Category: Payabli

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

Posted on July 26, 2024 by - 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 - 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:

  1. 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.
  2. 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.
  3. 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 - 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!

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

Posted on May 24, 2024 by - 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:

  1. 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.
  2. 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).
  3. 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 - 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:

  1. Token Portability: When working with a provider that processes your payments, make sure you can migrate your tokens to a new provider.
  2. 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 - 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.

 

Key Takeaways from NTEN 2024

Posted on March 22, 2024 by - Blog, Industry Insights, Payabli

The Payabli team had the pleasure of attending and sponsoring the NTEN (Non-Profit Technology Conference) in Portland, Oregon for the second year in a row. We interviewed our payment experts Aaron Vela and Collin Haberl who attended the event this year and met many amazing non-profit organizations and members of the NTEN community.

Can you provide a brief overview of the event and what it is all about?

NTC is the Non-Profit Technology Conference. The event brings together those in the non-profit community who are looking to make the world a better place through the skillful and equitable use of technology.

The conference encourages the non-profit community to explore the latest trends in technology and Software-as-a-Service (SaaS) tools that can help enable and streamline the management of their organizations. Many technology vendors were attending, from customer-relationship management platforms (CRMs) to Grants to Payments to Marketing agencies and web development. Overall, the conference is a great opportunity to educate yourself on the entire non-profit sector in an open and communal environment.

What were some of the highlights or memorable moments from the event this year?

Aside from sharing our core competency of “every software company is a payments company” with visitors at our booth, we also enjoyed keeping tabs on attendees’ running totals of the top Skee Ball scores as our booth was positioned right across from the activities! (440 was the highest score we witnessed, by the way).

All jokes aside, one of the key themes we encountered this year during our discussions with attendees, (especially some of the CRM providers), was the misconception about the ease of integrating payments into their platforms. Historically, both fundraising platforms and CRMs have leaned on gateway providers to handle payment processing for their charitable organizations, but increasingly we found that both donor management platforms and CRMs are intrigued and exploring options to build in-house white-labeled payment solutions in order to provide a better customer experience and monetize their payments volume. This invigorated us and brought about some exciting discussions.

We also really enjoyed the happy hour events Bonterra and Pantheon hosted during the event where we had great conversations with some prospects and consultants about Payabli and payments.

Were there any notable speakers or key themes you’d like to mention?

Yes. One of the speakers we enjoyed listening to was Amber Case, Founder of Calm Technology Institute. The topic of her presentation was around the interaction between humans and technology, which we appreciated. She reinforced the importance of keeping the mindset that the development of technology should be driven by the users and not just the developers. This allows for the feedback loop to be open versus restricted to the development.

A key theme we noticed throughout the event is how much people are concerned about data and privacy online. The non-profit, donor, and CRM platforms, especially, expressed that clients who use their software are concerned about their experience using their platform.

Payabli had a booth at the show. Can you share some feedback you received from booth visitors and attendees?

We were very excited to have a booth at the show and demo our product to attendees. Overall, we received great feedback about where their heads are at when it comes to payments. We found that a lot of attendees are particularly curious about payments and how our solution differs compared to some of the legacy providers in the space.

In a lot of our conversations, organizations expressed that they have allowed their charities to bring their own payment provider on board, which quickly turns into having to juggle multiple providers over time and naturally, less control over a singular solution.

Additionally, we were psyched to hear some of this feedback post-demo from some of the booth visitors:

“We want to start with a proof of concept solution that is “plug-and-play” before going “all in” on a payments offering.”

“The timing is perfect right now because we’re currently evaluating building our own payment solution!”

“Wow, the docs are beautifully laid out, and the level of granular detail is very nice.”

“It’s cool to see the reporting mechanisms from the top down – a bird’s eye view of our entire payment ecosystem is something we never knew we could see or have offered in a single solution.”

A lot of booth visitors also really appreciated our “meet you where you are” philosophy around Tech and Operations and our process of solving a tailored implementation through connections with our team. We were very pleased around the receptiveness of our mindset of consolidation and how we provide software Partners PayIn, PayOut, and PayOps solutions in a single unified platform. They also liked to hear about our hands-on approach from guided implementation to shared service responsibility, which brought reassurance to prospective partners looking to dip their toes in the water.

Overall it sounds like this was a very successful event not only for Payabli but also for the entire NTEN community! Can you sum up your top three takeaways?

Three takeaways, or themes that were prevalent during this year’s show were:
Education, Data, and Community.

Education: It was more apparent this year than ever that the NTEN community and attendees are there to learn. This crowd is very curious and always looking for new and innovative ways to better their organization. There were over 300 sessions for attendees to go to, which shows the conference is dedicated to learning.

Data: One of the major takeaways from this year was the importance of data and its security. For us, we wanted to tie that into our conversations with attendees as it relates to payments. We highlighted how working with the right provider can help non-profit organizations crawl, walk, and run in their payments journey, while also providing the data and security measures they need to be successful.

Community: This is a wonderful community where everyone is looking to help each other. The NTC attendees are all about self-determination, educating themselves, and sharing ideas for organizational transformation. The show’s focus on advocacy and forward-thinking nature encouraged highly engaged and productive conversations.

Any final thoughts on the event?

The opportunity for growth via the use of embedded payments is alive in the non-profit sector, as the community begins to see the simplicity available from the implementation to operationalizing with the right partner.

We are really excited to attend next year’s show in Baltimore and already looking forward to having more exciting conversations with the NTEN community and its attendees. We encourage you to stay connected with our team and reach out to schedule a demo if you would like to learn more about our product.

 

Hosted Payment Page vs. Embedded Component – What’s the Difference and Key Benefits

Posted on March 18, 2024 by - Blog, Industry Insights, Payabli

In the competitive landscape of software, staying ahead means mastering your chosen verticals. One crucial aspect is integrating payments seamlessly into your system. However, the task is often daunting due to the intricate nature of embedding and operationalizing payments.

As a software platform embarking on your payment journey, you will face the challenge of creating the best and most secure payment user experience for your customers. The development required and the allocation of resources can appear complex and time-consuming. Yet, it doesn’t have to be.

Partnering with the right payment provider can streamline the process from discovery to implementation, enhancing the end-user experience for your platform. The right provider offers flexible solutions, to crawl, walk, and run depending on where your software platform is in its payments monetization journey. Hosted Payment Pages and Embedded Components are two such tools.

These solutions enable platforms to evolve from their minimum viable product (MVP) to a fully seamless payment experience. This blog will delve into the details of these options, empowering your software platform to navigate its payment journey effectively.

Hosted Payment Pages vs. Embedded Components – What’s the Difference?

  • What is a Hosted Payment Page? A Hosted Payment Page is a payment page hosted on a payment provider’s secure URL allowing an entry of payment information from your customers.
  • What is an Embedded Component? An Embedded Component is a secure container placed within your software platform’s web experience, which allows for secure entry of your customers’ payment information.

An Overview of Hosted Payment Pages

Using prebuilt options such as Hosted Payment Pages are an easy option for your software platform to offer payments. Many benefits come with choosing the Hosted Payment Page path and there is flexibility for your software platform, including:

  • Little to no coding needed: When it comes to Hosted Payment Pages, one of the main benefits for your software platform is that there is little to no coding needed. Hosted Payment Pages allow you to start monetizing payments quickly, securely, and easily. This means if you’re resource-constrained and don’t have available developers or roadmap capacity you can still begin monetizing your payments volume while buying time to build a deeper integration.
  • Security and compliance advantages: Via the Hosted Payment Page, the right provider can ensure that no sensitive data/payment information touches your system, greatly reducing the burden of compliance for your software platform.
  • Ease of integration and scalability: Hosted Payment Pages and Boarding Links are great starting points for your software platform to accept payments and board customers today while allowing you the ability to build a seamless, payments and boarding experience into your platform over time.
  • Customization: There’s a common misconception that Hosted Payment Pages and boarding forms don’t offer any customization. However, the right payment provider can make this available and offer flexible options. For example, it can be as simple as branding your payment pages with your brand’s custom colors, fonts, and logo to give it your own look and feel even if it is still hosted on your payment provider’s URL. 

An Overview of Embedded Components

Embedded Components provide a seamless experience to allow your customers to accept payments securely via a JavaScript-based collection and tokenization system embedded within your platform, protecting sensitive data and limiting your PCI Compliance scope.

Similar to the Hosted Payment Page solution outlined above, there are various benefits for software platforms that choose the Embedded Component path for payment acceptance as well as merchant boarding and advanced reporting.

  • Seamless and immersed user experience: Embedded Components provide a more native user experience ensuring your customers always stay within your platform reducing customer friction and abandonment.
  • Greater control and customization options: Your payment provider will provide you with the Embedded Component, and from there you will have the ability to customize it with all your branding needs to fit your platform’s look and feel. Any additional information you want to include is still available to you.
  • Security and compliance: Just like the Hosted Payment Pages, your payment provider should be hosting any payment information and reduce the burden of PCI compliance via the Embedded Component path. They take care of the security, you take care of the UI and branding.
  • Development and maintenance considerations: You are in control of anything that involves your Embedded Component, which boosts user experience.

Does Your Payment Provider Offer the Flexibility You Need?

Choosing the right payment provider is crucial for your software platform as you seek flexibility in your payment offering. Here are a few key things to consider when choosing your payment provider as it relates to Hosted Payment Pages vs. Embedded Components:

  • Do they offer solutions that allow you to “crawl, walk, or run” depending on your needs? The right payment provider can meet you where you are in your journey and provide flexibility with your implementation. For example, maybe your team wants to get up and running quickly so you decide to start with the Hosted Payment Page solution but eventually would like to graduate to the Embedded Component path. The right payment provider will take on a consultative approach with you and your team from the beginning, assess your software platform’s current stage and needs, and map out the proper development and implementation plan to ensure success.
  • Is your payment service provider aligned with your requirements? With the consultative approach, the right provider will have the confidence to recommend the solutions they think are best for your business. At Payabli, our team of payment experts has extensive knowledge of the intricacies of different implementation paths and use cases. While we like to give our Partners full reign of their payment journeys, we are also here to offer best practices and recommendations so that your platform is set up for long-term growth and payment success.
  • Security, compliance, user experience, and scalability: As you embed payments into your software platform, you are inherently in scope for PCI compliance by bringing payments into your ecosystem. However, working with a PCI Level 1 certified provider like Payabli, you can reduce this scope by leveraging the security built into Hosted Payment Pages and Embedded Components which will insulate you as the platform from touching any PCI-sensitive card data. This will provide a foundation for a safe and successful launch of your platform.
  • Do they offer an “all-in-one” solution and tools for optionality? From Embedded Components and Hosted Pages to a Robust WebApp and No-Code tools, it’s important to make sure you are partnering with a payment provider that provides a holistic offering that spans myriad use cases and features. 

For software platforms, integrating seamless payment solutions is paramount. By partnering with a payment provider like Payabli, platforms can streamline the process and enhance user experiences with our API-first approach.

Whether through Hosted Payment Pages or Embedded Components, platforms can swiftly adapt and scale their payments business. The key lies in selecting the right payment service provider, one that aligns with the platform’s needs and champions flexibility.

Ultimately, strategic partnerships pave the way for sustainable growth and success in the ever-evolving realm of software platforms.

Are you interested in learning more?

Speak with our payment experts to learn more about Payabli’s hosted vs. embedded payment solutions and how our team can help get you on the right path.

Winning the Chargeback Game: Strategies for SaaS Platforms to Reduce Merchant Chargebacks

Posted on March 5, 2024 by - Blog, Industry Insights, Payabli

In the fast-paced realm of Software as a Service (SaaS), efficient payment operations are vital for business success. Chargeback management, in particular, is crucial as customer disputes can profoundly affect a SaaS platform’s bottom line and reputation.

This comprehensive guide provides essential insights into chargebacks, emphasizing their impact and the importance of choosing a reliable payment service provider to handle and minimize associated risks for SaaS businesses.

Understanding Chargebacks in the SaaS Ecosystem

What is a chargeback? A chargeback is when a customer disputes a transaction with their bank or credit card issuer, leading to a forced reversal of a transaction.

How and why do merchant chargebacks occur in SaaS platforms? There can be several reasons merchant chargebacks occur for SaaS platforms. Some of the most common reasons are:

  • Unauthorized transactions: This occurs when a SaaS business’s merchant/customer does not recognize a charge, assumes it is fraudulent, and then initiates a chargeback. 
  • Dissatisfaction with service: Customers might file for chargebacks if they feel the service didn’t meet the advertised standards or expectations. This could be due to issues like downtime, bugs, or lack of promised features.
  • Billing errors: Mistakes such as being charged the wrong amount, being billed twice, or not receiving a promised refund can lead to chargebacks. These issues often arise from administrative errors or system glitches.
  • Subscription and cancellation issues: SaaS businesses most commonly operate on a subscription model, and sometimes customers may have trouble canceling their subscriptions or might not understand the terms of renewal. If they see charges after attempting to cancel or if they were unaware of automatic renewals, they might file a chargeback.
  • Fraud: Chargebacks can occur due to actual fraudulent activities, where stolen card information is used to purchase subscriptions. Once the rightful card owner notices, they will likely dispute the charges.
  • Friendly Fraud: This occurs when a customer makes a purchase but then disputes the charge with their bank instead of requesting a refund directly from the service provider, often claiming they didn’t authorize the purchase or weren’t satisfied with the service, even if they were.

What is the Difference Between Refunds and Chargebacks? 

Refunds are direct reimbursements from merchants to customers for issues like returns or dissatisfaction, initiated by the customer but processed by the merchant.

Chargebacks are disputes initiated by the customer through their bank against a transaction, potentially leading to a forced reversal of the charge, additional fees for the merchant, and a more complex resolution process. Chargebacks can be more damaging to merchants than refunds due to higher fees and negative impacts on their acquiring bank relationship.

The Significance of Chargeback Management for SaaS Platforms 

Chargeback management holds significant importance for SaaS businesses and their customers across several fronts.

It is important to understand how unchecked chargebacks can inflict substantial financial ramifications on SaaS companies, leading to revenue losses, increased operational costs, and potential disruptions to cash flow. Moreover, excessive chargebacks can tarnish a merchant’s reputation and strain relationships with payment processors, potentially resulting in account termination or heightened transaction scrutiny.

Maintaining healthy chargeback ratios is also paramount for SaaS businesses, as high ratios can trigger penalties and restrictions from payment processors, impacting their ability to offer a compelling embedded payment offering. As a general rule of thumb, a healthy chargeback ratio is considered below .5%.This emphasizes the importance of close monitoring and the proper tools SaaS businesses should leverage to avoid high merchant chargeback rates.

For Saas Platforms’ customers, chargebacks can damage their reputation, negatively impact cash flow, jeopardize their business’s health, and even place them on Industry Blacklists like Mastercard MATCH list, impeding their ability to accept electronic payments. Effective chargeback management strategies, including fraud prevention measures and clear communication with customers, are essential for sustaining the financial health and reputation of SaaS businesses while ensuring a positive experience for their clientele.

Proactive Measures and Best Practices for SaaS Businesses to Prevent Chargebacks

SaaS platforms can take several proactive measures to prevent chargebacks and minimize their occurrence for both their business and customers:

  1. Offering merchants a comprehensive onboarding experience and user guides:
  • Develop comprehensive onboarding materials and user guides to help customers understand how to use the platform effectively and navigate billing processes with their customers.
  • Provide tutorials, walkthroughs, and instructional videos that demonstrate key features, functionalities, and billing procedures to minimize user confusion and reduce the likelihood of billing-related disputes.
  • Offer ongoing training and support resources to empower customers to make informed decisions and manage their accounts efficiently.

2. Educate your merchants about implementing clear and transparent billing practices:

  • Clearly communicate subscription terms, pricing, billing cycles, and renewal policies to customers in initial conversations.
  • Ensure that billing descriptors are easily recognizable on credit card statements to minimize confusion and prevent customers from disputing charges due to unrecognized transactions.
  • Provide detailed invoices or receipts outlining the products or services rendered and the associated charges. For any services provided detailed photography of any work done and a customer signature is highly recommended.  
  • Refund policies: It is important to communicate what your refund policies are upfront with your customers to prevent dissatisfaction or chargebacks.

3. Enhancing customer communication and support:

  • Offer multiple channels for customer support, including email, phone, live chat, and self-service portals, to address inquiries and concerns promptly.
  • Provide proactive notifications and updates regarding subscription renewals, billing changes, or service interruptions to keep customers informed and mitigate surprises that may lead to chargebacks.
  • Implement a customer feedback mechanism to gather insights into potential issues or areas for improvement, allowing the platform to address customer concerns proactively.

4. Utilizing preventative tools like fraud and anomaly detection to catch bad actors before they run a payment:

  • Leverage a modern payment infrastructure that provides robust tools, such as access to fraud consortiums, anomaly detection systems, and user behavior analytics to identify suspicious activities and potential fraudulent transactions.
  • Ensuring that Address Verification Service (AVS) details are passed through with every transaction. AVS verifies that the billing address entered by the customer is the same as the one associated with the cardholder’s account. AVS not only helps prevent merchant chargebacks it can reduce interchange rates by .10% to .30% reducing merchant processing rates and/or improving SaaS Platforms Payments margins.  
  • Set up alerts and monitoring for unusual customer behaviors, such as multiple failed login attempts, changes in payment methods, or unusually high transaction volumes, to trigger further investigation and mitigation efforts.

Work with reputable payment service providers that offer fraud prevention tools, and real-time monitoring capabilities to prevent chargebacks from being created in the first place.

Leveraging the Appropriate Payment Technology for Chargeback Management

With all this being said, working with the right integrated payment service provider can help you ensure and manage potential risks and flags regarding chargebacks and chargeback management.

Reputable payment service providers like Payabli offer advanced chargeback management and risk tools to ensure your SaaS business is in good hands, including:

  • Integrated dispute management tools to automate and provide an extra layer of control and security over your platform and its merchants.
  • White-glove support with responsive tools like our Chargeback Concierge program to help your team respond to merchants about chargebacks at no charge.
  • Chargeback management APIs so you can handle chargebacks and disputes directly from your platform in real time.
  • Risk management. Our risk team works closely with our SaaS partners every step of the way to proactively monitor, mitigate risk, and prevent chargebacks from occurring.

We’ve received incredible feedback from our partners and have significantly reduced their time spent managing and responding to chargebacks with our easy-to-use chargeback and dispute management tools mentioned above. Megan Mclean, fitDEGREE’s Integrator stated she’s “saved dozens of hours per month” managing and responding to merchant chargebacks after integrating with Payabli.

Beyond Chargebacks: Building a Customer-Centric SaaS Platform

Customer satisfaction is paramount in reducing chargebacks for SaaS businesses. Satisfied customers are less likely to resort to chargebacks to resolve disputes or express dissatisfaction. By analyzing chargeback data, businesses gain insights into customer pain points and areas for improvement, driving continuous enhancement of products and services. Investing in customer success initiatives enables proactive engagement, personalized support, and early issue resolution, reducing the risk of disputes.

By fostering positive relationships and delivering exceptional experiences with the help of payment partners like Payabli, SaaS platforms can mitigate chargebacks, drive loyalty, and differentiate themselves in the market. Embracing feedback loops and prioritizing customer satisfaction are essential strategies for minimizing chargebacks maximizing long-term success and fostering a more customer-centric platform.

Conclusion

Chargeback management is critical for SaaS businesses as it directly impacts customer satisfaction and financial stability. Proactive management of chargebacks demonstrates a commitment to resolving disputes swiftly, preserving customer relationships, and maintaining trust in the service. Partnering with the right payment service provider with advanced built-in chargeback management and risk monitoring tools equips businesses with tools and expertise to effectively manage, reduce, and gain valuable insights into chargeback trends, enabling them to optimize processes and minimize financial losses in the long term.

Interested in learning more? Schedule time with our team to chat more about your SaaS platform’s payments and chargeback management strategies.

Merchant Underwriting: Balancing Onboarding & Risk for Platform Success

Posted on February 23, 2024 by - Blog, Industry Insights, Payabli

You may have read our recent blog on creating frictionless experiences for onboarding. As SaaS Founders we all want to over-index on providing exceptional customer experiences. A smooth merchant underwriting and onboarding experience is key to making a positive first impression. With fraud continuously on the rise, software platforms must take the necessary precautions to ensure they have the proper measures in place. In fact, McKinsey found that 37% of merchants seek fraud prevention as one of their top value-added services in their Payment Service Provider. With more conversations and education around this topic, we already expect that percentage to have risen. By the same token, ensuring the safety and security of your platform so that ‘bad actors’ are not committing fraud should be also considered part of creating positive user experiences.

Not only can bad actors cause significant losses for your software platform, but they can also put your entire payment processing program in jeopardy with Sponsor Banks, Card Networks, and regulators. Some big names in the payments industry have recently come under fire for lax Know-Your-Customer (KYC) policies allegedly enabling activity like money laundering and illicit sales of contraband. In this blog, we discuss how software platforms should balance frictionless merchant onboarding with proper merchant underwriting and risk protocols to build their payments business the right way.

So when we say ‘frictionless onboarding’, we should add an asterisk saying, “for the good businesses who intend to actually use our platforms.”

Defining Good Actors vs. Bad Actors

While we’re not part of the Oscars Committee, Payabli is determined in distinguishing good actors from bad actors. Let’s start with defining what a good actor versus a bad actor means for software platforms embedding payments:

Good actor: A good actor in the context of payments and fintech operates a legitimate business and intends to adhere to the terms of service of your platform as well as payment network requirements or government regulations.

In simpler terms, these are your regular users and clients of your platform who intend to run payments through a legitimate business without breaking any rules and regulations. It’s important to note that some good actors may operate large, complex, or even regulated businesses that require greater due diligence.

Bad actor: A bad actor can come in many forms even when applying just the context of accepting and disbursing funds. These are persons or organizations that engage in fraudulent activities like attempting to attack your hosted or embedded payment capabilities with stolen card data or even worse, trying to impersonate a business by creating a synthetic identity and submitting it as an application for services. There are even cases when good customers develop fraudulent intent, despite having a positive history but have recently changed their motives due to unknown circumstances.

Now that we have a general understanding of good actors and bad actors. Let’s dive into the merchant onboarding and underwriting process that Payment Service Providers like Payabli must perform to enable good actors to process payments and prevent bad actors from infiltrating our ecosystem.

What Goes into Merchant Underwriting?

With the help of automated tools, underwriters at reputable Payment Service Providers evaluate the application based on a variety of methods such as but not limited to:

  • Blocklists: To identify previous bad actors, any suspicious demographics, how frequently the same application details have come through, and many more functions to prevent repeat offenders.
  • Fraud and Identity Verification: Reputable Payment Service Providers want to catch bad actors immediately. This includes rules for detecting synthetic identities, reviewing device and browser details, geolocation, and more.
  • Know Your Customer (KYC): To confirm the identity and accuracy of the information on the application about the business and its owners.
  • AML, Sanctions, and Watchlists: To meet our regulatory obligations by verifying the business and its owners against the list of sanctions, politically exposed, and other government lists.
  • Creditworthiness: Credit risk will vary by product and client so it’s important to be flexible. Payment Service Providers will evaluate businesses and their owners based on industry type, transaction volume, financial stability, and other factors.

Upon approval, businesses are set up with an account and provided with payment processing capabilities for collecting invoices for goods and services and paying their bills to vendors. However, even with approval, it’s wise to have compensating controls for mitigating credit and other types of risk after onboarding.

Balancing Frictionless Boarding with Comprehensive Risk Management

Risk processes don’t have to be invasive or require intense back and forth between applicants and risk teams. Modern risk capabilities should operate continuously throughout the customer’s interaction with your platform. For example,

  • When a user creates an account – a Payment Service Provider like Payabli can identify where the application is originating in the background and compare that with information being submitted to calculate the physical distance between them. We can then block that IP from submitting further information to our platform.
  • When an unknown customer attempts to process a transaction – we can hold transactions from being captured and processed when they occur at suspicious times like 3am. The user may see an authorization but it will not settle until a risk officer approves it.
  • When someone attempts to login into an account – we can compare this with a history of previous interactions to detect anomalies in their login attempt such as an unrecognized device. We can then push an alert to the account owner that someone has attempted to log in from a different device and IP Geolocation than normal.

Using tools that operate discreetly allow software platforms to manage their risk without noticeably impacting good actors. It’s important to note that False Positives can still arise so it’s wise to collect more information. Typically, a bad actor won’t upload bank statements, much less get on the phone when we catch them. This quickly hampers their attempts. Most good actors are well aware of review processes for financial products and feel safer when a partner does verify their information.

Streamlining Complex Businesses with Care

Setting expectations is crucial in life and especially in payments. Every vertical is different so you don’t want to use the same rules, conditions, or requirements to underwrite them all. There are certain industries and business sizes that will require greater due diligence than the average micro-merchant. When we are working with these types of businesses, it’s useful to ask for information up-front or to automate additional tasks. A few examples could be:

  • A large construction company requests merchant services but processes some very large transactions worth hundreds of thousands. Our partners can choose to segment their boarding processes with templates so that their enterprise customers like this construction company get asked to upload financial statements as part of their application process.
  • A seasonal business invoicing thousands of dollars with advanced payments for services has requested processing. Based on these inputs, we can automatically pull financials, assets, liabilities, and balance data to decide without ever needing to interact with the client to determine they are in good standing.
  • A fitness studio that offers high-ticket yoga retreats as an ancillary service to some of their customers has applied for merchant services. Every now and then they receive cancelations but they’ve always been able to return the funds to customers historically with no issues based on a review of their processing statements. However, taking lessons from the start of the pandemic it would be hard to weather all canceled trips. So as part of boarding these types of nuanced scenarios, you let your clients know you will be collecting a rolling reserve as part of the transaction processing to serve as a rainy day fund in case things go south (and I don’t mean to the Bahamas.)

Oftentimes people forget that opening a merchant account is akin to receiving an unsecured loan. When a business asks for a loan they typically expect some financial due diligence to be conducted. At a certain amount of volume requested, you and your customers should anticipate providing some additional financial documentation to mitigate undue risk and prevent bad actors from committing fraud. As we mentioned, certain scenarios and industries will require Payment Service Providers like Payabli to perform this additional level of review. However, it shouldn’t have to be painful or time-consuming for customers. So, working with a partner who understands how to handle this with finesse is key.

*Note: Though we do not cover it in this post, it’s important to keep a pulse on these businesses even after merchant underwriting and onboarding to properly manage your ongoing exposures. Keep your eyes peeled for a future post on ongoing monitoring.

Conclusion

Balancing frictionless onboarding with effective risk management is crucial for your software platform’s success. Distinguishing between legitimate and fraudulent actors, Payment Service Providers like Payabli implement stringent merchant underwriting processes to mitigate risks. It is also important to note that as business owners or software platforms, making the effort to integrate personal interaction and request additional information via phone calls, or other forms of direct communication can yield significant value during the merchant underwriting and onboarding processes.

Through measures like blocklists, fraud verification, and tailored criteria, payment providers like Payabli can strike a balance – welcoming compliant businesses while safeguarding against potential threats. This nuanced approach fortifies platform integrity, fosters trust, and supports sustainable growth in the dynamic digital landscape. ​​

Interested in learning more? Schedule some time to chat with one of our payment experts.