Collaborative Finance: How SaaS and Embedded Payments Are Changing the Game

We at PYMNTS have long been covering the trend that, in shorthand, is “embedded everything,” where payments, especially, are being woven inextricably into software and into platforms.

The embedded route has the potential to change — and indeed is changing — entire industries. That evolution is impacting even the digital only players, who themselves need a bit of collaboration to simplify software and selling, and offering enterprises and even government entities the boon of payments acceptance from their own end customers, from retail to education.

That’s especially true within software as a service (SaaS), which is marked by several business models. Those providers help businesses transform their own processes and payments without an attendant technical heavy lift. In addition, vertical SaaS players transform entire markets by putting “easy” payments where they had not been previously, allowing the platforms to monetize payments, while enabling merchants/businesses to be paid more easily.

The ripple effect, with embedded payment options and flexible financing in the mix, is that everyone, end to end, gets paid (and makes payments) more efficiently.

Affordability Closes the Deal

As to the SaaS sales teams that do business with enterprise customers — providing cloud-based options that help those clients manage everything from customer relationships to marketing to communications tools — well, they’ve got to sell to those clients, offering up affordable options that keep those relationships in place.

As noted here, Lemon announced last week that its financing platform built for SaaS sales teams is live. The platform is designed to help SaaS sales teams overcome the common challenge of customer hesitation over large upfront costs, the company noted. In addition to allowing buyers to spread the cost over multiple payments, Lemon enables sellers to get paid upfront, and in terms of the financing, when the deal is signed, Lemon pays the seller the full contract value upfront (the financing is provided, per last week’s announcement, by Shawbrook Bank).

HubSpot said that same week that it would add subscription billing management and configure, price, quote (CPQ) tools by acquiring Cacheflow. Cacheflow’s solutions simplify the selling and buying of B2B software by automating the software-as-a-service (SaaS) sales flow process in a single, no-code platform. HubSpot’s Commerce Hub includes invoicing and payments; last year the firm processed more than $1 billion in GMV.

Monetizing Payments

Last month, Cross River Bank formed a partnership with embedded payments company Forward. The collaboration is designed to use embedded payments to address payment challenges faced by SaaS providers, including same-day ACH payouts. Forward’s own offerings for vertical software firms selling to (among other customers) merchants includes a payment facilitation software and services platform.

Also in September, payment-as-a-Service provider UNIPaaS launched a small-business-focused invoice payments partnership with American Express. In terms of the mechanics of the deal, small- to medium-sized businesses (SMBs) can give customers the option of paying invoices with American Express cards through the UNIPaaS platform, speeding up business invoice payments. UNIPaas serves SaaS firms that have presence in HealthTech, accounting, education and mobility.

Stripe, which has been moving ever-further into what it has said are “software defined financial services,” acquired Lemon Squeezy over the summer. Lemon Squeezy serves as a merchant of record — mostly for SaaS companies — calculating and handling global sales tax for digital products.