In today’s modern business landscape, simply generating buzz around your SaaS (Software as a Service) business isn’t quite enough: if your payment experience isn’t satisfactory, you may fail to acquire customers – or worse, lose those you have.
If you run a SaaS business, setting up recurring payments with a payment provider is more crucial than ever. According to a study conducted in 2023 by the Harvard Business Review, SaaS businesses that employed recurring billing grew 300% more from 2012 to 2018.
In this guide, we’ll outline the key benefits of integrating recurring payments into your SaaS business, and take a quick look at how to get started.
Table of Contents
- Why do SaaS businesses need recurring payments?
- How does recurring billing work?
- Benefits of recurring payments for SaaS
- How to implement recurring payments
- How to choose your SaaS payment service provider
- How to optimise your SaaS payment process
- The challenges of recurring payments
- Final thoughts
Why do SaaS Businesses Need Recurring Payments?
SaaS businesses are at their best when their customers are in it for the long haul. To maximise customer lifetime value and decrease customer churn rate, SaaS businesses need the flexibility of recurring payments - whether they’re made weekly, monthly, or annually.
How Does Recurring Billing Work?
Recurring payments allow businesses to charge their customers repeatedly at predetermined intervals. It is often employed for subscription services, memberships, and payment plans. Recurring billing can be implemented in collaboration with a payment service provider like Ezypay, who work with banks to manage transactions.
What are the Benefits of Integrating Recurring Payments?
As a SaaS business, you’ll naturally have goals around predictability to allow for projections. Predictability allows for planning, which allows for growth and momentum. Recurring payments facilitate predictability - along with additional benefits for you and your customers.
Timely customer payments: Recurring payments ensure that payments come on time without you needing to send out invoices.
Fewer failed payments: Recurring payment platforms use dunning management to retry failed payments and notify customers, guaranteeing fewer failed payments. Dunning management is any automated communication between a payment platform and a customer, designed to request payment. This can take the form of an email, SMS, or a push notification.
Improved customer experience: Customers can take a ‘set it and forget it’ approach to your services, removing the need to manage invoices and make manual payments.
SaaS Business Benefits
Consistent and predictable cash flow: With an easier long-term view of your revenue growth trajectory, you can turn your attention to business planning - while the money keeps coming in.
Increased customer retention: Locking customers into a recurring payment plan increases customer retention and lifetime value.
Upselling and cross-selling: Recurring subscriptions and payments allows you to increase contract values by adding new services to the customer’s account.
Global currency processing: The nature of SaaS gives businesses the chance to expand into markets around the world. Recurring payments and multiple payment methods facilitate cross-nation payments through global currency processing.
High levels of security: Working with a dedicated payment service provider like Ezypay grants you access to secure encryption algorithms and automatic fraud detection systems that prevent security breaches and data leaks.
Automated processing: Manually managing subscription changes, renewals, and cancellations is no longer necessary. Automated invoice processing allows you to focus on more important things.
Transaction reporting features: When analysing data with your subscription software, you can use custom reporting features for insights into customer behaviour – as well as revenue, and churn rates. This data can help you make more informed choices for your business.
Review pricing strategy: With recurring payments, you can track customer data and review your pricing strategy, making dynamic adjustments to maximise your revenue.
How to Integrate Recurring Payments Into Your SaaS Business
Integrating recurring payments to charge your SaaS customers consists of four simple steps:
- Choose a payment provider that suits your needs and location.
- Decide on your preferred payment methods.
- Inform your customers of the new payment process.
Choose Your SaaS Payment Service
Setting up recurring payments requires placing your trust in a reliable payment service provider. There are countless PSPs (Payment Service Providers) out there, but to find the right one for your SaaS business, consider your business’ scale, monthly revenue, and customer base.
A promising payment service provider will support local and global payment methods, allow you to scale your business, and offer easy API integration for a hassle-free setup.
Optimise Your SaaS Payment Process
As you plan towards integrating recurring payments, your payment service provider can advise you on methods to best optimise your processes. Some ideas to get started with are:
- Implement automatic account updates,
- Offer smart retry features for failed transactions,
- Offer popular local and global payment methods,
- Employ automated payment reconciliation,
- Implement data and reporting tools to monitor changes,
- And, use dunning management to notify customers if their payment fails.
The Challenges of Recurring Payments
Integrating recurring payments is no small feat, and it’s one that comes with many challenges:
- Defining your Monthly Recurring Revenue (MRR)
- Adapting to customer contract changes and invoices
- Navigating global tax laws and maintaining regulatory compliance
- Investing in technology and infrastructure to manage recurring payments.
You can adapt to and overcome these complications with the help of a registered payment service provider, who can iron out all the details for you - allowing you to get on with managing your SaaS business.
If you own or manage a SaaS business, recurring payments are at the core of continued growth and scaling; but they can also complicate your business operations if you don’t work with a trusted, secure payment service provider.
Ezypay is an industry-leading payment service provider for businesses operating under the Software as a Service model. With an easy-to-use recurring payment management and multiple payment options available, Ezypay can help you smoothly integrate subscriptions and recurring payments into your SaaS business.