Could you make your own payment processor?
You’ve probably debated this with yourself multiple times considering that you are reading this article.
But do you know exactly what it would take, and how hard it could be?
Again, considering you are reading this, I’m going to take a guess that you are researching and looking for answers.
You may think that building your own billing solution could have big upsides, because you would be in full control…
But does owning the turf really equate to success? Is setting your own fees, creating the layout, and other development really crucial to increasing the profitability and longevity of your business?
You have to come to terms with the reality of building a platform of this caliber: there will be unforeseen challenges ahead.
Not to mention, could all this work you’re doing take away from your core business or product? Would your time, focus and resources be pulled away?
As you read on, you will see that it probably would…
At first, you may have simple components, but eventually you will come to the realization that the maintenance of code, and evolving your software, will take more than you expected it to.
You have to consider aspects such as upgrading, downgrading, cancellations, expired credit cards, and a slew of other problems that may arise with payments.
Are you really willing to create a software that can do all these things, while simultaneously accepting payments?
Or are you better off paying for a payment processor that can handle all of it for you?
This article will go over the details, and what you should factor in when deciding to build or buy a recurring billing solution.
Let’s take a deep dive, so you can make a better decision…
How to decide
So which one will you choose?
Do you pay for an already existing service, or do you build one?
Really the answer to this question comes down to getting honest with yourself, and looking at how much time and money you’re willing to spend.
It’s fairly straight forward: If you want to save money upfront, time, and you generally have low patience for the development of software, you should pay for an existing service.
We all know time is money, and if you feel that you buckle under pressure in the development phases, or you have had a past where you have quit when the going gets tough, you may want to do a self-analysis.
Unless you are willing to make a big change, maybe paying for a service is your best bet.
This is where PayKickstart can help you.
We accept major credit cards, Wire transfers (ACH & SEPA), PayPal, Stripe, Braintree, Authorize.net and EasyPayDirect.
You’ll notice that when using our payment processor, your customers will smoothly checkout, and this reduces the chances of a disgruntled complaint.
And in this day and age, you want to avoid bad press as much as possible, so why take the risk?
But that’s just the tip of the iceberg, we also offer:
- Checkout templates (High converting and one-step)
- Pop-up widgets (Get notified when someone clicks the buy button)
- Embeddable checkout forms (Build your own forms and add our checkout)
- Custom API (Use our API for 100% customization)
So as you can see, there’s a lot of upside with little downside.
But again, if you have a track record of sticking to and finishing what you start, and you have money to spend, making your own software could pay off in a big way for your company… over time.
Reduce points of friction
If you so choose to create your own billing solution, you will have to face another reality of the market currently…
With an economic downturn and changes in consumer preferences, the simple subscription plan is going out the window. It’s probably already in free fall…
What you need to reduce the friction points in your billing process, is a dynamic system that can easily change on a whim to adjust to your customers in real time, and at worst, as quickly as possible.
The key here really is to avoid a billing bottleneck as much as possible with your software when it comes time to pay…
You should make it easy to:
- Implement retention strategies quickly
- Handle failed payments, expired credit cards, and unnecessary loss of revenue
- Change price points quickly, or in real-time
- Test different offers
- Have the exact billing needed during a new product launch
- Do Usage based billing. We have a great article here about this.
Imagine implementing all these important concepts into your own billing solution…
This is yet another benefit of PayKickstart. It gives you and the customer flexibility when it comes to payments.
We’ve got your customer’s covered when it comes to:
- Updating their method of payment
- Accessing billing history
- Upgrades or downgrades (Proration)
Not to mention, we know that you use many different services, not just one.
We offer connection to 3rd Party Apps, including 5 payment gateways, 18 email services, 7 webinar services, 14 membership services, 2 fulfillment services and over 2000 Zapier services.
Avoid Billing issues
Billing issues are definitely an unsavoury experience, especially when your customer’s payment subscription fails.
But some business owners may look over the other side of the coin; what if your billing system is malfunctioning because of bugs? It’s crucial that you address these issues in your billing service beforehand.
Your customer may encounter these problems:
- Declining a card that works
- Problems when upgrading and downgrading
- Errors with accounts
- Refund delay not being communicated well enough
Anytime a customer encounters these problems, the chances of them churning increases.
Yet, some companies overlook these issues, simply because they are not paying enough attention to their customer complaints.
What are they saying? How many are you receiving? These are crucial indicators, and you need to consider the waning patience of your customers in an era of abundant options, and places to complain about it.
This is definitely an indication that regardless of how great you think your service is, your customers are not understanding how to pay, and that your system may not be as effective as you think.
When it comes to payments, you want to ensure the most transparency possible, and create a system that saves both you and the customer time and money.
The key here is that you have to notice patterns, identify problems regarding payment, and fix them quickly.
So how do you reduce and recover loss of revenue?
It really starts with having a strategy and plan ahead of time.
Do you know what you would do in the event that a customer fails to pay?
At this point, if you have decided to build your own payment processor, you need to make sure there are options to deal with delinquent payments. If you are paying for a service, verify if there are effective options available to collect your payment.
Considering that creating your own payment processor is harder, you will also need to ensure that you have covered your bases with your billing solution, as previously mentioned.
Are you looking at your customer complaints? Are you fixing the bugs and making the process as smooth as possible? If you are, then you’re on the right track.
You also want to make sure that in your good or service:
- You try to sell yearly payments as much as possible.
- You mainly accept credit cards, and understand the risk of credit debit cards.
- You notify your customer that a free trial is ending, or that a payment is coming up several days beforehand.
But even then, you could get a failed payment. What else can you do as a payment processor?
Here are several things you could do:
- Be on the lookout for at risk customers and accounts ahead of time
- Contact the credit card company or a collection agency
- Implement a dunning strategy to attempt a collection
- Use ACH
Luckily, PayKickstart offers solutions that can help SaaS, Digital goods, Physical goods, Memberships and other services stuck in these types of situations.
Do you need…
- Effective free trial conversions? We’ve got a set of proven trial to customer email sequences.
- Flexible subscription billing? We make it easy to update billing, plans and manage cancellations.
- Easy Proration? Reduce the chance of churning by giving your customer the option to downgrade rather than just cancel.
- Effective Dunning management? We have customizable proven email sequences, cancellation rules, billing method update options, in-app notifications and more.
- Don’t leave your customers in the dark. We also include subscription renewal and trial ending reminders. Transparency will make conflict less likely…
Also, if at the end you decide to build your own service, remember that with dunning, it is important to ensure that the service you build has options built in that can handle different types of payment.
A sequence of automated messages sent to a delinquent customer is also crucial.
The more streamlined you can make this process, the smoother this process will go, and the higher the chances you may receive a payment.
Measure, and you can manage
As you begin to implement all these concepts, and if you choose to build your own payment processor, measuring your results will be crucial.
Similar to customer complaints and feedback, knowing how and why your customers use your billing system will be critical.
Again, if you have the money and time, you can build your own analytics tracking systems.
But in all honesty, if you want to save resources and hate technical headaches, you are better off using paid versions that are already experts on tracking.
Often, the problem with the softwares is the cost, and at times, the overly complicated layout. This again is where PayKickstart has you covered…
In the PayKickstart Control Center dashboard you’ll get:
- Sales reports: Simply analyze your sales and revenue with key metrics.
- Subscription reports: Know how much churn, MRR, the average transaction value your service is getting and more.
- Funnel reports: You’ll know exactly which campaign and funnel is truly converting. Track your conversion rate, earnings per click, earning per sale and more. No more guessing. You’ll know.
- Affiliate reports: Are you an affiliate marketer? We’ll show you exactly which affiliate partners bring the most sales, the best conversion rates and EPC. Drive more revenue and save time and money by choosing the best affiliate programs.
If you want to truly get ahead in this market, you need an advantage your competition doesn’t have. Not to mention, many overlook the idea that you can’t manage what you don’t measure.
What about security and compliance?
This is something that may not immediately come to mind when deciding to build your own payment processor.
The government has regulations regarding payments, and you need to make sure you follow them, or face the consequences…
When building your payment processor, some things you need to consider are GDPR compliance, ISO compliance, compliance with the AICPA’s Trust Services Criteria in relation to your SOC audit, PCI (Payment card industry data security standard) and the EU-US Privacy shield.
Spoken in plain english, these compliance and security standards are a mouthful.
And again, if you don’t follow through with them, you may find yourself in a heap of trouble with regulatory institutions.
Well then, where’s the good news you’re probably asking?
There isn’t, it gets worse as the costs weren’t even mentioned.
You could likely expect to pay upwards of 6 figures in fees to just certify you are compliant with these organizations. Again if you have the time, money and patience, go ahead with this.
But if not, you need a better option…
PayKickstart covers many bases for you when it comes to compliance:
- PCI DSS Level 3 Compliant
- SCA Compliant (Strong customer authentication is a new European regulation)
- SOC-1 and SOC-2 Compliant
- EU-GDPR Compliant
Ok, but what about security? We’ve got you covered there too:
- Two-Factor Authentication
- Single sign-on
- User Management and Permissions
- Fraud Detection Tools
- 99.99% Uptime and Data
- Data Portability
So all in all, when it comes to security and compliance, we cover the bases ahead of time, so you don’t have to.
But what about support?
Obviously, as a business you have to offer customer support.
However is it any good? Is it limited? This could be a major problem if your payment processor starts to get traction, and especially if it processes many transactions in a given day.
We’ve all experienced some form of lackluster support from services we use, and many times it can be hard to find the support button, as they may purposely make it hard to locate.
Luckily at PayKickstart, we offer top-notch customer support for you and your customer.
We believe in personalized communication, and easy to use self-serve options:
- Customize email notifications.
- Automatic trigger for rebill reminders, card expirations, dunning emails, membership account details and more…
- Our Self-Service customer billing portal makes it easy for your customers to easily manage purchases, update their payment details, upgrade/downgrade, and more.
- We also allow you to embed our hosted billing portal, or use your own with the appearance showing full branding.
Sometimes, you may get customers who will have complaints about charges and invoices. Maybe that happens often for you…
Wouldn’t it be great if you could prevent these issues with itemized, easy to understand invoices?
Again, we’re already there.
PayKickstart offers On-Demand invoicing:
- You can customize everything with the Invoice Editor
- Clearly Itemized
- Easy to understand
- Sent upon purchase
With these features, you will definitely see a reduction in customer support inquiries, giving you more time to focus on individual customers and other business tasks.
So to wrap up
Should you buy or build your own payment processor?
This may be a big debate for some, but the answer is obvious.
Buy one, don’t build one. It’s faster, cheaper, and less risky.
Especially in this day and age, we have increasing regulations, liability, and changes in technology are happening faster than ever before.
We also have a pandemic and the economic downturn that comes with it. This can bring some business opportunities in the software industry, but we have to acknowledge the business risks, and act accordingly.
If you are a risk taker, then by all means create your own payment processor. But do so in a calculated way, that covers potential problem scenarios and reduces the chance of a huge loss.
If you are less of a risk taker, or at least someone who takes calculated risks when it counts, you are really better off buying a service that is already done for you.
It’s as simple as that.
You read this far, so maybe we’re striking a chord with you.
Want to learn more about how PayKickstart can eliminate your billing bottleneck with our services? Click here to learn more about how we can help you with payments.
Hi, my name is Ryan from Higherdesirecopywriter.com! I write effective content and copy for B2B SaaS companies. I do blog posts/articles, website copy, and make engaging content for readers that truly draws them into your software and company. SaaS, eCommerce, CRO, and inbound marketing are my passions!