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The Most Common Payment Processing Obstacles and Solutions for SaaS Companies

common payment processing obstacles

With the global market valued at $123 billion in 2021 and countless new startups appearing around the world, nobody can argue that SaaS is an ever-expanding industry. However, despite the increased growth, many SaaS companies deal with a set of common payment processing obstacles, including support for different currencies, taxation, and other regulations. Failure to deal with these issues can cause unnecessary churn and cause significant damage.

Usually, a SaaS business offers its clients a way to pay for a service through a recurring or subscription billing arrangement. The pricing model depends on the business. One company could require a flat monthly deposit, while another may determine a price based on usage amounts or both. Usually, a one-off payment is completed through a payment gateway. However, SaaS billing includes many other moving parts throughout the customer lifecycle.

Let's have a look at the most common payment processing obstacles for SaaS companies and the best ways to deal with them.

1. Handling Multiple Payment Processors

A company needs to do everything it can to attract and keep its clients, including offering convenient payment methods to clients in every corner of the world. Once the company grows to a certain point, tracking billing and invoicing manually becomes impossible. Besides, if a client has a poor payment experience, it could easily lead to a loss of revenue.

It's essential to consider the diverse client base and availability of different payment methods in their locations. Offering as many payment options as possible creates a frictionless experience that has a positive long-term impact on customer retention.

2. Dealing With Multiple Accounts

Swift and efficient payments are essential for maintaining a functional recurring model. However, due to the very nature of this model, the frequency of payments is significantly higher, so tracking every transaction requires more company resources.

At a certain point, this issue becomes too big for a company to handle internally. Therefore, it's necessary to find a payments partner, allowing the team to focus on other tasks.

3. International Tax Compliance

Since SaaS products are nowhere and everywhere, there are significant differences in terms of taxation depending on the market. Certain countries have a set revenue threshold you have to reach before you need to consider taxes, while others have no taxation rules. 

Offering services and conducting business in the global market has its own set of challenges. Every transaction must include a sales tax depending on the client's location. More importantly, the finance team has to deal with registering for taxes in different jurisdictions, filing, and paying them on time. Ensuring compliance with laws in different markets is an overwhelming endeavor. So, most companies resort to hiring services that can help them stay compliant.

What Worked for Us?

These are just some of the most common payment processing obstacles SaaS companies have to face at some point. IPRoyal was no exception. After trying out several different solutions, we've decided to go with Paddle. The reason? Its incredible track record and features that provide the unique all-in-one solution we were looking for.

Paddle is the perfect intermediary between our customers and us as it handles payments, subscriptions, and international taxes. The platform offers an excellent checkout solution, routing between multiple payment partners, and fraud protection. Besides, Paddle's ability to analyze relevant data and offer valuable insights helped us recognize the pain points and implement improvements as needed.

Switching to Paddle from several different payment processors helped us streamline the whole process. Firstly, we can now offer a unified solution to our clients that significantly improves their overall experience with us. Secondly, our team can now focus on growth, product development, pursuing new opportunities, and ensuring we offer the best proxy servers to our clients worldwide.