Any software application having a requirement to accept payments will most likely need to integrate a credit card payment integration solution. Even applications with a subscription model will likely do so, even though ACH processing lends itself very nicely to models with a recurring payment component. The fact of the matter is that credit cards are the go-to payment modal in the card not present space. If you are part of a team on a SaaS payments project, here are some key areas that you should explore.
As mentioned above, applications that support an organization having a requirement for recurring payments will generally need both a credit card integration and an ACH integration (eCheck). So why not kill two birds with one stone? One of your primary objectives should be to find a processor who supports both payment modals - and does them very well. Moreover, the integration should be able to be completed via a single API integration.
Credit Card Decline Management
The decline percentages of credit cards in the subscription space is greater than in the card present space. That's because the longer a card sits within a given subscription based application, the more likely it is to decline. Expirations, stolen cards, chip issued cards, and reissued cards for a variety of reasons all lead to declines. To combat credit card declines there are a few tools that you should look for when making your credit card integration:
- Card updater network availability. Make sure the payment processor you choose is hooked into the credit card updater network. There's usually a cost for this network, but the cost is minuscule compared to the amount of time it takes in tracking down customers and getting them to update their card information on file - not to mention opportunity costs and undelivered services or goods.
- Look for a processor that can work with you on a card recycling system. Expired cards that decline can many times be brought back to life using a systematic approach. Look for a partner who understands this logic and can assist you in putting something in place.
- Going back to the first point, also use the ACH modal. Bank checking and savings accounts don't expire!
API integration considerations
- Does the API support the card updater network?
- Does the API support both credit card and ACH modals?
- What communication capabilities are there for updating transaction status?
- Can I get a live technical support person when I have questions about the integration?
- Are there other integration possibilities that support specific types of payment acceptance?
- Does it support both USA ACH and Canadian EFT?
The on-boarding process
There are different types of processing relationships that a given SaaS organization might be eligible for:
- Traditional merchant accounts
- Payments partnership with traditional merchant accounts
- Payment Facilitation
- Managed payment facilitation
In either of the facilitation options the on-boarding process is near instant. The difference in the two models is that one takes on risk and one doesn't. Frictionless boarding has become popular for many SaaS organization over the past few years, but facilitation isn't always the best fit - or even an option for some SaaS. The facilitation models generally require the SaaS organization to be working with a specific niche or industry.
For the traditional options the merchant accounts are provisioned via an underwriting process. Not too long ago this meant having a prospective merchant complete paperwork and submit it to underwriting. Those days have changed. Today applicants can complete an online form and be near instantly approved if the automated background checks pass. Better yet, the same payment integration API can support the process by allowing the SaaS organization to present the online form on their website and receive notifications of approval and generate the live API keys to allow the new merchant to begin processing on the SaaS platform.