Category: Payabli

As technology continues to reshape the way we conduct digital transactions, software businesses are increasingly embedding payment functionalities into their platforms to expand their capabilities, enable frictionless experiences and create new revenue streams. However, amidst the excitement of embracing and owning the embedded payments experience, one crucial step often stands out as a challenge as software platforms get started on their payments journies  – merchant onboarding.

This blog will delve into key topics and cover everything you need to know about merchant onboarding from what it entails and why it matters, to the common challenges and risks associated, and how partnering with the right embedded payments provider can ensure frictionless experiences.

What is merchant onboarding?

Merchant onboarding is the process through which businesses are brought into the payment acceptance ecosystem of a software platform. It involves the collection of customer details, verification of their business identity, and integration of capabilities to enable them to start processing payments and collecting invoices seamlessly.

Merchant onboarding is a critical step and although it may seem difficult, it doesn’t have to be.

What is frictionless merchant onboarding?

Frictionless onboarding refers to a streamlined and efficient process where customers can complete applications without any hiccups. enables users to complete the onboarding process efficiently, ensuring a smooth and hassle-free experience. Additionally, it provides clear visibility to customers about the status of their application and any additional requirements needed to progress further, allowing for a transparent and informed onboarding journey.

Why does merchant onboarding matter for SaaS platforms embedding payments?

A lot of initial conversations for software platforms focus on the ability to process payment transactions, but onboarding is the start of the payments journey for every platform and should not be overlooked. A seamless onboarding experience greatly improves user experience for software platforms and their customers. With features like automated onboarding, hosted boarding links and embedded components, software platforms gain more visibility and control over the customer experience, while reducing any friction on the customer’s end. These features also allow platforms to white-label and brand their experiences.

A well-executed onboarding process also lays the foundation for a long-term, productive customer relationship. It demonstrates the platform’s commitment to delivering a user-friendly and reliable service, increasing customer loyalty.

Once customer information is collected, they must be verified. Thorough underwriting helps platforms validate the legitimacy of merchants, mitigating the risk of fraud or non-compliance. Additionally, by analyzing the financial history of the business and creditworthiness of its owners software platforms can determine appropriate payment processing terms and risk controls. This ensures a smooth and reliable payment experience for both the platform and its merchants.

Another key aspect is scalability. As software platforms continue to grow and acquire new customers, having smooth and streamlined onboarding automation is essential. This can eliminate the hassle of  sending and receiving paper documents and emails by replacing them with more automated and secure features like e-sign and embedded document uploads.

By simplifying the onboarding process, platforms can effortlessly expand their customer base and handle a higher volume of transactions. This not only saves time and effort but also maximizes revenue generation potential.

What are the common challenges of merchant onboarding?

Software platforms often encounter challenges during merchant onboarding. One challenge is the ease of entering and collecting information from merchants. Utilizing tools like boarding links and embeddable forms like our creator widgets can simplify this process, ensuring a smooth and efficient data collection experience.

Another challenge is managing the status of merchant applications. Platforms need robust systems in place to track and communicate the progress of the application to both the platform and the merchant. Software companies should be able to get play-by-play updates about their users with capabilities like our onboarding webhooks and portfolio management dashboards.This helps maintain transparency and enables timely updates on the status of the onboarding process.

Tailoring the underwriting policy to the specific industry is also a common challenge. Platforms must consider factors like client size, industry-specific risks, and other relevant demographics while formulating their underwriting policy. Working with an orchestration platform like Payabli, can provide software companies with access to hundreds of risk vendors to accommodate any risk profile or factors. This customizability ensures that the onboarding process aligns with the specific needs and expectations of different merchants.

Throughout the process of onboarding merchants, software platforms must be prepared to handle potential underwriting flags. These flags may include TIN mismatches and can occur in large numbers for specific industries. In addition, delayed deliveries may also lead to a need for further diligence. It is important for software platforms to ensure that merchants accurately fill out the onboarding application and are aware that additional documentation, such as previous merchant records, bank statements, and financial statements, may be requested if there are high transaction volumes.

What are the risks associated with merchant onboarding?

Merchant onboarding comes with inherent risks that software platforms need to address. One such risk is fraud, which includes the use of fake identities or stolen data by bad actors. This can lead to financial losses and reputational damage.

Compliance is another critical aspect to consider, as platforms must adhere to regulations such as the Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) and Financial Crimes Enforcement Network (FinCEN) guidelines. Failure to comply with these regulations or other rules can result in penalties and legal consequences.

Misconfigurations pose a risk as well, with errors in pricing, missing equipment, or other setup issues potentially causing financial discrepancies and customer dissatisfaction. It is crucial for platforms to implement robust processes and systems for merchant onboarding to mitigate these risks effectively.

How can SaaS platforms ensure frictionless onboarding experiences of their merchants? 

It’s important for software platforms to partner with an embedded finance provider who can help the platform onboard customers with ease and handle the heavy-lifting. The right partner can not only provide frictionless, digital onboarding experiences with some of the key features mentioned above, but also can help software platforms avoid any risk associated with payments compliance and regulatory laws.

What should I know about Payabli’s merchant onboarding?

Payabli’s Payment Infrastructure & Monetization Platform enables software businesses to build, customize, and manage a frictionless, automated merchant onboarding experience under one umbrella so they can start accepting and monetizing their payments quickly and securely. We can tailor to your business’s onboarding needs and provide flexible options including the ability to onboard your merchants via:

• Hosted boarding links
• Embeddable components
• A direct connection to a single API
• A hybrid approach, which pre-populates the information you already have and generates boarding links for your merchants to fill out the rest
• Bulk onboarding – Payabli works with merchants to fulfill any technical or underwriting prerequisites for the bulk onboarding process, with the ability to efficiently pre-underwrite merchants.

Learn more by watching the video below.

Early on in the journey of founding Payabli, we were Centavo Inc., we had no product and were selling legacy processors APIs trying to prove we could sell SaaS companies on monetizing their Payment Processing. Looking for any way that we could maximize our value to our prospective Software Partners we stumbled on this fascinating concept called Interchange Optimization.

If you’re somewhat familiar with Payments economics you’re likely familiar with Interchange; the wholesale costs that Card Issuers receive on each transaction processed. Interchange is typically the bulk of the charges that Merchants end up paying when a credit card transaction is processed. We learned that by passing additional information called Level 2 and Level 3 addenda data you could reduce these interchange costs on B2B Transaction by between 30 basis points (.30%) and 110 Basis Points (1.10%). When I heard this suddenly the raucous Hip-Hop anthem “I’m on a New Level” by Rapper’s ASAP Ferg and Future started playing in my head; this was going to be a game changer for our partners.

Interchange Optimization in Practice
The reason I was so stoked about L2 and L3 processing is that it essentially opened up two benefits for us and our Software platforms:

      1. Higher Margins: Most Software partners are able to charge a Flat Rate for their processing. By optimizing interchange rates you could reduce your cost basis significantly and return much higher margins to the Software Partner. Let’s walk through an example. We work with a Software Platform that services a lot of Residential and Commercial HVAC Companies. They price their Payment Processing at 2.90% and $.30, if they take a Non-Qualified Business transaction, Interchange alone is 3.15% and $.20. Tack on Network Fees and the Software platform is in the whole more than 40 basis points (.4%). However, if we pass level 2 data at the time of transaction the interchange magically reduces to 1.9% and $.10, creating roughly 80 basis points (.8% of margin) on that transaction.

   2. Aggressive Pricing while Preserving Margin: In most cases, Software Platforms can command a higher Flat Rate for the value of an integrated offering. However, there are certain strategic clients that will be hyper price sensitive and will command an interchange plus pricing model. In these instances, we’ve found that as long as there’s some commercial card mix, we can use L2 / L3 processing to charge a higher markup above Interchange while still matching or coming in lower than their existing processors’ effective rate. For example one of our Private Equity Partners introduced us to an Enterprise Merchant that distributed industrial equipment and nearly all of their card mix was commercial. They had a ridiculously low rate with their existing processor, however, we were still able to unlock over $200K in annual savings just by optimizing their interchange.

The Skinny on Qualifying for Level 2 & 3:
For SaaS platforms, the key is to collect and transmit the required addenda data to qualify for these optimized rates. This not only offers a route to reduced interchange but can be helpful in reducing chargebacks. Below are the types of addenda Data needed for L2 and L3 Processing:

below are Interchange categories that qualify for L2 and L3 processing and their corresponding rates. If you’re curious the different Tiers (Visa) or Levels (MC) correspond to the amount of annual spend performed by that customer.

Now you can send all the addenda data you want, but unless your Payment provider is certified to transmit Level 2 and Level 3 data, you’ll won’t reap these benefits. If your platform’s merchants have any B2B commercial mix you’ll want to make sure your Payments infrastructure offers this capability.

The Wrap Up
At Payabli we often say we’re building the AWS for Payments. Our vision is that whatever Payments use-case a Software Platform has they can come to Payabli for best-in-class Payments technology and leverage as much or as little of our offering to suit their needs. Level 2 and Level 3 processing is just one example of the diverse solutions Payabli offers SaaS Platforms looking to make Payments a Core Part of their business model.

By qualifying for Level 2 and Level 3 processing, Vertical SaaS platforms can see significant reductions in interchange fees. These savings translate directly into better margins for your SaaS platform, making the effort in collecting and transmitting the required data well worth it.

Conclusion For Vertical SaaS platforms, transitioning to Level 2 and Level 3 processing isn’t just a technical adjustment but a strategic one. By ensuring the capture and transmission of the required addenda data, platforms can drastically reduce transaction costs and simultaneously offer greater value to their merchant base. It’s time to leverage these benefits and get ahead in the competitive SaaS landscape!

Introduction:

In the rapidly evolving world of online transactions, the need for robust data security measures cannot be overstated. One technology that’s been pivotal in safeguarding sensitive financial data is credit card tokenization. In this comprehensive guide, we explore three different types of credit card tokenization – standard, multi-use, and network tokenization. We’ll delve into their unique benefits, applications, and potential risks, and explain why they are critical in today’s digital economy.

Standard Credit Card Tokenization:

When it comes to secure online transactions, standard or single-use tokenization plays a significant role. Single-use tokens are unique to each transaction or merchant. With this method, every transaction generates a new token, thus minimizing the risk of credit card fraud. If a token is stolen or intercepted, it’s essentially useless for further transactions, greatly enhancing the security of online payments.

Multi-Use Tokenization:

Differing from standard tokenization, multi-use tokens are created for multiple transactions. A common feature in scenarios like recurring billing or frequent customer purchases, multi-use tokens provide convenience and efficiency. For example a Property Management Software’s whose customers are communities that may have multiple merchant IDs for different Use-Cases. Multi-Use tokens allow the residents of that community to have one card on file and use them across the different functions i.e. Paying rent, Paying for a special assessment, or paying to rent out the clubhouse for a party. While powerful for delivering better customer experiences, there is inherent risk with multi-use tokens because if one is compromised, all transactions associated with that token could potentially be at risk. This highlights the importance of stringent data security measures when dealing with multi-use tokens.

Network Tokenization:

Taking credit card security a step further is network tokenization. Programs like the Visa Network Tokenization Program offer tokens tied to the cardholder’s account and the specific device used for the transaction, enhancing security across different merchants. Network tokenization provides additional benefits, particularly for software companies.
Network tokens can easily be transferred if a company decides to switch payment processors. This feature eliminates the need to re-tokenize card data, saving time and resources. Additionally, network tokenization programs like Visa’s offer potential financial benefits, such as reduced processing fees, further incentivizing its adoption.
Network tokens also have the advantage of remaining secure even if the physical card is lost or stolen. The token can be instantly updated when card details change, ensuring uninterrupted online and mobile payment services.

Conclusion:

Grasping the concept of credit card tokenization is essential to building your payments strategy and can have wideranging implications on your business model. Fortunately, Payabli offers all three versions as part of our Payments Infrastructure offering and our team of Payments Experts are here to help you in understanding the gamut of tokenization options and how you can best leverage them to meet your Platform’s desired needs.

Culture. This single word is talked about extensively and we believe it should be, because it is important. The world is changing and it’s important to recognize that we have to change and evolve with the times. Great talent is motivated by more than money, they want a stimulating endeavor to work on and they want to be surrounding by impassioned colleagues. It all starts with identifying what culture means to your organization and hiring great people to fit that dynamic.

Payabli defines a great culture as a place where team members love coming into work every day and have a hand in solving big problems. The big problem we are solving is to make it easier for businesses to pay, get paid and in that process let them take over their payment stack. We strive to attract team members that look forward to Monday mornings, ready to do great work and tackle big challenges with their team members. We strive to create an environment where they feel empowered, a place where their voice counts, and a place where their direct efforts impact the well being of everyone on the team and our customers.

Culture is incredibly important at a startup stage all the way through its maturing process. We think a lot about what core responsibilities our company has towards our team. As a result we always come back to learning and why we believe a great culture should embrace continued education. This education can come in any shape or form with the ultimate emphasis on ensuring our team members are learning something they will get satisfaction and grow. Perhaps the learning comes in the form of a coding course, reading a book on just about anything, learning how to sail, how to sketch, how to produce movies, etc. Ultimately we hope our team strive to learn and we believe that satisfaction is priceless.

There is a lot more to share on culture, and we look forward to challenging ourselves on how we can do better.

We look forward to sharing more on this important subject.

We think it is important to share something dear to our hearts as it gives us our purpose.

Things that matter to us (Our Guiding Principles):

We want a vibrant culture where employees love coming to work every single day

• At Payabli, employees treat each other with respect, can prosper monetarily, and are constantly learning and achieving self efficacy   
• Employees form strong friendships with colleagues
• A sound work-life balance is not encouraged it’s required
• We hire good people: integrity, intelligence, fun, and caring are qualities we seek out in employees
• We want all of our employees to be successful in numerous facets of life; we will invest in their development with programs such as: 
  • • Personal Finance and money management 
    • Fitness and mindfulness 
    • Goal fulfillment and self efficacy 
    • Continued education
    • Giving back

We want to woo our customers and in turn we want them to write us love letters

• We purposely go out of our way to make clients feel loved
• Employees are guided by wanting rather than needing to help, going above and beyond to serve customers comes as second nature 
• We use the Payabli “Deal Paradigm” as a blueprint for every partnership: Fair share of value, proportional share of risk, and alignment of upside incentive
• We are selective with which customers we take on, quality is more valued than quantity

We want to build a sustainable organization that has a strong sense of purpose and is long term in thinking 

• We want our reputation to proceed ourselves and as a result be the premier PAAS (Payments as a Service) product in the Industry 
• We want to be a “Small Giant” where we have control of our destiny and to not cave to external pressures to grow and compete   
• We covet and protect our reputation our word is bond

Hello World,

We are ready to claim our part of the universe. We are on a mission to help software companies and merchants take over their payment stacks. For a long time we felt software companies and merchants have not been able to see under the hood of what makes payments great for their business; as a result we want to change this. We have a goal to help software companies move money with developer friendly tools and embedded elegant user experiences. We believe payments should be easy to implement, secure, and a rewarding experience.

Mission:

Payabli’s mission is to unlock the value of payments within SaaS Provides and Independent Software Vendors (ISVs) ecosystems by providing a substantial revenue driver, appreciating portfolio asset, and inherent product value to their customers, in turn fostering stickier relationships with their respective customer bases.

Vision:

To unlock immense value for software providers pennies at a time.

Jo- Co-Founder
Payabli