writing, and Developer Evangelists to help our Partners integrate with us more quickly and easily. We’ve historically focused a lot on condensing the Sales and Integration Processes. We believe that a lot of the industry has neglected a critical element which is helping Partners ramp their volume by driving customer adoption once they are live. We will be investing heavily in partner marketing and enablement to help our partners not only integrate with us, but maximize their customer adoption and drive maximal revenue.

A BIG Thank You!

We’re thrilled to be in this privileged position of having raised our Series A round of funding. We are so appreciative of everyone who has helped us get to this stage. From our earliest to our newest Software partners thank you for entrusting us with such a critical part of your business and selecting us to be your partner. To our investors QED, TTV, Fika, and Bling thank you for your support, guidance, and friendship, we couldn’t imagine not having you in our corner. To our team members from the OGs that started when we were nothing more than a dream to the new team members choosing to bet their careers on Payabli, we love you guys and thank you for being in the trenches with us every day. We haven’t won anything yet, but we intend to leverage this capital to propel us to become a category-leading Payments Infrastructure company and continue to empower the entrepreneurial economy.

Best,

Jo and Will

Leveling Up: Payabli’s 2024 Team Offsite in Miami, Florida

Posted on June 17, 2024 by finao-admin - Blog, Meet the Team, Payabli

Last week the Payabli team swarmed the shores of Miami Beach for our bi-annual team offsite. It had been 9 months since the entire team got together for our last event in September of 2023. The team was thrilled to regroup over a jam packed 48 hours of learning, planning and bonding.

During each offsite we rally around a singular theme that’s intended to capture the team’s engagement and focus while representing what’s most prescient at the company during that time. Our first offsite in October 2022 was “Creating Magical Customer Experiences” and revolved around going above and beyond to delight our customers. Our second offsite in March of 2023 was “Finding our Why” and encouraged the team to tap into their personal motivations for being at Payabli and finding a deeper purpose in their roles and responsibilities. Our third offsite’s theme was the “Time is Now” and prepared our team for the anticipated growth we would be experiencing in Q4 23 and Q1 24 – ensuring we were prepared to rise to the occasion.

This offsite’s theme was “Leveling Up: this is HOW we do it”. Whereas previous offsites revolved around the “What?” and the “Why?” about Payabli, this offsite specifically focused on execution and “How?” we will transition from a high potential startup to a category leading Scale Up over the next few quarters. We aimed to inspire our team members to work harder, dream bigger, and achieve more throughout the year and beyond.

Day 0: The Storm

Events can be nerve wrecking because there are discrete moments in time that require balancing so many potential externalities; so much precision is needed in order for an event to be a success. Luck would have it that the entire team would be traveling to Miami during a “Tropical Depression.” Wednesday was a stressful day with myriad flight cancellations, team members being rerouted to airports hours away from Miami and needing to drive into the location in the wee hours of Thursday morning. Not to mention completely flooded streets, and our hotel losing power for nearly 12 hours!

While this could have been a show stopper for our offsite, the team rallied and exhibited incredible resilience and positivity during the challenging travel impediments and inconveniences. Some team members ended up arriving at the hotel at 4am and were still able to make it for our kick-off at 9am on Thursday. What started off as a horrendous beginning ended up creating this incredible solidarity among the team and actually made Thursday that much sweeter. We know there will be jokes about Offsite #4’s rocky (rainy) start for years to come. Check out some of the snippets from our community Slack Channel “Cafecito Break Room”:

Day 1: Building Bonds and Celebrating Culture

The offsite kicked off with some icebreakers setting the tone for the event. Payabli has an official Team Dance that originated from the early day’s of our Founders’ friendship. Every offsite it’s an opportunity to induct the “newbies” into Payabli by teaching them the “Big Fish, Little Fish” dance. After getting our boogie on our leaders, Will Corbera and Jo Phillips, moderated the game “If You Really Knew Me.” In this game each team member has 60 seconds to share personal facts about themselves, bringing us closer together and building a stronger trust and camaraderie. It was an eye-opening experience that allowed us to see each other beyond our professional roles and connect on a deeper level.

We then dived into discussions about our core company values and how they align with this year’s theme of “Leveling Up.” These values are the backbone of Payabli and guide us in our mission to deliver exceptional service and innovative payment solutions to our Partners daily. Each team—operations, sales, marketing, and customer success—provided updates on their respective areas, highlighting achievements and setting ambitious goals for the future.

As night fell, we embraced the rich cultural heritage of some of our team members at Miami’s Sazon restaurant. The atmosphere was electric as we indulged in traditional Cuban cuisine, danced to live music, and celebrated our shared journey and team accomplishments. It was a night filled with laughter, music, and delicious food, reinforcing the bonds we’ve built and the vibrant culture we cherish at Payabli.

Day 2: Inspiring Talks and Team Spirit

Day two began with a fantastic surprise: custom Payabli jerseys for everyone! Each jersey was custom embroidered with every employees’ last name and their number of when they joined the company. We took team photos and professional headshots, capturing the spirit and unity of our team. These jerseys weren’t just clothing; they symbolized our collective identity and pride in being part of Payabli.

The excitement continued with two very special guest speakers. First, we welcomed Guillermo Cancio Bello Jr., a renowned business psychologist, who delivered an impactful discussion on “Sticking Together: Practicing Radical Candor & Empathy.” His insights on fostering open communication and understanding within teams resonated deeply with us, providing valuable tools to enhance our teamwork and collaboration.

Next, Michael Marmo, CEO and Founder of CurbWaste and a valued Payabli customer, inspired us. He shared his personal story on his entrepreneurial journey, detailing how it led him to build CurbWaste and how Payabli’s payment solutions play an integral role in their success. Michael’s story was a powerful reminder of the impact of our work and the limitless possibilities that lie ahead, empowering vertical SaaS businesses like CurbWaste to embed and monetize payments. Much like our team members who had a difficult time getting to our offsite, Mike also had to navigate through canceled flights and an emergency landing in order to join us. We will always be grateful to Mike for joining us as it definitely was an extremely motivating and memorable presentation.

The day also included more business updates, focused on upcoming Product Releases at Payabli as well as a mesmerizing session on some of the AI applications being employed at Payabli today and our further plans to leverage AI at Payabli in the future. There are a lot of exciting new features being rolled out these next two quarters and we’re excited to get them in our customers’ hand!

We concluded the offsite with a wonderful team dinner at Mila. The elegant setting, delicious food, and great company perfectly ended a productive and exhilarating event. We left the offsite feeling energized, refreshed, and ready to tackle the challenges ahead with renewed vigor and a united front.

Looking Ahead: The Future of Payabli

Our June 2024 offsite in Miami was more than just a meeting; it was a celebration of our achievements, a reinforcement of our core values, and a powerful motivation to “Level Up” as we enter an exciting new phase of the company’s growth. The experiences we shared, the knowledge we gained, and the bonds we strengthened have prepared us to achieve greater heights.

As we move forward, we carry the inspiration and energy from these two incredible days. Big things are happening at Payabli, and we are excited and ready for the future. Together, we will continue to innovate, excel, and make a difference in the world of payments. Here’s to leveling up and making 2024 our best year yet!

Introducing Payabli New Hires: Hannah Corry and Maourice Gonzalez

Posted on May 31, 2024 by finao-admin - Blog, Meet the Team

At Payabli, we’re always excited to introduce fresh talent that brings new energy and perspectives to our team. This month, we were thrilled to welcome two exceptional leaders to our family: Hannah Corry, our new Director of Project Management, and Maourice Gonzalez, our new Director of Engineering. Both come with rich backgrounds and a shared passion for innovation in the payments industry. Let’s dive in and get to know them a little better.

Can you introduce yourself and tell us a little about your background?

Hannah: I view education as a lifestyle, not a piece of paper. I’ve spent most of my career learning how to find new ways to approach age-old problems. I cut my teeth on a warehouse floor, which is excellent for the fast feedback it takes to really visualize the flow concepts that inform my project management style so deeply.

Maourice: I began my career in support, eventually making my way through QA, and engineering and eventually leading the entire tech organization as CTO.

Payments and Payabli

Tell us what excites you the most or what you love about the payments industry.

Hannah: I think most people assume that something as fundamental as payments has already been perfected. Payabli takes a fresh look at the industry and creates something that is accessible to the next generation of business owners. That’s something near and dear to my heart.

Maourice: I love everything about payments, building simple solutions that solve complex problems is what drives me. What we do at Payabli is critical to modern society, the more we innovate, the easier it becomes for people to worry about paying and getting paid. This allows people to focus on their business while we quietly keep funds flowing behind the scenes.

What excited you the most about joining Payabli? What made Payabli stand out to you?

Hannah: If you spend more than 30 seconds with a Payabli team member you see the mission and values in action. Creating the type of culture that lives and breathes values is something really special. It is possible to achieve great things, work hard, and still be a people-first org. Payabli is a great example of this.

Maourice: The mission and the people. Payabli is building solutions that make paying and getting paid extremely easy. Our platform lifts a huge burden off software (SaaS) companies and allows them to focus on their core business.

Role and Responsibilities

What will your role at Payabli be, and what are your primary responsibilities?

Hannah: I’m joining Payabli as a Director of Project Management. Project Management has such a bad rep, and a lot of it is for good reason. I am excited to be shoulder-to-shoulder with the team and work through some new ways of working that bring real value to more painful meetings.

Maourice: My role is Director of Engineering, my goals are to continue to build a world-class platform and team with a big focus on operational excellence bolstered by reliability, scalability, and security.

Career Insights & Advice

What’s one piece of advice you would give to someone starting in your field?

Hannah: My biggest advice is to deal with your ego first. Having a big ego will get in the way of all the curiosity, reflection, and fast failure you’ll need to be able to learn and serve others. Learn to hear the truth and tell the truth with kindness. The rest will fall into place.

Maourice: You should never assume you know everything. Knowledge, and experience come from the unlikeliest of places. You are the easiest person to fool, so learn to question yourself, don’t be afraid to be wrong, and acknowledge other’s great ideas and contributions.

Lightning Round

Let’s do a quick lightning round! Answer the following in a few words:

Hannah:

Favorite book? The Signature of All Things by Elizabeth Gilbert.

Favorite movie or TV show? What We Do in the Shadows.

Dream travel destination? Any place with hiking and hot springs.

Favorite cuisine or dish? I’m in love with Israeli cuisine and all the adventurous flavors and bread.

One thing you can’t live without? My water bottle. I don’t know how people can leave the house without one.

Favorite hobby or a passion of yours? Making artisan yeasted bread. I’m always looking up new braids or natural colorings that delight my 5-year-old.

Maourice:

Favorite book? The Gulag Archipelago by Aleksandr Solzhenitsyn.

Favorite movie or TV show? Star Trek Deep Space 9.

Dream travel destination? Japan and Korea (went earlier this year).

Favorite cuisine or dish? Bandeja Paisa from Colombia.

One thing you can’t live without? Being close to the ocean.

Favorite hobby or a passion of yours? Motorcycles.

The Power of Split Funding and Dynamic Funds Routing for Property Management and “Need to Pay” Verticals

Posted on May 24, 2024 by finao-admin - Blog, Payabli

Horizontal payment processors have served software platforms for years but lack flexibility critical to certain key verticals. Enter split funding and dynamic funds routing. In this blog, we’ll explore how split funding and dynamic funds routing transform payment processing for software platforms serving key “Need to Pay” verticals like Property Management. From flexibility to facilitating complex payment management, we’ll uncover the benefits and their impact on digital commerce.

Understanding Split Funding and Dynamic Funds Routing

What is Split Funding and Dynamic Funds Routing? This is the process in which a software platform that is processing payments can split a transaction and have it deposited into multiple merchant accounts or on their behalf.

Split Funding and Dynamic Funds Routing: Benefits for Software Platforms

When it comes to split funding and dynamic funds routing, there are multiple benefits software platforms will see when working with the right payment provider.

Never co-mingle funds again. With split funding and dynamic funds routing your software platform can avoid the co-mingling of funds. Co-mingling of funds typically refers to the mixing or pooling of funds from multiple transactions or sources into a single account but also consolidating different funds sourced for different purposes. For certain verticals, this provides superior user experiences while remaining compliant, while the co-mingling of funds is highly discouraged.

By eliminating the co-mingling of funds, your platform will avoid:

Accounting Challenges: WIth traditional payment processing providers, all your transactions occur within a basic merchant account and among daily batches of transactions. This means that funds get routed to one or two bank accounts with limited control over how they get settled, inadvertently mixing funds from different sources. This makes it difficult to track individual transactions or understand the origin of specific settlements within your clients’ bank accounts.
Compliance Headaches: Depending on the jurisdiction and industry, there may be regulations or legal requirements governing the segregation of funds, particularly when handling transactions on behalf of others (e.g., customers or clients).
Lack of Transparency: Maintaining records of all your transactions from your customers coupled with keeping track of funding transfers, payments to your software companies, and other bills in bank accounts places an undue burden on businesses. This can be a nightmare operationally and may even require you to leverage third-party tools to just make sense of it all.

Additionally, split funding and dynamic funds routing allow software businesses to optimize for:

Improved customer experience: ensuring timely and accurate payments, increasing customer experience within your platform as it relates to payments, and the splitting of funds overall.
Increased compliance and transparency: facilitating adherence to financial and compliance regulations and providing clear records for auditing.
Ease of payment management: simplifying reconciliation and reporting, eliminating the need to track individual transactions across multiple accounts. Working with the right payment provider offers a streamlined approach that not only saves time and resources for software platforms but also improves accuracy and transparency, enhancing the platform’s financial visibility and control of all transaction details in one centralized view.

Which SaaS Industries Can Benefit From Split Funding and Dynamic Funds Routing?

Certain SaaS industries significantly benefit from utilizing split funding, specifically to eliminate the co-mingling of funds. One key industry is the HOA software industry. For example, if you are operating as an HOA software company, you are responsible for all of the individual HOA management companies under you, who are responsible for collecting all of their homeowner payments and fees. When the HOA management companies under your platform receive payments from the homeowners, they need to ensure there is no co-mingling of funds that eventually flow through as transactions via your platform. For example, a homeowner may pay an HOA management company under your platform for renting out the pool area at their building but also pay a fee for re-paving the roads at the HOA community. If both of those transactions settle into the same pool, this would be considered a co-mingling of funds. Co-mingling funds in HOA software platforms is highly discouraged to ensure financial transparency, comply with legal requirements, and prevent fraud. Keeping funds separate simplifies accurate accounting, reporting, and auditing while reducing liability and maintaining homeowner trust.

Streamlining Payment Management & The Power of Working with the Right Payment Provider

Payabli empowers software platforms to optimize their payment processing, drive revenue, and boost customer satisfaction with a unique payment feature set that is fully integrated and baked into each platform’s product experience. Unlike many payment providers in the space, Payabli offers robust split funding capabilities, setting up each customer on your platform with the appropriate amount of merchant accounts and ensuring the correct funds routing to eliminate the co-mingling of funds. This allows you to process transactions securely and compliantly, routing funds to different bank accounts while seamlessly reconciling split funding through comprehensive transaction and settlement reporting APIs and UIs. Our team provides the tools to direct and split funds according to your unique business needs, ensuring compliance and enhancing user experience.

To see how these innovations can revolutionize your software platform’s payment processing, we invite you to watch our video on split funding and dynamic funds routing.

Interested in learning more? Schedule some time to chat with one of our payment experts. We’ll show you how our API-first payment solution can empower your business to build seamless payment experiences.

What is Payment Tokenization and How Can it Enhance Security for Your Software Business?

Posted on April 30, 2024 by finao-admin - Blog, Industry Insights, Payabli

Security in payment transactions is crucial for software businesses, and payment tokenization offers an innovative solution to this challenge. As we mentioned in our previous blog, there are multiple types of tokenization including standard, multi-use, and network tokenization. Each can benefit a software business’s unique use case and play a crucial role in its payment strategy.

In this blog we take a step back to explore the fundamentals of payment tokenization, why it matters for software businesses, its role in safeguarding sensitive payment data, and its impact on transaction security. We also emphasize the significance of partnering with the right payment provider for seamless and secure token migrations, ensuring a smooth experience for software businesses and their customers.

What is Payment Tokenization?

Payment tokenization involves replacing sensitive payment data, such as credit card numbers or bank account details, with randomly generated tokens. These tokens are used to facilitate secure transactions without exposing actual payment information. When a customer initiates a transaction, the payment system generates a token representing that information instead of transmitting their payment information, such as credit card or bank account details. This token is then passed through the payment process and stored in your business’s payment platform for future usage. If the token were intercepted, it would be rendered ineffective for use by unauthorized individuals or hackers, because it does not contain any sensitive data. The diagram below shows how payment tokens work for software businesses and their customers, and how the payment platforms’ backend tech, such as Payabli helps facilitate the payment tokenization process.

Why Does Payment Tokenization Matter for Software Business?

For software businesses, payment tokenization enhances security by reducing the risk of data breaches and fraud. It allows them to handle payment transactions without storing sensitive data, thus minimizing liability and compliance requirements. Additionally, payment tokenization enables software businesses to offer their customers a safer and more secure payment experience, which can enhance trust and loyalty.

Graph from EMV Co

Exploring Different Types of Payment Tokens

There are three generally well-known forms for tokens:

Traditional Payment Tokens: These tokens are generated by replacing sensitive payment card details such as credit card numbers with a randomly generated string of characters. Many PCI-certified gateways and processors have enabled this functionality for many years. Since they are managed by your payment service provider, they tend to be the easiest and cheapest method to manage recurring payments.

Device Tokens: Device tokens are associated with specific devices, such as smartphones or smartwatches, and are used in mobile payment systems like Apple Pay, Google Pay, or Samsung Pay. Instead of using the primary account number, the payment system generates a unique token tied to the device’s secure element or software.

Network Tokens: Unlike traditional tokens or device tokens, which are generated by merchants or payment processors, network tokens are created and managed by the card networks themselves. These tokens can be automatically updated since they are linked to the issuer and network if a change occurs.

Payment service providers like Payabli work with all three of these modalities to provide a convenient and secure payment processing experience for our software Partners.

That Seems Too Easy… What’s the Catch? And What Does This Mean For Software Businesses?

As mentioned above, traditional tokens are stored with either the gateway or processor. This means those platforms are managing the token lifecycle on behalf of customers and thus control the flow of that data. If a merchant or software provider (ISV) had to switch to a new gateway or processor, they would have to migrate all those saved tokens or even risk losing them all. Not having access to those tokens could have a massive impact on the merchant’s ability to process transactions and could affect their business operations overall.

There are two key factors that software platforms need in order to save their clients from this grief:

Token Portability: When working with a provider that processes your payments, make sure you can migrate your tokens to a new provider.
Token Migration: When you select a new payment service provider, it is important to ensure they can handle token migrations. Are they PCI-compliant and do they have a formal process to ingest the token information securely?

How does Payabli Do it Better?

Migrating a token may sound simple but it tends to be fraught with error. At Payabli, our team of payment experts has spent a significant amount of time normalizing data from the largest players in the payments space to ensure that migrations work smoothly for software businesses. You can see in the diagram below how the token migration process works within our technology ecosystem.

Moreover, we have automated the process, which often takes 2-3 weeks with other payment providers, down to a one-day process.

Here’s how we help facilitate the token migration process in a timely and secure manner:

We set secure file transfer protocol (SFTP) inboxes for our clients to deliver the information
We have built proprietary tools to standardize the formats from big payment service providers in the industry
We automatically decrypt the files and extract all the information
We create Payabli tokens for our merchants to be able to process transactions immediately

Conclusion

In conclusion, payment tokenization stands as a cornerstone of modern transaction security for software businesses, providing a robust shield against data breaches and unauthorized access. By adopting this technology, businesses not only safeguard sensitive payment data but also enhance the trust and confidence of their customers. Partnering with the right payment provider, such as Payabli, further amplifies these benefits through efficient token migrations and management, ensuring that the payment process remains seamless and secure. Payabli not only simplifies compliance with PCI standards but also equips businesses with the tools necessary for handling complex token migrations effectively. Therefore, embracing payment tokenization is not just about adopting new technology—it’s about investing in the future of secure, reliable, and customer-centric digital transactions.

Interested in learning more? Our team of payment experts would love to chat. Schedule a demo here.

ACH & ACH Returns: Everything Your SaaS Business Needs to Know

Posted on April 3, 2024 by finao-admin - Blog, Industry Insights, Payabli

In the dynamic landscape of digital transactions, it’s crucial for businesses, especially Software as a Service (SaaS) companies, to stay abreast of various payment methods and their associated processes. One payment method that holds significant importance is Automated Clearing House (ACH) transactions.

Understanding what ACH is, how ACH works, as well as subsequent processes like ACH returns is fundamental for SaaS businesses to efficiently manage their finances and maintain customer satisfaction.

What is ACH?

ACH (Automated Clearing House) is a network in the United States for electronic payments and transfers between bank accounts, facilitating transactions such as consumer transactions, direct deposits, and bill payments. It offers a more efficient and cost-effective alternative to traditional paper-based methods like checks.

How does ACH Work?

The ACH rail supports pushing and pulling funds from a US Bank Account. This means it can be used for purchases, payroll, and pretty much any use case as long as you have an originating and receiving bank account on either side of the request. See the diagram below.

What is an ACH Return?

An ACH return is a process where an ACH transaction is sent back to the originating bank by the receiving bank. There are several reasons why an ACH transaction may be returned, including insufficient funds, invalid account numbers, incorrect information, or issues with the account holder’s authorization. When a transaction is returned, the funds are not transferred and the payment is considered unsuccessful. It is important for businesses to understand with ACH returns that just because you set up a payment, doesn’t mean it is completed.

What is the Flow of the ACH Return Once It Has Been Initiated? (AKA how do ACH returns happen?)

Once initiated and depending on the return code, a return can take 2 banking days to up to 60 calendar days to process.

Why ACH Returns Matter for SaaS Businesses?

With ACH returns, the RDFI is responsible for initiating the return entry or the return for the total amount of the original payment (partial returns are not permitted).

ACH returns not only incur fees and lose revenue for merchants but also endanger a merchant’s ability to use ACH payments. If a merchant incurs too many ACH returns, their ability to use the ACH network can be revoked altogether.

There are other implications around ACH Returns for SaaS businesses, including:

Cash Flow Management: ACH returns can disrupt cash flow for SaaS businesses, especially those operating on subscription-based models. Failed payments mean delayed revenue, which can impact budgeting, forecasting, and overall financial stability.

Customer Experience: Payment failures can result in customer dissatisfaction and churn. For SaaS businesses, where customer retention is paramount, failed transactions due to ACH returns can damage relationships and erode trust. Customers expect seamless payment experiences, and frequent returns can tarnish a company’s reputation.

Compliance and Risk Mitigation: Understanding ACH regulations and compliance requirements is crucial for SaaS businesses to mitigate risk and avoid potential penalties. Non-compliance with ACH rules can lead to fines and legal consequences. By proactively managing ACH returns and adhering to industry standards, businesses can reduce compliance risks.

Operational Efficiency: A high volume of ACH returns can strain operational resources as businesses need to investigate and resolve payment issues promptly. Implementing efficient processes and leveraging the right payment solutions for ACH management can streamline operations and reduce the administrative burden associated with returns.

How Can SaaS Businesses Address ACH Returns?

Partnering with the Right Payment Provider: Utilize a payment provider that offers robust ACH processing capabilities and built-in features for managing returns. These platforms often provide monitoring, reporting, and automated retry mechanisms to help minimize returns.

Data Verification and Validation: Implement account verification processes to ensure the accuracy of customer information before initiating ACH transactions. Validating account details can reduce the likelihood of returns due to incorrect or incomplete data.

Communication and Notification: Maintain transparent communication with customers regarding payment failures and ACH returns. Promptly notify customers of any issues and provide clear instructions for resolving payment discrepancies to mitigate dissatisfaction and preserve relationships.

Risk Assessment and Fraud Prevention: Implement risk assessment protocols to identify and mitigate potential fraud risks associated with ACH transactions. Utilize fraud detection tools and monitoring systems to detect suspicious activity and prevent unauthorized transactions.

In conclusion, ACH transactions and ACH returns play a significant role in the payment ecosystem, particularly for SaaS businesses reliant on recurring revenue streams. By understanding the fundamentals of ACH, actively managing returns, and implementing best practices for ACH processing for PayIn, SaaS companies can enhance cash flow, preserve customer relationships, and ensure compliance with regulatory requirements, ultimately driving long-term success in the digital economy. There are other implications as it relates to ACH for PayOut, which we will cover in more detail in a future blog post.

Looking to learn more about how Payabli helps SaaS companies like yours better handle ACH and ACH Returns? Schedule some time to speak with one of our Payment Experts.

The 3Ps to scaling your SaaS Payments Business

Posted on March 29, 2024 by finao-admin - Blog, PayFac 101

It’s a pretty awesome time to be a vertical SaaS company. SaaS has always been attractive given the recurring and predictable nature of SaaS revenue, the opportunity for category leaders to command dominant positions in their given verticals, and the plethora of ways to monetize one’s platform when you become the mission critical system of record for your installed client base. Now more than ever though, SaaS companies have so many levers they can pull to diversify their business model and unlock lucrative new revenue streams. Insert Payments Monetization. As most savvy SaaS operators already know, there’s a ground swell of TRILLIONS of dollars in payments volume and hence hundreds of billions in payments revenue, migrating from the traditional ISOs / MSPs and legacy means of distribution to SaaS companies across every vertical imaginable and unlocking massive new revenue opportunities for them.

We were inspired to create Payabli after helping architect ServiceTitan’s Payments offering. Whereas ST had the resources to hire a large team, stitch together integrations to various disparate APIs, and manually manage a complex system, we believed the next generation of Service Titans, Mindbodys, and Toasts who will make Payments a core part of their business model need something different. We believe they need a modern, “API First” Payments Stack that seamlessly ties together the key vectors of managing and scaling a SaaS Payments Business:

Pay-Ins
Payouts
Pay Ops.

Pay-Ins

Payment Acceptance, or as we call it Pay-ins is the low hanging fruit. The cats out the bag—there’s significant revenue to be made on the merchant acquiring side of the payments business, where a vertical SaaS company effectively becomes an ISO or a Payment Facilitator and enables their merchants with the ability to accept payments. While integrated payments is nothing new for Software companies, there’s a fundamental difference between payments as a feature set, and Payments as a core part of your business model. Today’s vertical SaaS companies need a developer friendly API and Embedded Components to deliver a world-class payments experience that seamlessly blends with their User Experience while reducing their PCI scope and security vulnerabilities. They should be evaluating Payments Partners’ breadth of their offering to ensure they can not only deliver for today’s basic payments use-cases but continue to drive value in future iterations of their Payments offering.

Payabli provides robust APIs and Embedded Components so our SaaS partners can design world-class payments experiences for their specific verticals and use-cases. From Card-Not Present solutions like eInvoices and Pay-Links, Dynamic Payment Pages, subscription billing and logged-in customer pay portals to Cloud Device integrations to power Webapp Integrations and offer payments in the field or diverse retail environments. Of course, we can’t forget the nuanced, but highly strategic solutions like L2/L3 processing to optimize B2B interchange rates, compliant and powerful Service / Convenience fee engine, or the ability to consolidate numerous payment methods from CC and ACH to Billpay and Lockbox payments.

Payouts

Less understood, but oftentimes more lucrative is Payouts Monetization. SaaS companies often overlook the fact that while a Gym, an HVAC Contractor, or a Childcare Facility want the ability to accept payments from their clients, these same merchants need ways to efficiently, securely, and economically send money to vendors and suppliers, sub-contractors, employees and a coterie of other plausible recipients. Aside from creating significant efficiencies and cost savings by helping their clients with Payouts, there’s significant revenue for SaaS companies to unlock here as well.

The same Developer friendly APIs and embedded components are available through Payabli for our SaaS Partners to prop-up and monetize on the outflows of capital from their platform. Whether it’s fully automating and optimizing the accounts payable process, developing a Spend Management program to help manage clients’ employee’s expenses, or various other potential PayOuts use cases, Payabli is focusing heavily on helping our Software partners on all things payouts. This goes beyond Card Issuing and monetizing within the interchange, Payabli is helping our Partners disburse and monetize payouts through a slew of payment modalities like vCards provisioned to a digital wallet, ACH, Real-Time Payments (RTP), Push to Card, and more.

While this is usually a second stage integration, Software partners when thinking about their ideal Payments Infrastructure should be looking down the pike to ensure their partner can help them develop and monetize on payouts.

PayOps

PayOps may not be sexy, but these are the critical tools that allow SaaS companies to establish maximal control over their payments experience and command maximal revenue. Payabli aims to be the “bridge” across your entire Payments monetization journey. This means that we can assume the role of our clients’ outsourced payments team and provide all the managed services that go along with running the operation of a payment. However, we’re designed as a scaled program to help you take on responsibility over your payments business and ultimately unlock the lion’s share of the Payments revenue.

Some of our competitors have been all in on PayFac as a Service. We’ve validated that most Software Partners don’t need to, don’t want to, and shouldn’t invest in the arduous process of becoming a PayFac. In reality, they just need PayOps solutions that provide certain PayFac like capabilities like frictionless boarding, split payments and consolidated ACH and CC funding, among other things. Our robust suite of PayOps solutions like frictionless boarding, Underwriting Management, Billing and Pricing, Dispute Management, Fraud and Risk Tools, and more, allow our Partners to choose what parts of their Payments business they want to manage and the tools needed to do so. And hey, when our partners are crushing it so much and processing Billions in volume, at which point it may make sense for them to become a PayFac then great, just leverage our PayOps stack instead of building it from scratch.

Within PayOps are the underlying economics, margin maximization tools, and reporting infrastructure to drive massive revenue from your SaaS Payments business. It’s not enough to earn payments revenue, SaaS companies should have clear and transparent revenue reporting and be educated on what levers they can pull to unlock more revenue from their Payments offering.

At Payabli we operate off a simple thesis that If you’re a Software Company, You’re a Payments company. We believe we’ve built the best holistic Payments Infrastructure platform to help today’s vertical SaaS companies build, manage and scale a best in class Payments offering. To find out more about what we’ve built and are building, we invite you to schedule a call with one of our Payments Consultants and discuss your Payments strategy and if Payabli could be a good fit for you.

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