Category: Uncategorized

Podcast: Mastering Payouts & How Vertical SaaS Platforms Can Take Control and Unlock New Revenue Streams

As embedded finance continues to evolve, more software platforms are integrating payment acceptance to create new revenue streams. However, many businesses overlook the potential in payouts – a critical yet often misunderstood component of payments infrastructure. In the second episode of Payabli’s series with the Leaders in Payments Podcast hosted by Greg Myers, our co-founders and co-CEOs, Will Corbera and Jo Phillips, dive into why payouts are becoming the next frontier for SaaS platforms and how businesses can capitalize on this shift.

Why Payouts Matter

Most software companies understand the value of embedding payment acceptance, but payouts remain an afterthought. Traditionally, payouts have been viewed as a simple settlement function—sending funds to merchants, gig workers, or vendors. However, Payabli takes a different approach, treating payouts as a fully embedded payables solution that enables SaaS platforms to streamline money movement and unlock new revenue.

Many businesses still issue thousands of manual checks each month, creating inefficiencies, delays, and unnecessary operational costs. Automating this process through a unified API eliminates these bottlenecks while improving vendor relationships and compliance.

How SaaS Companies Can Monetize Payouts

One of the biggest takeaways from the conversation was that payouts can be a major revenue driver—sometimes even exceeding payment acceptance. This is achieved through:

  • Virtual card issuance – Vendors are paid using virtual cards, generating interchange revenue when the payment is processed.
  • Enhanced ACH transactions – Faster and more reliable ACH payments can be monetized as part of an embedded solution.
  • On-demand payouts – Real-time disbursements provide flexibility for businesses while opening new revenue opportunities.

The Shift Toward Embedded Payouts

To fully embed payouts, SaaS platforms must think beyond traditional accounts payable solutions. Payabli follows what they call the Three P’s of Embedded Payments:

  • Pay In – Payment acceptance and acquiring
  • Pay Out – Vendor, supplier, and contractor payments
  • Pay Ops – Payment operations and infrastructure

This comprehensive approach allows SaaS companies to own the full money movement experience rather than relying on multiple third-party providers. By integrating both pay-in and pay-out functionality, businesses create a seamless financial ecosystem that increases platform stickiness and retention.

Security, AI, and the Future of Payouts

As payouts scale, security and risk management become even more critical. Payabli is investing heavily in AI-driven fraud detection, using:

  • Dynamic risk scoring to assess vendor trustworthiness
  • Automated payment decisioning to ensure compliance
  • Real-time monitoring to prevent fraudulent transactions

With faster payments come higher security risks, making AI a necessary tool for safeguarding transactions. The next phase of embedded payouts will likely include even more advanced fraud prevention and compliance automation.

Looking Ahead

Payouts are no longer just a back-office function—they are a key part of embedded finance that software companies can use to drive efficiency, improve vendor relationships, and unlock new revenue. As the industry moves toward a fully embedded payments experience, companies that embrace both money in and money out will have a significant competitive advantage.

For software platforms looking to expand their financial capabilities, the opportunity in payouts is clear. The question is: are you ready to capitalize on it?

Watch the podcast here:

To learn more about Payabli’s offerings and what’s coming next, stay tuned for the next episodes in this series, which will explore Pay Ops.

Interested in learning more about our Pay Out offering? 

Schedule a demo with one of our payment experts today.

Interchange Optimization for SaaS: Maximizing Margins with Smarter Payments

Embedding payments into software platforms has never been easier, but many providers fail to offer the tools and strategies needed for interchange optimization, which is crucial for maximizing margins and optimizing payment portfolios. For platforms monetizing payments, reducing interchange fees through strategic optimization is essential for driving profitability and staying competitive.

Embedded payment providers should do more than just process transactions—they should empower software platforms to maximize their margins. In this blog, we’ll explore how software companies can unlock additional revenue through interchange optimization, covering essential tools, techniques, and strategies for success.

What Is Interchange in the Context of Software Platforms?

Interchange refers to the fees paid by merchants to card-issuing banks every time a credit or debit card transaction is processed. These fees are typically a percentage of the transaction amount, plus a fixed fee, and they form a significant portion of the overall cost of accepting payments.

For software platforms offering embedded payments, interchange is a critical cost factor that directly impacts profitability. While interchange is often seen as a fixed cost, the reality is that it can vary based on several factors, including the type of transaction, the merchant’s category, and the data provided during processing.

Optimizing interchange is especially important for software platforms that monetize payments. By lowering interchange costs for their merchants, platforms can improve margins while offering competitive rates and a better overall experience for their users.

Understanding the mechanics of interchange—and how to influence it—puts software platforms in a stronger position to drive profitability and create value for their merchant customers.

The Importance of Optimizing Your Interchange

Optimizing interchange is not just about cutting costs—it’s about driving long-term profitability and staying competitive in the software space. For platforms monetizing payments, even small reductions in interchange fees can result in substantial margin improvements at scale.

Moreover, optimizing interchange demonstrates value to your merchants by lowering their payment processing costs, which enhances their loyalty and trust in your platform. With rising competition in the embedded payments space, taking a proactive approach to interchange optimization can be a key differentiator that sets your platform apart.

The right strategies and tools enable you to turn interchange from a cost center into a profit-driving opportunity.

Key Tools for Extracting More Margin

Understanding the Components of Interchange

Interchange fees represent a significant portion of the costs your merchants or SMB customers pay for payment processing. By managing these components effectively, you can unlock substantial savings.

The key factors impacting interchange include:

  • MCC (Merchant Category Code): Properly categorizing your clients into the right industry codes can dramatically lower interchange costs. For instance, a business categorized as a “Professional Service” may face higher fees than one classified as “Healthcare,” even if they perform similar services.
  • Transaction Indicators (CIT/MIT): Transactions are categorized as either Merchant-Initiated (MIT) or Customer-Initiated (CIT). Correctly using these indicators reduces costs, improves fraud prevention, and ensures proper interchange qualification.
  • Level 2 and Level 3 Data: Providing detailed transaction data, such as tax amounts, invoice references, and itemized product breakdowns, qualifies merchants for lower interchange rates. This is especially critical for B2B transactions.
  • AVS and CVV Data: Address Verification System (AVS) and CVV checks reduce fraud and unlock better interchange rates. Payabli requires these data points to optimize transactions and help partners maximize margins.

 Additional Methods to Lower Costs

  1. Network Tokens
    Network tokens, managed by card networks like Visa and Mastercard, replace real card numbers with secure, unique identifiers. These tokens are critical for reducing fraud in card-not-present transactions (e.g., online payments) while also lowering interchange fees by up to 10 basis points (BPS). This margin increase requires minimal effort from the software platform or its merchants.
  2. Convenience, Surcharging, and Service Fees
    While Pass-Through Fees do not necessarily impact Interchange, compliantly  passing fees to customers, is an effective way to reduce processing costs while increasing profitability. Here’s how:
  • Convenience Fees: Applied for payments made through non-standard methods, such as online or over the phone.
  • Surcharge Fees: These fees are added to credit card transactions, offsetting the merchant’s processing costs.
  • Service Fees: Similar to convenience fees, service fees are designed for specific MCCs and involve two transactions: one for the service fee and one for the payment itself.
  • Cash Discounts: Merchants incentivize customers to pay with cash by offering discounts, avoiding card processing fees altogether.

Monthly Reviews and Pricing Strategy Consultations

At Payabli, we don’t stop at providing tools. We actively work with our partners to ensure they’re maximizing profitability through regular business reviews and tailored pricing strategies.

  • Partner Reviews: Each month, our team of experts evaluate your portfolio’s performance and identify opportunities for increased profitability.
  • Pricing Suggestions: Based on industry trends and transaction data, we offer recommendations to help you adjust pricing for optimal margins.
  • Flexible Pricing Tools: From offering discounts for new client enrollments to setting up custom fees, we empower you with flexibility to grow your business.

Why It Matters

By leveraging tools like network tokens, interchange optimization, and strategic pricing, software platforms can unlock better margins without compromising on customer experience. With the right provider, like Payabli, these processes are seamless and bundled into a unified solution.

If you’re ready to enhance your embedded payments strategy, lower processing costs, and extract the margin you deserve, Payabli is here to help.

Ready to optimize your payments stack? Contact us to learn how we can help you drive better margins and profitability for your platform. 

Podcast: Unlocking the Power of Embedded Payments for SaaS Platforms with Pay In

In Episode 370 of the Leaders in Payments podcast, our co-CEOs, Jo Phillips and Will Corbera, joined host Greg Myers to dive into how vertical SaaS companies can harness modern payment infrastructure to drive growth and deliver superior user experiences. This episode marks the beginning of a special three-part series focused on Payabli’s three pillars: Pay In, Pay Out, and Pay Ops, starting with Pay In.

The Shift to Embedded Payments

During the discussion, Jo and Will highlighted a tectonic shift in the payments industry. Traditional payment processing systems are being replaced by embedded solutions, where vertical SaaS platforms integrate payment functionalities directly into their offerings. This transformation is not just changing how businesses manage transactions but is also creating new revenue streams and enhancing customer retention.

For us at Payabli, embedding payments isn’t just about processing transactions—it’s about creating seamless, value-added experiences for users. With the right approach, SaaS companies can unlock significant revenue opportunities, boost enterprise value, and strengthen customer loyalty.

Understanding the Challenges

Jo shared his experience scaling ServiceTitan, a leading SaaS platform for the trades industry, and how it inspired the creation of Payabli. Many SaaS companies face challenges with fragmented legacy systems or opaque, one-size-fits-all solutions like Stripe Connect. These options often lead to inefficiencies, limited control over user experience, and suboptimal revenue realization.

Each vertical has its own unique set of challenges, whether it’s supporting specialized payment methods or meeting industry-specific compliance requirements. At Payabli, our mission is to solve these problems with a unified API infrastructure that combines cutting-edge technology with hands-on advisory services.

What Sets Payabli Apart

Our approach to solving these challenges is built around our “three Ps”: Pay In, Pay Out, and Pay Ops. In this episode, we focused on Pay In, (our payment acceptance product offering) which enables SaaS platforms to seamlessly integrate diverse payment options into their systems for payment acceptance. From credit cards to ACH and mobile check capture, Payabli’s solutions empower businesses to meet the specific needs of their verticals.

One of our standout features is our “no-code environment,” which allows product teams to build customized payment workflows without writing a single line of code. This simplifies PCI compliance and accelerates time to market.

Realizing the Benefits of Embedded Payments

The benefits of embedded payments go far beyond revenue generation. By embedding payments, companies gain better control over the user experience, leading to increased customer lifetime value and higher retention rates. This stickiness directly impacts a SaaS platform’s enterprise valuation, making embedded payments a strategic priority for leadership teams.

At Payabli, we also invest in innovative features like split funding capabilities, allowing businesses to route funds to multiple accounts from a single transaction. This is particularly valuable in regulated industries like property management or education, where fund segregation is critical.

Looking Ahead

As Jo and Will shared, Payabli is dedicated to driving innovation in embedded payments. Our roadmap includes advancements in offline payment capabilities, AI-powered tools, and expanded payment modalities such as real-time payments and digital lockboxes.

Watch the podcast here:

At Payabli, we see payments not just as a backend utility, but as a strategic advantage that can help SaaS companies unlock growth, improve customer satisfaction, and future-proof their operations. To learn more about Payabli’s offerings and what’s coming next, stay tuned for the next episodes in this series, which will explore Pay Out and Pay Ops.

Interested in learning more about our Pay In offering? Schedule a demo with one of our payment experts today.

Building Embedded Payments 3x Faster with the Right Partner and Vision

This is post two of a multi-post series with Ershad Jamil, former Chief Growth Officer at ServiceTitan.  Ershad shares his experience in launching embedded payments for ServiceTitan to guide similar Vertical SaaS companies.

No matter what add-on offering you’re considering launching for your Vertical SaaS company, it’s always worth evaluating whether to buy, build, or partner. Given my experience launching payments for ServiceTitan and the rapid growth of the embedded payments model, I strongly suggest that you evaluate working with a partner. Here’s my guidance on how to select the best embedded payments partner for your new offering.

Settling the Buy vs. Build vs. Partner debate

In 2015 at ServiceTitan, we started with a hypothesis – offering embedded payments would improve our customers’ experience and create significant revenue growth for the company. As you can imagine with this hypothesis – our business development and product teams were driving the exploration. We diligently evaluated the landscape – including a review of 30+ potential partners. We spoke with industry experts and their peers.  

Why invest in such thorough research?

The answer is simple – and likely similar to your own. We were not payments experts.  From engineering to business operations, we did not have the DNA of a financial technology company (FinTech).  Many developers and operators at large FinTech’s know financial operations, compliance issues and risks. They have experience with accounting, banking, payroll, issuing, and more. On the other hand, your Vertical SaaS team has experience with integrations or vertical specific details (home contractors for ServiceTitan, restaurants for Toast, or fitness and wellness for MindBody). 

Understanding the differences in team expertise helped me quickly rule out the idea of building a payments solution in-house, from scratch.  It would be both timely and costly to hire a team with this financial expertise and build a squad. Not to mention, it would be rather daunting to take on underwriting, chargebacks, and other risks commonly associated with payments. 

The benefit of investing in researching the payments landscape is that you’ll also learn there’s not an existing payments solution custom built for your vertical and use case. 

At ServiceTitan, it took us about 4 months to complete our discovery and evaluation work on the best approach to add an embedded payments offering. We signed with a partner to build embedded payments.  Here’s how we picked the right partner – and my tips to help you pick the best partner from the beginning.

Start off on the right foot – how to choose a embedded payments partner

Ten years ago, there were three main categories of embedded payments partners to consider: 

  1. Referral / Agent – Partner with a third-party payment provider to handle payments moving through your platform. In return, the SaaS organization earns a commission or share of transaction fees without managing the payment infrastructure itself.
  2. Independent Selling Organization (ISO) – Serves as a middleman, referring SaaS customers to a payment provider and earning a commission for each sign-up, acting as a sales channel without handling transactions directly.
  3. Payment Facilitator (PayFac) – Full control and revenue potential, but requires significant upfront investment, comes with administrative burden, and ongoing operational costs.

Without fail, I’ve seen many Vertical SaaS companies start with one partnership approach, and change it as their business grows.  The end result can be your customers on 2 or 3 varying platforms and many hidden costs in maintaining and switching. 

While it may seem like Referral partnerships are a great way to start until you can take on the fees and annual costs associated with a PayFac, what’s most important is to be very intentional about the embedded payments offering you want to build.  From day one of your partnership evaluation, think through what you will charge customers, what rates you want to negotiate, etc.  Embedded payments is a new business line.  It’s worth thinking through it as its own P&L – including how it will continue to be built and supported over time. 

I’m excited about how the partnership models have evolved over the last decade.  There is a fourth and usually better option for Vertical SaaS companies – it’s a hybrid agent/ISO partnership. With this approach, you partner with a FinTech company that specifically caters to vertical software. These companies allow you to sell embedded payments directly, onboard customers with help (digital onboarding tools) and continue to innovate and build new features to expand the embedded payments solution. 

This approach lets you set flexible pricing models for your customers and maximize your revenue. In addition, this model gives you more influence over the customer experience. 

Regardless of the approach you select, it’s important to always review the terms and conditions with your existing partners.  In the world of payments, there are cases in which you might not be able to migrate your customers off of your partner platform, when you choose to evolve.  

What are the key criteria for evaluating an embedded payments/FinTech partner?

There are options out there for these types of partners and the following should be considered when making your selection:

Technology

  • Does the partner continue to innovate and build new solutions for credit card / ACH / check acceptance and other financial technology capabilities like payables?
  • What visibility is provided into uptime?
  • Does the partner have powerful RESTful APIs, embedded components,  and an overall technology suite to build and enhance the integration?

Support 

  • How accessible and transparent is the support team (well written documentation, external slack channel, live chat, ticketing system)?
  • What kind of implementation services are offered?
  • Does the partner offer an ongoing consultative approach from integration to go-to market, to ongoing support and additional fintech program?

Operations 

  • How does your FinTech partner help you manage required documentation during the onboarding phase on behalf of your end customers? 
  • Does the partner take on the risk and underwriting for the merchant to allow the VSaaS to focus on what they do best?
  • Does the partner offer good buy rates so the VSaaS solution can offer a pricing to their customers where they still make good basis point take rates?

Experience & Certifications

  •  What is the background of the founders and C-Suite?
  • Are there strong VSaaS references to showcase that they know what they are doing?
  • Would the partner be willing to include a customer reference who had an issue and reached resolution?
  • Is your primary point of contact willing to introduce more team members to deepen the relationship and navigate implementation?

When I was at ServiceTitan, we had a spreadsheet with our criteria and we scored and ranked partners against that criteria.  But, at the end of the day, it came down to the relationship.  I asked, which partner went the extra mile?  Invested in understanding us?  Showed up consistently and collectively? 

I knew we selected the right partner when we had created a mutual vision for the future. We sold the potential of ServiceTitan’s growth to the partner – and negotiated buy rates for where we were going (knowing that volume is key). When the growth works both ways, then it’s the right partner.  

Don’t just go with the default – the partner from your previous company, a known big name, a recommendation from a peer at a different kind of company than your VSaaS. It’s a very nuanced and important decision to select a payments partner. Invest the time and stakeholders to make the selection with the biggest potential growth impact. 

What I know now, that I wish I knew then

I thought selecting the payments partner model and payment partner was the toughest challenge.  I wish I had known how hard it would be to convince early customers that we were the right solution for them! We should have spent more time talking to customers and asking for a soft agreement to use the offering –  before even launching our alpha embedded payments offering. We spent a lot of time going 1×1 (without the right materials in place).  It definitely took longer to get to that beta and full product offering with this approach. 

My final recommendation for you is to go deep with your customers and their merchants. Get soft commitments and have references ready for when you launch your embedded payments!